June 14, 2023
Fed holds off on rate hike
Recent data points to a continuation of moderate growth in economic activity. Recent months have seen brisk job growth, and the unemployment rate has stayed consistently low. Still, inflation is rather high.
The financial system in the United States is stable and secure. Reduced access to credit is expected to have a chilling effect on consumer spending, company hiring, and price growth. The full scope of these impacts is still unclear. Inflation concerns continue to get the Committee’s undivided attention.
The Committee’s long-term goals include full employment and inflation of 2%. The Committee agreed to keep the federal funds rate target range at 5% to 5-1/4% in order to help achieve these objectives. The Committee can evaluate new information and its implications for monetary policy by keeping the target range unchanged at this meeting. The Committee will consider the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments to determine the extent to which further policy firming may be appropriate to return inflation to 2% over time. As part of its previously announced objectives, the Committee will also keep selling off its Treasury assets, agency debt, and agency mortgage-backed securities. The Committee indicated that it remains dedicated to bringing inflation back down to its 2% target.
Additionally, the Committee will keep an eye on how new data may affect their assessment of the economy’s future prospects as they choose the best course of action for monetary policy. If threats materialize that may prevent the Committee from achieving its aims, the Committee would be willing to change the stance of monetary policy as necessary. The Committee will evaluate a wide variety of data, including the state of the economy, inflation rates and projections, the state of the financial markets, and global events.
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