Federal Reserve System (FED) FOMC Meeting summary

Economic and inflation outlook

• Economic activity continues to expand at a solid pace, with resilient consumer spending and strong business investment, though housing remains weak.

• Unemployment rate is stable at 4.3%, with job gains low due to softer labor demand and lower labor force growth.

• Inflation has risen, with total PCE prices up 3.5% year-over-year, driven by higher global oil prices and tariffs.

• Core PCE inflation stands at 3.2%, with near-term inflation expectations rising but longer-term expectations anchored near 2%.

• Higher energy prices from Middle East conflict are expected to keep inflation elevated in the near term.

Monetary policy stance and committee dynamics

• The policy rate remains unchanged at 3.5% to 3.75%, with the stance seen as appropriate for current conditions.

• Interest rate on reserve balances held at 3.65 percent, effective April 30, 2026.

• Primary credit rate remains at 3.75 percent.

• The committee is divided, with vigorous debate over shifting from an easing bias to a more neutral stance; three members dissented on statement language.

• No immediate plans for rate hikes or cuts; decisions will be made meeting-by-meeting based on evolving data and risks.

Risks, uncertainties, and external factors

• The economic outlook is highly uncertain due to the Middle East conflict, which has driven up oil prices and could impact inflation and growth.

• The U.S. is less vulnerable to energy shocks than Europe or Asia due to its status as an oil exporter and lower energy intensity.

• Inflationary pressures from tariffs are expected to subside over the next two quarters, but energy price impacts remain unpredictable.

• Consumer spending remains resilient despite higher gas and airline prices, but further increases could eventually dampen demand.

• The committee is closely monitoring for signs of energy costs bleeding into core inflation.