While the rate of economic growth leaves much to be desired, at 0.7% annual pace in the first quarter, unemployment hit a 10-year low, at 4.5%.
"The labor market continued to strengthen even as growth in economic activity slowed and "The fundamentals underpinning the continued growth of consumption remained solid", the Fed's statement added".
The Fed voted unanimously to leave its benchmark interest rate at 0.75% to 1%, but signaled another rate hike is imminent despite recent economic weakness.
The weak USA auto sales figures could make market participants wary of actively buying the dollar against the yen for now, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. But investors will look for any hints concerning a June rate hike in the statement that will be released. The Fed simply repeated it plans to hold the balance sheet steady until "normalization of the level of the federal funds rate in well under way". Low rates have made loans relatively affordable, for example, for businesses and for home and auto buyers.
The remarks point to confidence that weaker consumer spending levels and manufacturing output were a blip. 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 global developments. While acknowledging that the pace of growth in the US economy was slower than expected during the first quarter, Fed officials remained bullish on the country's economic prospects. It was the poorest quarterly performance in three years. And wages and job growth remain fairly healthy. On Monday, the government said consumer spending stalled in March for a second straight month. That decision will come alongside officials' updated quarterly economic projections and will be followed by a press conference with Yellen.
"The relatively neutral stance was to be expected and makes the prospect of a move in June, no more likely than it was before".
As long as the jobs number is above 150,000, investors will likely take that as a good sign and figure the Fed will hike soon, Jim Caron, a fixed income portfolio manager at Morgan Stanley Investment Management told Barron's. Officials probably also discussed how and when to start paring their extraordinary large $4.5 trillion portfolio of Treasurys and mortgage bonds. At the time, the Fed had already cut its short-term rate to a record low. They began raising rates in December 2015 and have boosted rates only two more times since then.
"I'm sure many central banks are happy the Fed is on a path to normalisation and the RBNZ would be one of them", he said. That was higher than expected but the smallest increase since October.