In a recent Federal Reserve meeting, the Federal Open Market Committee (FOMC) decided to lower the federal funds rate by 25 basis points to a target range of 4.50% to 4.75%. This reduction is half the size of the previous rate cut, reflecting a shift in the committee's approach to addressing economic conditions.
Significant changes in this statement include the removal of previous confidence expressed in reaching a 2% inflation target. The committee also adjusted its evaluation of the labor market, now describing it as "generally relaxed" without reiterating the past comment of a slowdown in employment growth.
Unlike the previous meeting where there was a dissenting vote, this decision was unanimously supported by all FOMC voting members, including Michelle W. Bowman, who had opposed the prior rate cut.
The FOMC continues to aim for full employment and a 2% inflation rate in the long term. It is committed to evaluating future data and changing economic outlooks to adjust the federal funds rate accordingly. Additionally, the committee will maintain its reduction of holdings in U.S. Treasuries, agency debt, and mortgage-backed securities.
In monitoring economic prospects, the committee remains vigilant about potential risks that could hinder its dual mandate and is prepared to adjust monetary policy as needed.
