**MNI 5 Things:FOMC Statement: Infl Close To 2%; Rates Steady>

--Five Things We Learned From The May 2 FOMC Statement>}

By Kevin Kastner, Jean Yung, Holly Stokes and Sara Haire

     WASHINGTON (MNI) - The following are the key points from the 

FOMC statement released Wednesday:

     - As expected, the FOMC held the funds rate steady at 1.50% to 

1.75% on a 8-0 vote, but the bigger news is an update to the inflation 

language. After the PCE price data showed an upward movement in the 

year/year rate Monday to 2.0% overall and 1.9% for core, the FOMC 

altered their statement in a number of places to acknowledged that 

progress. 

     - The statement now says "(i)nflation on a 12-month basis is 

expected to run near the Committee's symmetric 2 percet objective over 

the medium term." The previous statement had said "(i)nflation on a 

12-month basis is expected to move up in coming months and to stabilize 

around the Committee's 2 percent objective over the medium term." 

     - The Committee kept the "risks to the economic outlook appear 

roughly balanced language, but cut off the "but the Committee is 

monitoring inflation developments closely" portion seen in the previous 

statement. 

     - The FOMC now says "on a 12-month basis, both overall inflation 

and inflation for items other than foods and energy have moved close to 

2%." Their previous statement said "(o)n a 12-month basis, both overall 

inflation and inflation for items other than food and energy have 

continued to run below 2 percent." They also altered the following 

sentence to say market-based measures of inflation compensation "remain 

low," rather than saying they have "increased in recent months, but 

remain low." Survey-based measures of longer-term inflation expectations 

remain little changed.

     - Outside of inflation, the FOMC repeated that data on household 

spending growth has moderated from the fourth quarter pace, but now 

says business fixed investment "continued to grow strongly" rather than 

saying that it too had moderated, as it did in the previous statement. 

They repeated that job gains have remained strong "on average," a 

reference to the sharp movements in the February and March payrolls 

reports.

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MMUFE$,M$U$$$,MAUDR$]