January Meeting
Duel mandate
- To promote max employment and stable prices
- Inflation has eased from highs
- Inflation is still high, path forward is still uncertain
- Focused on returning inflation to 2%
- Did not change interest rate
Economic Development
- GDP growth at 3.3% in 4th quarter
- GDP growth 3.1 for whole year
- Housing sector down b/c high mortgage rates
- interest rates suppressed business investment
- Payroll gained 165k jobs/month. Strong but lower
- Unemployment low at 3.7%
- Nominal wage growth has eased, vacancies declined
- Inflation has eased, still above 2%
- inflation is in the right direction, still need more
- Inflation poses risk to both sides of mandate
- Strong emphasis on decreasing inflation
Monetary Policy
over past 2 years
- Raised policy rate by 5 1/4 percent
- Decreased securities holdings 1.3 trillion Restrictive stance on monetary policy puts downward pressure on inflation Maintain fed funds at 5 1/4 to 5 1/2 % The monetary policy is at peak tightness Dialing back monetary policy this year? Uncertain, economic outlook uncertain. Prepared to keep fed funds if needed
Reducing policy rates too soon could cause tighter policy later on. Too little/late could unduly stifle the economy. Need more confidence that inflation is going down.
Restoring price stability is essential to employment and stability
Conclusion:
We work for the public towards the duel mandate
March Meeting
Duel mandate
- Committee aims for maximum employment and 2% inflation in the longer run.
- Job gains remain strong, and the unemployment rate is low.
- Inflation has eased over the past year but remains elevated.
- Risks to achieving employment and inflation goals are moving into better balance.
- Economic outlook is uncertain; Committee remains attentive to inflation risks.
Monetary Policy
- Federal funds rate target range maintained at 5-1/4 to 5-1/2 percent.
- Committee will assess data, outlook, and risk balance before adjusting rates.
- Rate reduction not expected until greater confidence in sustainable inflation movement.
- Committee continues reducing holdings of Treasury securities and agency debt.
- Stance of monetary policy will be adjusted as appropriate based on emerging risks.
Conclusion
- Assessments consider labor market conditions, inflation pressures, and financial/international developments.
- Strong commitment to returning inflation to 2% objective.