Minutes of the Federal Open Market. November 6–7, 2024

Financial Market Developments - Nominal Treasury yields rose notably due to stronger-than-expected data releases and monetary policy communications signaling a more gradual pace of policy easing [1][23] - Broad equity prices increased, reflecting solid incoming data and lower odds of economic weakening [1][26] - The VIX, which measures equity price volatility, increased leading up to the November elections but decreased afterward [1] Federal Funds Rate and Monetary Policy - The federal funds rate path shifted up notably, with a modal expectation of a 25 basis point cut at the current meeting and another cut in December [2][57] - A large majority of survey respondents expected the end of balance sheet runoff to occur around May 2025, with two-thirds anticipating it in the first or second quarter of 2025 [5][57] - The Committee decided to lower the target range for the federal funds rate by 25 basis points to 4½ to 4¾ percent [57][67] Economic Conditions - Real GDP expanded solidly, with job gains moderating and the unemployment rate remaining low at 4.1 percent in October [15][18] - Consumer price inflation was reported at 2.1 percent in September, with core PCE inflation at 2.7 percent [16] - Labor market conditions remained solid, with average hourly earnings rising 4 percent over the past year [18] International Developments - Policy rate expectations declined in most advanced foreign economies, contributing to an increase in the trade-weighted dollar index [6] - Real GDP growth in foreign economies picked up, particularly in the euro area and Mexico, while inflation abroad continued to ease [20][21] Financial Stability and Credit Conditions - The U.S. financial system's vulnerabilities were characterized as notable, with elevated asset valuation pressures and risks associated with commercial real estate [35][50] - Credit remained available for most consumers, although credit availability tightened moderately through September [32] - Delinquency rates on loans to small businesses remained modestly above pre-pandemic levels, while credit quality for large firms and municipalities remained solid [33]