Federal Reserve releases FOMC statement on economic activity and monetary policy

The statement indicates that recent indicators point to continued modest expansion in economic activity, with robust job gains and a low unemployment rate. However, it also acknowledges elevated levels of inflation.

The FOMC emphasises that the US banking system remains strong and resilient. However, it notes that tighter credit conditions for households and businesses are likely to have a dampening effect on economic activity, hiring, and inflation. The extent of these effects remains uncertain, and the Committee remains highly attentive to inflation risks.

In line with its objectives of achieving maximum employment and a 2% inflation rate over the longer run, the Committee has decided to maintain the target range for the federal funds rate at 5 to 5-1/4%. This decision allows the Committee to gather additional information and assess its implications for monetary policy. The Committee will consider factors such as the cumulative tightening of monetary policy, the time lags in which monetary policy affects economic activity and inflation, and developments in the economic and financial landscape when determining the appropriate extent of additional policy firming to bring inflation back to its objective.

Furthermore, the Committee reiterates its commitment to reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as previously announced. The objective is to support the return of inflation to its 2% target.

The FOMC will continue to monitor incoming information and assess its impact on the economic outlook when determining the appropriate stance of monetary policy. If any risks emerge that could hinder the achievement of the Committee's goals, it stands ready to adjust the stance of monetary policy accordingly. Various factors, including labour market conditions, inflation pressures and expectations, and financial and international developments, will be taken into account during the Committee's assessments.

The monetary policy action was supported by voting members Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller.