Federal Reserve System (FED) FOMC Meeting summary

Economic outlook and recent developments

• Economic activity continues to expand at a solid pace, with GDP growth moderating from 3.4% in Q4 2023 to 1.3% in Q1 2024, and underlying demand at 2.8% growth in private domestic final purchases.

• Labor market conditions have returned to pre-pandemic levels, with payroll job gains averaging 218,000 per month in April and May, and unemployment at 4%.

• The overall labor market is strong but gradually cooling, with job creation still robust and unemployment slightly higher than a year ago.

• Consumer spending growth has slowed but remains solid, while investment in equipment and intangibles has picked up.

• Risks to employment and inflation goals have become more balanced, but uncertainty persists.

Inflation trends and projections

• Inflation has eased from a peak of 7% to 2.7%, but remains above the 2% target; core PCE prices rose 2.8% over the past year.

• Recent inflation data were higher than expected earlier in the year, but more recent readings have shown some easing.

• The median projection for total PCE inflation is 2.6% for 2024, 2.3% for 2025, and 2.0% for 2026.

• Inflationary pressures have lessened, but some areas, such as non-housing services and housing, still show elevated readings.

• The Committee remains highly attentive to inflation risks and is committed to returning inflation to 2%.

Monetary policy stance and guidance

• The policy interest rate remains unchanged at 5.25%-5.5%, with a continued reduction in securities holdings.

• The committee does not expect to reduce rates until there is greater confidence that inflation is moving sustainably toward 2%.

• The median projection for the federal funds rate is 5.1% at end-2024, 4.1% at end-2025, and 3.1% at end-2026.

• Policy decisions will remain data-dependent, with a focus on both inflation and labor market developments.

• Holdings of Treasury securities and agency debt will continue to be reduced according to set monthly caps.