Information received since the Federal Open Market Committee met in MayJune indicates that the labor market remains strong and that economic activity ishas been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although growth of household spending appearshas to have picked up from earlier in the year, indicatorsgrowth of business fixed investment havehas been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation haveremain declinedlow; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In supportlight of thesethe goalsimplications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to maintainlower the target range for the federal funds rate atto 2-1/4 to 2-1/24 percent. TheThis Committeeaction continuessupports tothe Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective asare the most likely outcomes, but uncertainties about this outlook have increasedremain. InAs lightthe Committee contemplates the future path of thesethe uncertaintiestarget andrange mutedfor inflationthe pressuresfederal funds rate, theit Committee will closelycontinue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.

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 maximum employment objective and its symmetric 2 percent inflation objective. 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.

The Committee will conclude the reduction of its aggregate securities holdings in the System Open Market Account in August, two months earlier than previously indicated.