Voting members of the Federal Reserve see the economy improving but apparently not enough to move the needle on rates.

The Fed's Federal Open Market Committee (FOMC) emerged from its March 16 meeting to again leave the federal funds rate unchanged, in part because of the slow economic recovery and the present inflation situation that includes "substantial resource slack:"

“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period…Although the pace of economic recovery is likely to be moderate for a time, the committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.”

The Fed noted that, even as bank lending “continues to contract, financial market conditions remain supportive of economic growth.” The FOMC’s Thomas Hoenig, who continues to fret over the possibility of long-run financial instability, was the only member to vote against maintaining the historically low rate.

The Fed also announced it will close Term Asset-Backed Securities Loan Facility program on June 30 for all loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral.

Brian Shappell, NACM staff writer