The Federal Reserve on Wednesday opted to stand pat on the Federal Funds Rate, its key tool for managing credit markets. National Association of Home Builders economist Robert Denk gives his analysis of what it means to the construction industry. Denk writes,
"The statement released following the meeting emphasized continuing progress is US economic conditions but concerns about risks posed by global economic and financial developments in recent months. The summary of economic projections released with the statement indicated what Yellen characterized as only slightly weaker expectations than at the December meeting. The median forecast for GDP growth was slightly lower in 2016 and 2017 but unchanged thereafter. Headline inflation was lower in 2016 while core inflation was unchanged, pointing to a continuing influence of declining energy prices, an impact expected to be transitory.
The median path for the federal funds rate was 0.5 percentage point lower in 2016 and 2017, and 0.25 percentage point lower in 2018 and over the longer run. Yellen emphasized that the expectations regarding the path of the federal funds rate represented the views of individual meeting participants, consistent with their own views about the trajectory of the economy and appropriate monetary policy, and not a consensus forecast nor a preset roadmap for rate increases. The pace of interest rate normalization will be data dependent and consistent with unfolding economic conditions, both domestic and global, to the extent that global developments affect the domestic economy."