The distinction is that 'gradual' means as needed, or as seen to be necessary
by the ongoing data.
'Measured' was meant to imply a steady 25 basis point at a time rate of
increases to an objective which some thought to be 100 bp.
So in other words, as suspected, the Fed raised, but it is very likely to be
quite gradual, since the data does not fully support it despite all the
verbage which has been put out there to justify it.
The Fed is raising rates in order to 'end' ZIRP and to begin to provide
themselves some maneuvering room out of the policy corner into which they had
painted themselves in their thrashing within a credibility trap of lack of
reform, top down stimulus, and thereby a continuing lack of broad, organic
recovery.
Release Date: December 16, 2015
Information received since the Federal Open Market Committee met in October
suggests that economic activity has been expanding at a moderate pace.
Household spending and business fixed investment have been increasing at
solid rates in recent months, and the housing sector has improved further;
however, net exports have been soft.
A range of recent labor market indicators, including ongoing job gains and
declining unemployment, shows further improvement and confirms that
underutilization of labor resources has diminished appreciably since early
this year. Inflation has continued to run below the Committee's 2 percent
longer-run objective, partly reflecting declines in energy prices and in
prices of non-energy imports. Market-based measures of inflation compensation
remain low; some survey-based measures of longer-term inflation expectations
have edged down.
Consistent with its statutory mandate, the Committee seeks to foster maximum
employment and price stability. The Committee currently expects that, with
gradual adjustments in the stance of monetary policy, economic activity
will continue to expand at a moderate pace and labor market indicators will
continue to strengthen.
Overall, taking into account domestic and international developments, the
Committee sees the risks to the outlook for both economic activity and the
labor market as balanced. Inflation is expected to rise to 2 percent over the
medium term as the transitory effects of declines in energy and import
prices dissipate and the labor market strengthens further. The Committee
continues to monitor inflation developments closely.
The Committee judges that there has been considerable improvement in labor
market conditions this year, and it is reasonably confident that inflation
will rise, over the medium term, to its 2 percent objective. Given the
economic outlook, and recognizing the time it takes for policy actions to
affect future economic outcomes, the Committee decided to raise the target
range for the federal funds rate to 1/4 to 1/2 percent. The stance of
monetary policy remains accommodative after this increase, thereby supporting
further improvement in labor market conditions and a return to 2 percent
inflation.
In determining the timing and size of future adjustments to the target range
for the federal funds rate, the Committee will assess realized and expected
economic conditions relative to its objectives of maximum employment and 2
percent inflation. This assessment will take into account a wide range of
information, including measures of labor market conditions, indicators of
inflation pressures and inflation expectations, and readings on financial and
international developments.
In light of the current shortfall of inflation from 2 percent, the
Committee will carefully monitor actual and expected progress toward its
inflation goal. The Committee expects that economic conditions will
evolve in a manner that will warrant only gradual increases in the federal
funds rate; the federal funds rate is likely to remain, for some time, below
levels that are expected to prevail in the longer run. However, the actual
path of the federal funds rate will depend on the economic outlook as
informed by incoming data.
The Committee is maintaining its existing policy of reinvesting principal
payments from its holdings of agency debt and agency mortgage-backed
securities in agency mortgage-backed securities and of rolling over maturing
Treasury securities at auction, and it anticipates doing so until
normalization of the level of the federal funds rate is well under way. This
policy, by keeping the Committee's holdings of longer-term securities at
sizable levels, should help maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair;
William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley
Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K.
Tarullo; and John C. Williams.