Federal Reserve System (FED) FOMC Meeting summary

Economic and policy overview

• Inflation has eased from 7% to 2.5%, with the labor market returning to pre-pandemic strength and unemployment at 4.1%.

• GDP growth moderated to 2.1% in the first half of the year, with private domestic final purchases growing at 2.6%.

• Wage growth has slowed, and job creation remains solid but has moderated, reflecting normalization rather than overheating.

• Core PCE inflation stands at 2.6%, and longer-term inflation expectations remain well anchored.

• Economic activity continues to expand at a solid pace, with moderated job gains and a low but rising unemployment rate.

Monetary policy stance and outlook

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

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

• Decisions will be data-dependent, considering the totality of economic data, outlook, and risk balance.

• A rate cut could be on the table as soon as September if incoming data support rising confidence in inflation and labor market stability.

• The interest rate paid on reserve balances remains at 5.4 percent, and the primary credit rate at 5.5 percent.

Policy implementation and operations

• Open market operations will maintain the federal funds rate within the target range.

• Standing overnight repo operations set at a minimum bid rate of 5.5% with a $500 billion limit; reverse repo at 5.3% with a $160 billion per counterparty limit.

• Treasury securities and agency MBS holdings will continue to be reduced, with monthly caps on rollovers and reinvestments.