Fed Chair Powell: We are well positioned to wait and see how the economy evolves

Core Viewpoint - The Federal Reserve has decided to lower the target range for the federal funds rate by a quarter percentage point to 3% to 3.75%, reflecting a balanced approach to managing employment and inflation risks [1][3]. Monetary Policy Adjustments - The committee acknowledges that there are no risk-free paths for policy as it navigates the tension between employment and inflation goals, indicating that the effects of tariffs on inflation are expected to be short-lived [2]. - The recent adjustments to the policy stance are aimed at stabilizing the labor market while allowing inflation to trend down towards the 2% target once tariff effects dissipate [4]. - The median projection for the federal funds rate is 3.4% at the end of 2026 and 3.1% at the end of 2027, remaining unchanged from previous estimates [5]. Implementation of Monetary Policy - The committee has initiated purchases of shorter-term Treasury securities, primarily Treasury bills, to maintain an ample supply of reserves over time, with an initial purchase amount of $40 billion in the first month [6][7]. - The implementation framework indicates that an ample supply of reserves allows the federal funds rate to be primarily controlled by administered rates rather than daily market interventions [8]. - The committee has eliminated the aggregate limit on standing repo operations to support monetary policy implementation and ensure the federal funds rate remains within its target range [8][9]. Commitment to Goals - The Federal Reserve remains committed to achieving maximum employment and stable prices, recognizing the impact of its actions on communities, families, and businesses across the country [9][10].