The recovery from the Great Recession has advanced sufficiently far. And domestic spending appears sufficiently robust. That an argument can be made for a rise in interest rates at this time.
We discussed this possibility at our meeting. However, in light of the heightened uncertainties abroad and the slightly softer expected path for inflation, the committee judged it appropriate to wait for more evidence, including some further improvement in the labor market, to bolster its confidence that inflation will rise to 2% in the medium term.
Now, I do not want to overplay the implications of these recent developments. Which have not fundamentally altered our outlook.
The economy has been performing well. And we expect it to continue to do so.
As I noted earlier, it remains the case that the timing of the initial increase in the Federal funds rate will depend on the committee's assessment of the implications of incoming information for the economic outlook. To be clear, our decision will not hinge on any particular data release. Or on day-to-day movements in financial markets. Instead, the decision will depend on a wide range of economic and financial indicators. And our assessment of their cumulative implications for actual and expected progress towards our objectives.
Let me again emphasize that the specific timing of the initial increase in the target range for the Federal funds rate is far less important for the economy than the entire expected path of interest rates. And once we begin to remove policy accommodation, we continue to expect that economic conditions will evolve in a manner that will warrant only gradual increases in the target Federal funds rate.
