The FOMC is taking into account the cumulative tightening of monetary policy, the lags with which monetary policy may affect economic activity and inflation and economic and financial developments.
In the coming months, data will need to show that the Fed’s goal of returning inflation to 2% over time can be met. The FOMC statement sets the stage for a pause at the upcoming June FOMC meeting, but ultimately economic data will determine if the terminal federal funds rate has been hit for this cycle. The Committee remains highly attentive to inflation risks. The extent of these effects is uncertain. Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. Inflation, however, still remains elevated. Job gains have been robust in recent months and the unemployment rate has remained low. TopicĮconomic activity expanded at a modest pace in the first quarter.
The Fed continues reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities in 2023 in accordance with its statement released in May 2022. The FOMC replaced prior language that “some additional policy firming” may be warranted, with language that suggests the Federal Reserve (Fed) is now “determining the extent to which additional policy firming may be appropriate”. The Federal Open Market Committee (FOMC or the Committee) increased the federal funds rate by.
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