The Federal Reserve has decided to maintain its target interest rate range, signaling its intention to continue its fight against inflation while acknowledging some progress has been made. The central bank emphasized the importance of restoring price stability and noted that the labor market remains strong, with GDP growth showing resilience. The Fed’s policy stance has been exerting downward pressure on economic activity and inflation, with the goal of achieving a balanced approach to its dual mandate of price stability and maximum employment. The central bank also plans to continue reducing its securities holdings, in line with its commitment to returning inflation to its 2% target.
- The Federal Reserve left its policy interest rate unchanged, keeping the target range at 5.00% to 5.50%.
- The FOMC is continuing the process of reducing its securities holdings.
- The economy expanded at a solid pace, with 3.2% GDP growth in Q4 of the previous year, and 3.1% growth overall for 2023.
- The labor market remains strong, with an average of 265,000 jobs added per month over the past three months.
- The unemployment rate has increased slightly to 3.9%, but the labor market is still considered tight.
- Nominal wage growth is easing, and job vacancies have declined, suggesting labor market rebalancing.
- Inflation has eased notably over the past year but remains above the 2% longer-run goal.
- The median projection for total PCE inflation falls to 2.4% this year, 2.2% next year, and reaches 2% in 2026.
- The Fed’s monetary policy actions are guided by the mandate to promote maximum employment and stable prices.
- The FOMC participants’ median projection is that the federal funds rate will be 4.6% at the end of this year, 3.9% at the end of 2025, and 3.1% at the end of 2026.
- The committee discussed slowing the pace of decline in securities holdings and will likely implement this adjustment soon.
- The Fed is prepared to maintain the current federal funds rate range for longer if necessary to ensure inflation is moving sustainably toward the 2% goal.
The Wall Street Journal is an American business and economic-focused international daily newspaper based in New York City. The Journal is published six days a week by Dow Jones & Company, a division of News Corp.
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