The pause on interest rate hikes is continuing.
At its meeting Wednesday, the Federal Open Market Committee elected to maintain the target range for federal funds at 5.25 to 5.5 percent. It was the second straight meeting for the FOMC to keep rates steady after aggressively raising rates 525 basis points since early 2022.
“The Committee decided at today’s meeting to maintain the target range for the federal funds rate at 5.25 to 5.5 percent and to continue the process of significantly reducing our securities holdings,” said Jerome Powell, Federal Reserve Chairman. “We are committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation sustainably down to 2 percent over time, and to keeping policy restrictive until we are confident that inflation is on a path to that objective.”
Inflation remains above the target at 3.4 percent in September. The core index, minus food and energy prices, was at 3.7 percent in September. It is down significantly from the 9 percent in the summer of 2022.
“Inflation has moderated since the middle of last year, and readings over the summer were quite favorable,” Powell said. “But a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. The process of getting inflation sustainably down to 2 percent has a long way to go.”
Unemployment remains low at 3.8 percent, with average job gains of 266,000 in the past three months.
“Strong job creation has been accompanied by an increase in the supply of workers,” Powell said. “The labor force participation rate has moved up since late last year, particularly for individuals aged 25 to 54 years, and immigration has rebounded to pre-pandemic levels. Nominal wage growth has shown some signs of easing, and job vacancies have declined so far this year. Although the jobs-to-workers gap has narrowed, labor demand still exceeds the supply of available workers.”
Powell noted the economy has been resilient despite the rate hikes and the continued inflation.
“This has been a resilient economy, and it’s I think been surprising in its resilience and there are a number of possible reasons why that may be. Our job is to achieve maximum employment and price stability and so we take the economy as it comes,” Powell said.
