Recent data shows that economic growth slowed in the first half of the year. Job gains have decreased, and unemployment has slightly increased but remains low. Inflation has risen and continues to be above target levels.
The Federal Open Market Committee (FOMC) stated its ongoing goal is “to achieve maximum employment and inflation at the rate of 2 percent over the longer run.” The Committee noted that uncertainty about the economic outlook is still high, and there are increased risks to employment.
In response, the FOMC decided to lower the target range for the federal funds rate by a quarter percentage point, setting it at 4 to 4‑1/4 percent. The Committee said it would “carefully assess incoming data, the evolving outlook, and the balance of risks” when considering further changes to interest rates. It also confirmed plans to continue reducing its holdings of Treasury securities as well as agency debt and mortgage-backed securities.
The statement emphasized: “The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.”
Ongoing monitoring will include labor market conditions, inflation trends, expectations about future inflation, and both financial and international developments. The FOMC added: “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
Those voting for this monetary policy action included Jerome H. Powell (Chair), John C. Williams (Vice Chair), Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, Jeffrey R. Schmid, and Christopher J. Waller. Stephen I. Miran voted against this action; he preferred a larger reduction in rates by half a percentage point.
For media inquiries regarding this decision or other Federal Reserve matters, contact [email protected] or call 202-452-2955.
