FOMC officials voted to keep interest rates unchanged, maintaining the target federal funds rate range at 3.5%–3.75%, as inflation remains above the Federal Reserve’s long-term goal and economic conditions continue to evolve.
Economic Conditions Overview
The FOMC noted that economic activity is expanding at a solid pace, supported by steady consumer demand and resilient business investment. Job gains have moderated in recent months, and the unemployment rate is showing early signs of stabilization. However, inflation continues to run somewhat above the Fed’s 2% objective, reinforcing the need for a cautious policy approach.
Policy Decision
At its latest meeting, the Federal Open Market Committee (FOMC) agreed to hold rates steady, reflecting a careful balance between supporting economic growth and ensuring progress toward price stability. The decision underscores the Fed’s intention to remain data-dependent amid lingering economic uncertainty.
Dissenting Views
Two voting members—Stephen I. Miran and Christopher J. Waller—dissented from the majority decision. Both favored a 0.25% rate cut, citing easing inflationary pressures and emerging risks to employment growth.
Implementation Measures
To support its policy stance, the Board of Governors unanimously set the interest on reserve balances at 3.65%. Standing overnight repo operations will continue at 3.75%, while overnight reverse repo operations will be offered at 3.5%, with a daily per-counterparty cap of $160 billion.
The FOMC will also maintain its approach to balance-sheet management by purchasing Treasury securities with maturities of up to three years to ensure ample reserve levels. Principal payments from Treasury and agency securities will continue to be rolled over or reinvested into Treasury bills.
Forward Guidance
Looking ahead, the FOMC emphasized that future policy decisions will depend on incoming economic data, inflation trends, and the evolving balance of risks. The Committee reiterated its readiness to adjust monetary policy if conditions threaten its dual mandate.
Commitment to Long-Term Goals
The FOMC reaffirmed its strong commitment to achieving maximum employment and returning inflation to 2% over the longer run. The primary credit rate remains unchanged at 3.75%.
