In a release, the Federal Reserve said that despite strengthening labor market conditions, low inflation and slowing economic activity has caused it to maintain the target range for the federal funds rate at .25% to .5%.
According to the release, inflation is expected to remain low in the short term, partially due to declines in energy prices, but will rise to 2%, the target rate for the Fed, as the labor market continues to strengthen and effects of the decline in energy and import prices fall away.
The Fed noted that labor conditions have improved despite slowing economic growth activity. Bloomberg columnist Mohamed El-Erian believes that this is a positive sign for wage increases and inflation. El-Erian also said that the release indicates that the June meeting will be “live.”