By Isaac Cohen*
The Federal Reserve met last week in Washington and for the peace of mind of many, the central bank said it will continue doing the same for some time. The reasons offered to stay the course are found in the final communique of the Open Market Committee meeting, they were also clarified immediately afterwards, at a press conference by Chair Janet Yellen.
To begin, the Committee recognized economic activity continues expanding at a moderate pace, which led to slight downward revisions to earlier, relatively more optimistic, forecasts.
On the two key components of its mandate, maximum employment with price stability, the Committee recognized improvement in the labor market, but said there also remains “significant underutilization of labor resources.” At the press conference, Chair Yellen clarified the meaning of “underutilization.” She said, “there are still too many people who want jobs but cannot find them, too many who are working part time but would prefer full time work, and too many who are not searching for a job but would be if the labor market were stronger.”
Also, inflation is below the 2 percent objective, which was corroborated when the Labor Department informed that in August the consumer price index fell 0.2 percent from July.
Therefore, there is no rush, interest rates will remain near zero for “considerable time,” understood as before the end of 2015.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.