Federal Reserve Maintains Monetary Policy Stance and Addresses Economic Indicators

Recent economic indicators point to robust third-quarter expansion, although job gains have moderated, unemployment remains low, and inflation stays elevated. The U.S. banking system is declared sound and resilient, though tighter financial and credit conditions may affect economic activity, hiring, and inflation. The Federal Reserve remains vigilant about inflation risks, aiming for maximum employment and 2 percent inflation in the long run.

Monetary Policy Announcement

The Federal Open Market Committee has decided to maintain the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continually evaluate new information for its policy implications, considering factors like monetary policy's cumulative tightening, it's time lags on the economy, and economic and financial developments. The Committee also plans to reduce its holdings of Treasury securities and agency debt and mortgage-backed securities.

Commitment to Inflation Target

The Committee is dedicated to achieving its 2 percent inflation target and is ready to adjust the monetary policy stance if necessary to meet its objectives. Their assessments will encompass labor market conditions, inflation pressures, inflation expectations, and financial and international developments.

Monetary Policy Action

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; and other committee members.

Monetary Policy Implementation Decisions

The Federal Reserve has made the following decisions:

• Interest rate paid on reserve balances maintained at 5.4 percent.
• Open market operations to keep the federal funds rate in a range of 5-1/4 to 5-1/2 percent.
• Standing overnight repurchase agreement operations with a minimum bid rate of 5.5 percent.
• Standing overnight reverse repurchase agreement operations at an offering rate of 5.3 percent.
• Principal payments from Treasury securities exceeding AU$60 billion per month will be rolled over at auction.
• Principal payments from agency debt and agency mortgage-backed securities exceeding AU$35 billion per month will be reinvested.
• The primary credit rate remains at 5.5 percent.

These actions align with the Federal Reserve's commitment to address economic conditions and achieve its policy goals. The Committee remains attentive to evolving risks and changing economic conditions.

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