The interest rate set by the US Federal Reserve has been at a historic low for a record amount of time. The latest statement from the Federal Open Market Committee, released June 17, suggests this is to continue for some time still, but lending rates may gradually increase later in the year.

US economic performance has gradually improved in the second quarter of 2015

The FMOC claims that US economic performance has gradually improved in the second quarter of 2015, in contrast to its last statement in April, which conceded economic expansion had been poor for the first quarter. The latest statement notes that the US economy has seen some increased job growth, a moderate increase in household spending and an improvement in the housing sector. At the same time, it points out that net exports and business fixed investment remain low, while inflation remains below the Fed’s long run target.

This below-target inflation rate, along with an unemployment considered too great for full employment, means that an interest rate rise was not seen as justifiable as of yet, with the low level of 0.24 percent maintained. “To support continued progress toward maximum employment and price stability,” the FMOC noted in its statement, “the current 0 to 0.25 percent target range for the federal funds rate remains appropriate.”

To determine how long to hold rates, the FMOC says it will continue to monitor progress towards its objectives of maximum employment and an inflation rate of two percent. A rise in interest rates is expected sometime later this year, with the FMOC claiming it is “reasonably confident that inflation will move back to its two percent objective over the medium term.” However, even once its employment and inflation targets are reached, any raise, owing to US economic conditions, will be moderate, below what would be considered normal in the longer run.