FOMC on hold and in no hurry to cut further

Summary

• As universally expected, the FOMC decided at its policy meeting today to keep rates unchanged. The decision to maintain the target range for the federal funds rate at 4.25%–4.50% was universally supported by all 12 voting members of the FOMC.

• The post-meeting statement continued to describe the pace of economic activity as "solid." It also upgraded its characterization of the labor market. Previously, the Committee said that "labor market conditions have generally eased." The FOMC now views labor market conditions as "solid."

• The FOMC continues to characterize inflation as "somewhat elevated."

• In sum, there was little in today's statement to suggest the FOMC is contemplating another rate cut in the near future.

• With the pace of real economic activity holding up and with inflation remaining above target, we think the FOMC will keep rates on hold until the second half of 2025.

FOMC appears to be in little hurry to cut further

As universally expected, the Federal Open Market Committee (FOMC) left its target range for the federal funds rate unchanged at 4.25%–4.50% at the conclusion of its meeting today. Unlike in December, when Cleveland Fed President Beth Hammack dissented from the decision to cut rates by 25 bps—she preferred to keep rates on hold at that meeting—today's decision was unanimously supported by all 12 voting members of the Committee.

The post-meeting statement continued to note that "economic activity has continued to expand at a solid pace." It also stated that "the unemployment rate has stabilized at a low level in recent months." In that regard, the unemployment rate trended up from 3.4% in April 2023 to 4.2% in mid-2024. But it has subsequently leveled off at just over 4%. The statement went on to characterize labor market conditions as "solid." This characterization of the labor market represents an upgrade from the December statement, which said that "labor market conditions have generally eased."

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