The Federal Open Market Committee (FOMC), as expected, announced no change in interest rates at the end of this week’s meeting. This is a welcome pause from the too-regular increases of the past couple of years. It is also a pause warranted by the economic data. There are clear signs that past rate increases are slowing spending growth through traditional transmission channels (slower residential investment growth and lower net exports), and 2019 will see the fiscal boost from tax cuts and higher spending levels fade rapidly. While wage growth is clearly healthier in recent years, productivity has also staged what looks increasingly like a durable (if unspectacular) rebound. This productivity rebound has helped keep price inflation firmly within (or even under) the Fed’s long-run targets. At this point, the key challenge facing the Fed in coming years is likely not going to be how to keep inflation in check, instead it will be how to keep the recovery going as long as possible to let workers finally eke out some significant gains. Indications that the Fed is unlikely to raise rates this year suggest they realize this.

Josh Bivens is available for comment.