As expected, the Federal Reserve left its monetary policy stance unchanged at the 28-29 April meeting. According to the post-meeting statement, 1 the economic slowdown in the first quarter of the year reflected in part temporary factors. Although the recovery in the labor and housing markets slowed somewhat and exports and business fixed investment declined significantly during the early months of this year, the Committee probably expects private consumption to rebound in the coming months as “households’ real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high”. This argument is in line with the March improvement in auto and retail sales, suggesting an improved outlook for private consumption.
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