Hunkered down in a Washington immersed in political drama, the Federal Reserve's latest no-drama decision to stand pat on interest rates feels like the calm eye in the midst of the Trump administration hurricane and Twitter storms.
Drawing upon an economic backdrop that is seen as mostly favorable, Fed Chair Janet Yellen and her Federal Open Market Committee colleagues are betting on further improvement ahead.
In the official statement, the FOMC acknowledged that it is failing to hit its own target saying inflation "is expected to remain somewhat below 2 percent in the near term." The Fed's favorite inflation gauge, the Core Personal Expenditures index, is up just 1.4 percent over the past year.
On the other hand, the policy-making body says "job gains have been solid" since the beginning of the year. Employers added 222,000 jobs in June while the unemployment rate stood at 4.4 percent. Underscoring a persistently disappointing aspect of the years-long economic expansion, average hourly earnings were up 2.5 percent over the past year. That's well-shy of more substantial wage growth seen in previous recoveries.
The Fed has raised benchmark interest rates twice so far this year and earlier signaled that another rate hike could come before the end of this year. Investors and many economists are more cautious, however, noting the lack of inflation.