Federal Reserve System (FED) FOMC Meeting summary

Economic outlook and inflation

• Economic activity continues to expand at a solid pace, with GDP growth at 2.2% in the first half of the year and similar growth expected this quarter, though job gains have slowed and unemployment has edged up but remains low.

• Inflation has eased from a peak of 7% to an estimated 2.2% as of August, with core PCE prices rising 2.7% over the past year, but remains somewhat elevated.

• The median projection for total PCE inflation is 2.3% this year and 2.1% next year, trending toward the 2% target.

• Longer-term inflation expectations remain well anchored, supported by various surveys and market measures.

• The Committee judges risks to employment and inflation goals are roughly balanced, but the outlook remains uncertain.

Labor market conditions

• Labor market has cooled, with payroll job gains averaging 116,000 per month recently and unemployment rising to 4.2%.

• Nominal wage growth has eased, and the jobs-to-workers gap has narrowed, indicating less tightness.

• Labor market indicators suggest conditions are now less tight than pre-pandemic, and not a source of elevated inflationary pressures.

• The median projection for unemployment is 4.4% at year-end, higher than previous estimates.

Monetary policy actions and guidance

• The policy interest rate was lowered by 0.5 percentage points to a target range of 4.75%-5%.

• The interest rate paid on reserve balances was reduced to 4.9%, effective September 19, 2024.

• The primary credit rate was decreased by 0.5 percentage points to 5%.

• The committee will continue reducing securities holdings and is not on a preset course, making decisions meeting by meeting.

• The median projection for the federal funds rate is 4.4% at year-end and 3.4% at the end of 2025, both lower than June projections.