The Federal Reserve has announced that economic activity continues to expand at a solid pace according to recent indicators. The unemployment rate has remained stable at a low level over the past few months, and labor market conditions are still robust. Inflation remains moderately high.
The Federal Open Market Committee (FOMC) aims to achieve maximum employment and an inflation rate of 2 percent over the long term. However, uncertainty surrounding the economic outlook has increased. The Committee is vigilant about risks to both aspects of its dual mandate.
To support its goals, the FOMC decided to keep the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. When considering further adjustments to the target range for the federal funds rate, the Committee will carefully evaluate incoming data, the evolving outlook, and the balance of risks. The Committee will also continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. Starting in April, the Committee will slow the decline in its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The monthly redemption cap on agency debt and agency mortgage-backed securities will remain at $35 billion.
The Committee remains firmly committed to supporting maximum employment and bringing inflation back to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. If risks arise that could hinder the attainment of the Committee’s goals, the Committee will be prepared to adjust the stance of monetary policy as appropriate.
The decision was supported by Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Adriana D. Kugler; Alberto G. Musalem; and Jeffrey R. Schmid. Christopher J. Waller voted against this action, preferring no change to the federal funds target range but supporting the continuation of the current pace of decline in securities holdings.
— news from Federal Reserve