July 31, 2025
The Federal Reserve’s Federal Open Market Committee (FOMC) released its latest monetary policy statement on July 30, 2025, highlighting a mixed economic landscape. Economic growth moderated in the first half of the year, largely due to fluctuations in net exports. Despite this slowdown, the labour market remains resilient, with low unemployment and continued job gains, indicating underlying strength in domestic demand.
Inflation, while having eased from its peak, remains above the Federal Reserve’s long-term target of 2%. The Committee reaffirmed its commitment to returning inflation to this target and emphasized that it remains attentive to inflation risks. In light of current conditions, the FOMC voted to maintain the federal funds rate at a target range of 4.25% to 4.5%, signalling a cautious approach as it monitors incoming data and assesses the appropriate path for monetary policy.
The Fed also confirmed it will continue reducing its holdings of Treasury securities and agency debt and mortgage-backed securities, consistent with its balance sheet normalization plans. The Committee noted that the economic outlook remains uncertain and reiterated its readiness to adjust policy as needed to support its dual mandate of maximum employment and price stability.
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