Minutes of the Federal Open Market Committee September 17–18, 2024

Financial Data and Key Indicators Changes - The nominal Treasury yields declined notably, primarily due to weaker-than-expected data releases and policy communications suggesting a reduction in policy restraint [1][3] - The market-implied policy rate path shifted down materially, with expectations of about 100 basis points of cuts through year-end, compared to around 50 basis points previously [3][5] - Consumer price inflation was reported at 2.5% in July, with core PCE inflation at 2.6%, indicating a decrease from earlier rates [11][12] Business Line Data and Key Indicators Changes - Real private domestic final purchases (PDFP) showed stronger growth than GDP, indicating solid underlying economic momentum [13] - Job gains moderated, with average monthly nonfarm payroll gains lower than the previous quarter, and the unemployment rate edged up to 4.2% [12][26] Market Data and Key Indicators Changes - Broad equity prices finished modestly higher, despite a brief episode of elevated market volatility in early August [1][2] - The trade-weighted U.S. dollar index declined modestly as market-implied expectations for year-end policy rates fell for most central banks [6][20] Company Strategy and Development Direction and Industry Competition - The Federal Reserve's strategy includes a commitment to support maximum employment while returning inflation to the 2% objective, reflecting a cautious approach to monetary policy adjustments [42][48] - Participants noted that the economic outlook remains uncertain, with attention to risks on both sides of the dual mandate [42][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that inflation is moving sustainably toward 2%, while acknowledging that economic activity continues to expand at a solid pace [38][42] - Risks to achieving employment and inflation goals were assessed as roughly balanced, with a focus on monitoring labor market conditions closely [37][41] Other Important Information - The Committee unanimously voted to lower the target range for the federal funds rate to 4¾ to 5%, reflecting cumulative developments related to inflation and the balance of risks [43][49] - The next meeting of the Committee is scheduled for November 6-7, 2024, indicating ongoing monitoring of economic conditions [54] Q&A Session All Questions and Answers Question: What is the outlook for inflation? - Almost all participants expressed greater confidence that inflation is moving sustainably toward 2%, citing various factors likely to exert downward pressure on inflation [32][31] Question: How are labor market conditions evolving? - Participants noted that labor market conditions have eased further, with job gains slowing and the unemployment rate rising, but overall conditions remain solid [33][34]