Federal Reserve System (FED) FOMC Meeting summary

Economic outlook and labor market

• Economic activity is expanding at a moderate pace, with GDP growth at 1.6% in the first half of the year, down from 2.4% last year, and job gains slowing while unemployment remains relatively low.

• Labor market conditions are gradually cooling, with downside risks to employment increasing and both layoffs and hiring remaining low.

• The slowdown in job creation is attributed to lower immigration, labor force participation, and softer labor demand.

• Consumer spending remains strong among higher-income households, while lower-income consumers are pulling back.

• Uncertainty about the economic outlook is elevated, with downside risks to employment rising in recent months.

Inflation and monetary policy

• Inflation has eased from its mid-2022 highs but remains above the 2% target, with total and core PCE prices rising 2.8% over the past year and inflation increasing since earlier in the year.

• Goods inflation has picked up due to tariffs, while services disinflation continues.

• Near-term inflation expectations have risen, but longer-term expectations remain anchored around 2%.

• Risks to inflation are tilted to the upside in the near term, mainly due to tariffs, but these effects are expected to be temporary.

Monetary policy decisions and implementation

• The FOMC lowered the federal funds rate by 25 basis points to 3.75%-4% and decided to end balance sheet runoff as of December 1, with all principal payments from Treasury and agency securities to be reinvested thereafter.

• Interest rate paid on reserve balances reduced to 3.90 percent, effective October 30, 2025.

• Primary credit rate decreased by 1/4 percentage point to 4.0 percent.

• Open market operations will maintain the federal funds rate within the new target range, with updated procedures for repo and reverse repo operations.