(Finance) – The Federal Open Market Committee (FOMC) of Fedas widely expected and for the third consecutive meeting, decided to keep the target range for rates between 5.25% and 5.5%and said that “will continue to evaluate further information and their implications for monetary policy.” In determining the extent of any further tightening of monetary policy that may be appropriate to bring inflation back to 2% over time, the Committee will “take into account the cumulative tightening of monetary policy , the lag with which monetary policy influences economic activity and inflation, and economic and financial developments”.
Furthermore, the Committee will continue to reduce its holdings in Treasury securities, agency debt and agency mortgage-backed securities, as described in previously announced plans. The Committee is “highly committed” to bring inflation back to its 2% target.
“In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook – reads the note released at the end of the meeting – The Committee would ready to appropriately change the direction of monetary policy if risks emerge which could prevent the achievement of the Committee’s objectives. The Committee’s assessments will take into account a broad range of information, including readings on labor market conditions, inflationary pressures and inflation expectations, as well as financial and international developments.”
More interesting indications have emerged since dot plot (the dot chart summarizing the forecasts of the various FOMC members). There median forecast for rates at the end of 2024 is now at 4.6% (up from the 5.1% forecast last September), but individual expectations varied widely: Eight officials see fewer than three quarter-point cuts next year, while five see more. The median rate forecast for 2025 is 3.6%, for 2026 at 2.9%.
The forecasts for 2024 are for a GDP change of 1.4%, an unemployment rate of 4.1%, a PCE inflation of 2.4%, a core PCE inflation of 2.4%. “Inflation has eased over the past year but remains high“, reads the statement.