Monetary Policy Review - The Federal Open Market Committee (FOMC) discussed the review of its monetary policy framework, focusing on labor market dynamics and the goal of maximum employment, acknowledging the difficulty in measuring maximum employment due to nonmonetary factors [3][4][5] - Participants supported the current description of maximum employment as a broad and inclusive goal, emphasizing the importance of monitoring a wide range of labor market indicators [4][6] Financial Market Developments - Treasury yields declined, equity prices fell, and credit spreads widened, reflecting increased perceived risks in the U.S. economic outlook due to weaker-than-expected consumer spending and trade policy uncertainties [7][8] - The implied average federal funds rate path shifted lower for horizons beyond mid-2025, with higher probabilities assigned to lower GDP growth and higher inflation outcomes compared to previous surveys [8][9] Economic Situation - Real GDP was expanding at a solid pace, with the unemployment rate stabilizing at 4.1% in February, while consumer price inflation was estimated at 2.5% [17][18][19] - Labor market conditions remained solid, with average monthly gains in nonfarm payrolls lower than the previous year, and the ratio of job vacancies to unemployed workers was 1.1 in February [19][20] Inflation Outlook - Inflation remained somewhat elevated, with core PCE price inflation estimated at 2.8% in February, and participants noted that inflation data in early 2025 were higher than expected [18][39] - Participants expressed concerns that inflation could be boosted by higher tariffs, with significant uncertainty surrounding the magnitude and persistence of these effects [40][41] Monetary Policy Actions - The FOMC decided to maintain the target range for the federal funds rate at 4¼ to 4½ percent, with a majority agreeing to slow the pace of securities holdings reduction [52][57] - The monthly redemption cap on Treasury securities was reduced from $25 billion to $5 billion, while the cap on agency debt and mortgage-backed securities remained at $35 billion [52][57] Economic Projections - Staff projections indicated weaker real GDP growth than previously expected, with the unemployment rate forecast to edge up but remain close to its natural rate [33][34] - The staff's inflation projection was slightly higher for 2025, reflecting higher-than-expected incoming data, with inflation expected to decline to 2% by 2027 [34][35]

Core Viewpoint - Recent indicators suggest that economic activity is expanding at a solid pace, with a stable low unemployment rate and elevated inflation levels [1][2]. Monetary Policy Decisions - The Federal Open Market Committee (FOMC) decided to maintain the federal funds rate target range at 4-1/4 to 4-1/2 percent, with a commitment to support maximum employment and return inflation to a 2 percent objective [3][8]. - The FOMC will slow the pace of decline in its securities holdings, reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion starting in April, while maintaining a cap of $35 billion on agency debt and mortgage-backed securities [3][8]. - The interest rate paid on reserve balances will remain at 4.4 percent, effective March 20, 2025 [8]. Economic Monitoring - The FOMC will continue to assess incoming data and the evolving economic outlook, being prepared to adjust monetary policy if risks emerge that could impede the attainment of its goals [4][5]. - The assessments will consider a wide range of information, including labor market conditions, inflation pressures, and international developments [5]. Voting and Consensus - The monetary policy action was supported by all voting members except Christopher J. Waller, who preferred to maintain the current pace of decline in securities holdings [6].

Core Insights - The Federal Open Market Committee (FOMC) meeting held on March 18-19, 2025, resulted in economic projections for real GDP growth, unemployment rate, and inflation from 2025 to 2027, reflecting participants' assessments of appropriate monetary policy [1][4][5] Economic Projections - Projections for real GDP growth indicate a range of outcomes, with the median expected to change from the previous year [5][44] - The unemployment rate is projected to average in the fourth quarter of each indicated year, with specific percentage changes noted [5][44] - Inflation measures, including PCE inflation and core PCE inflation, are projected as percentage changes from the fourth quarter of the previous year to the fourth quarter of the indicated year [5][44] Monetary Policy Assessment - Each participant's assessment of appropriate monetary policy includes a path for the federal funds rate, with projections for the target range or level at the end of each specified calendar year [5][10][17] - The longer-run projections represent the expected convergence of each variable under appropriate monetary policy and in the absence of further economic shocks [5][44] Uncertainty and Risks - Participants provided assessments of uncertainty and risks surrounding their projections, indicating whether they perceive the risks as balanced, weighted to the upside, or downside [20][24][27] - Historical forecast errors inform the confidence intervals around projections, suggesting a 70% probability that actual outcomes will fall within specified ranges [20][46] Data Visualization - Figures illustrate the medians, central tendencies, and ranges of economic projections for GDP growth, unemployment rate, and inflation from 2025 to 2027 [8][19][26] - The distribution of participants' projections for various economic indicators is visually represented, highlighting the range of views across FOMC members [12][17][25]

