The FOMC announced the decision from its two-day policy meeting, leaving interest rates unchanged by unanimous decision, as largely expected. The statement noted that “economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period”. The Fed reiterated its outlook for improving conditions, saying recent evidence “suggests that the pace of economic contraction is slowing”. Concerns that the FOMC would tighten policy were abated, with the Fed saying “substantial resource slack is likely to dampen cost pressures” from recent increases in energy and commodity prices, but “the Committee expects that inflation will remain subdued for some time”.
The US economic data released earlier in the session included durable goods orders and new home sales. The durable goods orders report was sharply better than expectations, with the headline figure beating calls for a decline of 0.6% from an increase of 1.7% in April, instead, improving by 1.8% in May. The excluding transportation durable goods orders increased by 1.1% from a 0.4% increase a month prior. New home sales were softer than expected, lower by 0.6% to 342k units in May from 352k units previously
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