Recent indicators suggest that the growth of economic activity has decelerated from its robust pace in the third quarter. While job gains have slowed down from earlier in the year, they remain strong, and the unemployment rate remains at a low level. Inflation has decreased over the past year but remains higher than desired.
The U.S. banking system is stable and resilient. However, tighter financial and credit conditions for households and businesses are expected to have a negative impact on economic activity, employment, and inflation. It is uncertain how severe these effects will be, but the Committee is closely monitoring inflation risks.
The Committee’s primary objectives are to achieve maximum employment and inflation at a rate of 2 percent in the long run. To support these goals, the Committee has decided to maintain the target range for the federal funds rate between 5-1/4 and 5-1/2 percent. The Committee will continue to evaluate new information and its implications for monetary policy. When determining the need for further policy adjustments to bring inflation back to the target rate, the Committee will consider the cumulative tightening of monetary policy, the time lag in which monetary policy affects the economy and inflation, and economic and financial developments. Additionally, the Committee will continue reducing its holdings of Treasury securities and agency debt and mortgage-backed securities as planned. The Committee is strongly committed to achieving the 2 percent inflation target.
The Committee will continue to assess the economic outlook in light of incoming information. If any risks emerge that could hinder the achievement of the Committee’s goals, the stance of monetary policy may be adjusted accordingly. The Committee’s assessments will consider various factors, including labor market conditions, inflation pressures and expectations, as well as domestic and international financial developments.
The monetary policy action was supported by Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller.
Read the original Federal Reserve release here.