National Summary - Overall economic activity rose slightly since mid-January, with six Districts reporting no change, four reporting modest or moderate growth, and two noting slight contractions [10] - Consumer spending was lower on balance, with solid demand for essential goods but increased price sensitivity for discretionary items, particularly among lower-income shoppers [10] - Manufacturing activity exhibited slight to modest increases across a majority of Districts, with concerns over potential trade policy changes [10] - Residential real estate markets were mixed, with ongoing inventory constraints and modest declines in construction activity for both residential and nonresidential units [10] Labor Markets - Employment nudged slightly higher on balance, with four Districts reporting a slight increase and seven reporting no change [11] - Job growth was noted in healthcare and finance, while declines were reported in manufacturing and information technology [11] - Labor availability improved for many sectors, although some sectors experienced a tight labor market [11] - Wages grew at a modest-to-moderate pace, slightly slower than the previous report, with easing wage pressures in several Districts [11] Prices - Prices increased moderately in most Districts, with several reporting an uptick in the pace of increase relative to the previous reporting period [14] - Input price pressures were generally greater than sales price pressures, particularly in manufacturing and construction [14] - Many Districts noted higher prices for food ingredients impacting food processors and restaurants, with substantial increases in insurance and freight transportation costs [14] Highlights by Federal Reserve District - **Boston**: Economic activity increased slowly, with a surge in home sales and modest price increases, but employment declined slightly [15] - **New York**: Regional economic activity was little changed, with slight employment growth and moderate wage growth [16] - **Philadelphia**: Business activity declined slightly, with continued slight employment growth and modest wage and price increases [17] - **Cleveland**: Business activity was flat, with consumer spending down and employment levels remaining unchanged [18] - **Richmond**: The regional economy grew modestly, with consumer spending increasing modestly and manufacturing activity unchanged [19] - **Atlanta**: The economy expanded at a modest pace, with steady employment and modest increases in wages and prices [20] - **Chicago**: Economic activity was little changed, with slight increases in employment and moderate wage growth [21] - **St. Louis**: Economic activity and employment were flat, with moderate price increases above expectations [22] - **Minneapolis**: Economic activity was steady, with moderate wage and price increases [23] - **Kansas City**: Economic activity was unchanged, with moderate price increases and steady employment levels [24] - **Dallas**: The economy expanded moderately, with steady employment and little change in wage and price growth [25] - **San Francisco**: Economic activity ticked down, with stable employment levels and slight price and wage growth [26] Banking and Finance - Banking activity was slightly higher among Districts that reported on it, with some banks noting a decline in demand for loans [10][51] - Small-to-medium-sized banks reported a decline in demand for all loan types, while commercial lending saw a slight increase [89]

Core Points - The Federal Open Market Committee (FOMC) held a meeting on January 28-29, 2025, focusing on monetary policy strategy and economic conditions [3][4][6] - The committee reaffirmed its commitment to a 2 percent inflation target and discussed potential revisions to its monetary policy framework in light of recent economic developments [9][14][50] - Economic activity continued to expand at a solid pace, with the unemployment rate stabilizing at a low level and inflation remaining somewhat elevated [24][69][70] Organizational Matters - New members and alternates of the FOMC were elected, including Jerome H. Powell as Chair and John C. Williams as Vice Chair [4][6] - The Federal Reserve Bank of New York was selected to execute transactions for the System Open Market Account (SOMA) [6][7] Monetary Policy Review - The committee is reviewing its monetary policy framework, focusing on the Statement on Longer-Run Goals and Monetary Policy Strategy, with discussions expected to continue in upcoming meetings [9][15] - The review aims to adapt to evolving economic conditions and enhance transparency and accountability in monetary policymaking [10][11] Economic Conditions - Real GDP rose at a solid pace in 2024, with consumer price inflation measured at 2.4 percent in November, down from 2.7 percent a year earlier [26][27] - Labor market conditions remained solid, with the unemployment rate at 4.1 percent in December and average hourly earnings rising 3.9 percent over the past year [27][28] Financial Market Developments - Broad equity price indexes declined moderately, while credit spreads remained tight [16][17] - The expected path of the federal funds rate indicated a potential quarter-point reduction during 2025, with market expectations shifting towards later rate reductions [17][18] Inflation Outlook - Participants noted that inflation had eased significantly but remained above the 2 percent target, with total PCE prices rising about 2.6 percent over the 12 months ending in December [50][51] - Factors contributing to downward pressure on inflation include easing nominal wage growth and well-anchored longer-term inflation expectations [52][53] Committee Policy Actions - The FOMC decided to maintain the target range for the federal funds rate at 4¼ to 4½ percent, emphasizing the need for further progress on inflation before making additional adjustments [66][71] - The committee will continue to reduce its holdings of Treasury securities and agency debt, while monitoring economic conditions closely [66][67]

