Minutes of the Federal Open Market January 28–29, 2025 Committee

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]