Federal Reserve issues FOMC statement,20241218

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]