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The Federal Open Market Committee unanimously voted to keep the target federal funds rate unchanged at 0.25% to 0.50% in its June Meeting. The Committee lowered its forecast for 2016 GDP growth to 2.0% from 2.2%. The FOMC’s statement noted that since April job growth has slowed and business investment has remained soft. However, the Committee’s June assessment of the economy is in large part the same as its April assessment. The Committee maintains that it “expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.” A July rate hike will depend in large part of the June Employment report.
Consumer prices reported by the CPI rose a slight 0.2% in May. Consumer prices excluding food and energy also increased 0.2%. Energy costs increased 1.2%; however, gasoline prices are down 10.1% on the year. Housing and medical care both rose 0.3%. Other categories saw unremarkable increases. Overall, prices consumer prices remain flat.
May retail sales increased a significant 0.5%. E Commerce retail sales jumped 1.3% and auto sales increased 0.3%. Sporting goods, music, and hobby sales were up. Building materials and garden equipment sales dropped 1.8%. The overall upbeat report may indicate an improvement in the household finances of US consumers.
Wednesday June 22 — Existing Home Sales (a gauge of housing demand)
Thursday June 23 — Jobless Claims (a measure of the health of the job market)
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