Economic Activity - Recent indicators suggest that economic activity has continued to expand at a solid pace [1] - The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid [1] - Inflation remains somewhat elevated [1] Monetary Policy Goals - The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run [2] - The risks to achieving its employment and inflation goals are roughly in balance [2] - The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate [2] Federal Funds Rate - The Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent [3] - The Committee will carefully assess incoming data, the evolving outlook, and the balance of risks for future adjustments [3] - The Committee is committed to supporting maximum employment and returning inflation to its 2 percent objective [3] Monetary Policy Implementation - Effective January 30, 2025, the interest rate paid on reserve balances will be maintained at 4.4 percent [8] - Open market operations will be undertaken as necessary to maintain the federal funds rate in the target range [8] - Standing overnight repurchase agreement operations will have a minimum bid rate of 4.5 percent with an aggregate operation limit of $500 billion [8] - The amount of principal payments from Treasury securities maturing will be rolled over at auction, with a cap of $25 billion per month [8] - Reinvestment of principal payments from agency debt and agency mortgage-backed securities will be capped at $35 billion per month into Treasury securities [8]

The Beige Book Summary of Commentary on Current Economic Conditions by Federal Reserve District January 2025 F E D E R A L R E S E R V E S Y S T E M | About This Publication | | ii | | --- | --- | --- | | National Summary | | 1 | | Federal Reserve Bank of Boston | | 5 | | Federal Reserve Bank of New York | | 8 | | Federal Reserve Bank of Philadelphia | | 12 | | Federal Reserve Bank of Cleveland | | 16 | | Federal Reserve Bank of Richmond | | 20 | | Federal Reserve Bank of Atlanta | | 24 | | Federal Reserve ...

FOMC Minutes of the Federal Open Market Committee December 17–18, 2024 FEDERAL RESERVE SYSTEM Minutes of the Federal Open Market Committee December 17–18, 2024 A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, December 17, 2024, at 10:30 a.m. and continued on Wednesday, December 18, 2024, at 9:00 a.m.1 Developments in Financial Markets and Open Market Operations The manager turned first ...

Economic Projections - The Federal Open Market Committee (FOMC) participants submitted projections for real GDP growth, unemployment rate, and inflation from 2024 to 2027, with longer-run projections based on appropriate monetary policy assumptions [2] - The median projection for real GDP growth in 2024 is 2.5%, with a range of 2.4–2.5%, and the unemployment rate is projected at 4.2%, with a range of 4.2–4.5% [5] - PCE inflation is projected at 2.4% for 2024, with a range of 2.4–2.5%, while core PCE inflation is projected at 2.8%, with a range of 2.8–2.9% [5] Federal Funds Rate Projections - The median projection for the federal funds rate in 2024 is 4.4%, with a range of 4.4–4.6%, and it is expected to decline to 3.0% in the longer run [5] - The September projections for the federal funds rate in 2024 were 4.4%, with a range of 4.4–4.6%, and the longer-run projection was 2.9% [5] Uncertainty and Risks - FOMC participants assessed uncertainty and risks around their economic projections, with some participants judging the uncertainty as "broadly similar" to historical levels [36] - The risks to GDP growth were assessed as "broadly balanced" by some participants, while others viewed them as weighted to the downside or upside [35] - The uncertainty around the federal funds rate projections is significant, with historical confidence intervals being quite wide [80] Historical Projection Errors - The average historical projection error for real GDP growth in 2024 is ±0.8 percentage points, while for the unemployment rate, it is ±0.1 percentage points [76] - The error range for short-term interest rates in 2024 is ±0.1 percentage points, reflecting the uncertainty in forecasting the federal funds rate [76]

Economic Overview - Economic activity has continued to expand at a solid pace, with labor market conditions easing and the unemployment rate remaining low despite a slight increase [1] - Inflation has made progress toward the 2 percent objective but remains somewhat elevated [1] Monetary Policy Goals - The Committee aims to achieve maximum employment and maintain inflation at 2 percent over the longer run [2] - Risks to achieving employment and inflation goals are roughly balanced, with the economic outlook remaining uncertain [2] Federal Funds Rate Adjustment - The Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent [3] - The Committee will continue reducing holdings of Treasury securities, agency debt, and agency mortgage-backed securities [3] Monetary Policy Implementation - The Board of Governors voted unanimously to lower the interest rate paid on reserve balances to 4.4 percent, effective December 19, 2024 [8] - The Federal Open Market Committee directed the Open Market Desk to maintain the federal funds rate in the target range of 4-1/4 to 4-1/2 percent [8] - Standing overnight repurchase agreement operations will be conducted with a minimum bid rate of 4.5 percent and an aggregate operation limit of $500 billion [8] - Standing overnight reverse repurchase agreement operations will be conducted at an offering rate of 4.25 percent with a per-counterparty limit of $160 billion per day [8] Treasury and Agency Securities Management - Principal payments from Treasury securities exceeding $25 billion per month will be rolled over at auction, with coupon securities redeemed up to the monthly cap [8] - Principal payments from agency debt and agency mortgage-backed securities exceeding $35 billion per month will be reinvested into Treasury securities [8] Primary Credit Rate Adjustment - The Board of Governors approved a 1/4 percentage point decrease in the primary credit rate to 4.5 percent, effective December 19, 2024 [10]