Federal Reserve System (FED) FOMC Meeting summary

Economic outlook and inflation trends

• Economic activity continues to expand at a solid pace, with GDP growth moderating but private domestic demand and job gains remaining strong, and unemployment low.

• Inflation has eased from its peak but remains above the 2% target, with recent data showing modest further progress and longer-term expectations well anchored.

• Committee projections anticipate GDP growth of 2.1% in 2024 and 2.0% in the following years, with inflation expected to gradually decline to 2% by 2026.

• Risks to employment and inflation goals have become more balanced, but uncertainty persists.

• The Committee remains highly attentive to inflation risks and is committed to returning inflation to 2%.

Monetary policy stance and rate outlook

• The policy interest rate remains unchanged at 5.25%-5.5%, with continued reduction in securities holdings.

• Interest rate paid on reserve balances is 5.4%, and the primary credit rate is 5.5%.

• The committee requires greater confidence that inflation is moving sustainably toward 2% before considering rate cuts.

• Projections suggest a median federal funds rate of 5.1% at year-end, declining to 4.1% in 2025 and 3.1% in 2026, but these are not fixed plans.

• Policy decisions will remain data-dependent, with adjustments possible if inflation falls faster or the labor market weakens unexpectedly.

Labor market and consumer dynamics

• Labor force participation has increased, especially among prime-age workers and through immigration.

• Wage growth has moderated but remains above sustainable levels, and job openings and quits have declined.

• Consumer spending is still growing, though at a slower pace, and household financial conditions are less robust than a year ago but remain solid.

• The committee is monitoring for signs of unexpected labor market weakness, which could prompt a policy response.