Recent indicators suggest that economic activity has maintained a solid pace of growth. The unemployment rate has stabilized at low levels in recent months, indicating that labor market conditions remain robust. Despite these positive trends, inflation is still somewhat elevated, causing concern for policymakers.
The primary objective of the Committee is to achieve maximum employment while keeping inflation at a target rate of 2 percent over the long term. However, uncertainty regarding the economic outlook has increased significantly. The Committee is vigilant about risks that could affect both sides of its dual mandate, which encompasses both employment and inflation.
In support of its economic goals, the Committee has decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. This decision reflects a careful consideration of the incoming economic data, the evolving outlook, and the balance of risks associated with future adjustments.
Furthermore, the Committee is committed to reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities. Beginning in April, there will be a notable change in the pace of these reductions. The monthly redemption cap on Treasury securities will decrease from $25 billion to $5 billion, while the cap on agency debt and agency mortgage-backed securities will remain at $35 billion.
The Committee remains steadfast in its commitment to supporting maximum employment and returning inflation to its 2 percent objective. As part of this effort, they will continuously assess the implications of new information on the economic outlook. The Committee is prepared to adjust its monetary policy stance as necessary if any risks emerge that could hinder the achievement of its goals.
In making their assessments, the Committee will consider a wide range of information, including labor market conditions, inflation pressures, and inflation expectations, as well as financial and international developments. This comprehensive approach ensures that all relevant factors are taken into account when formulating policy decisions.
The monetary policy action was supported by Committee members including Jerome H. Powell (Chair), John C. Williams (Vice Chair), Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Adriana D. Kugler, Alberto G. Musalem, and Jeffrey R. Schmid. However, Christopher J. Waller voted against this action, advocating for no change in the federal funds target range while supporting the continuation of the current pace of decline in securities holdings.
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