Federal Reserve System (FED) investor relations material

Policy decision and rationale

• Raised the federal funds rate by 25 basis points to 3.75%-4% to support the dual mandate.

• Decision was unanimous, reflecting strong resolve to achieve price stability.

• Removal of a dose of accommodation to align financial conditions with policy objectives.

• Noted that financial conditions are not yet restrictive, but the move aims to make them more consistent with objectives.

• Emphasized commitment to a disciplined, principle-based approach rather than forward guidance.

Economic outlook and projections

• Economic activity is expanding at a solid pace, with robust capital investment and resilient domestic spending.

• Labor market remains strong, with unemployment steady at 4.1% and job gains matching workforce growth.

• Inflation remains elevated, with total PCE inflation at 3.7% for the year, projected to fall to 2.3% next year.

• Median projection for the federal funds rate is 4.1% at year-end and through next year.

• Inflation risks are to the upside, while labor market risks are balanced.

Inflation and price stability

• Inflation has been above target for over five years, with recent readings showing little improvement.

• Many categories still post price increases above 3% on both six- and 12-month bases.

• Commodity prices and global supply shocks are contributing to inflation pressures.

• The committee's focus is on preventing relative price changes from broadening and keeping inflation expectations anchored.

• Commitment to achieving the 2% PCE inflation objective remains unequivocal.