(Reuters) – The Federal Reserve on Wednesday pointed to weakness in the U.S. labor market and economy, in a sign that the central bank is struggling to proceed with its plans to raise interest rates this year.
The Fed’s policy statement puts it on track to begin a meeting-by-meeting approach toward deciding when to pull the trigger on its first rate hike since June 2006.
The central bank, however, acknowledged soft patches across the economy, making it more likely that it will not be ready to hike rates until at least September.
“The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term,” the Fed said in its statement, following a two-day meeting of its policy-setting committee.
The Fed’s rate guidance mirrored what it gave last month.
But unlike its March policy statement, this time the central bank did not effectively rule out hiking rates at its next meeting.
While that makes a June move possible, the economic data is not cooperating.
The economy grew at an anemic 0.2 percent annual rate in the first quarter, the Commerce Department reported early on Wednesday, well below economists’ expectations for 1 percent growth and the fourth quarter’s 2.2 percent expansion.