Date
stringdate 2000-02-02 00:00:00
2025-12-10 00:00:00
| Release Date
stringdate 2000-02-02 00:00:00
2025-12-30 00:00:00
⌀ | Type
stringclasses 2
values | Text
stringlengths 527
95.5k
|
|---|---|---|---|
2025-12-10
|
2025-12-30
|
Minute
|
Minutes of the Federal Open Market Committee
December 9â10, 2025
A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, December 9, 2025, at 9:00 a.m. and continued on Wednesday, December 10, 2025, at 9:00 a.m.1
Developments in Financial Markets and Open Market Operations
The manager turned first to an overview of broad market developments during the intermeeting period. Market participants did not materially change their macroeconomic outlooks and continued to interpret data made available over the intermeeting period as consistent with a resilient economy. Investors' expectations for the path of the policy rate, whether market based or survey based, were little changed, on net, over the period. Market participants and respondents to the Open Market Desk's Survey of Market Expectations (Desk survey) generally expected a 25 basis point reduction in the target range for the federal funds rate at the December FOMC meeting, and the modal outlook from the survey as well as from options pricing implied two additional rate cuts next year.
The manager turned next to developments in Treasury markets and market-based measures of inflation compensation. Treasury yields rose a little over the intermeeting period, on net, but remained within recent ranges. Inflation compensation moved lower over the period, particularly for shorter tenors. The manager attributed the decline in inflation compensation at shorter tenors to lower energy prices as well as a reassessment by some market participants of the likely effect of tariffs on near-term inflation. In contrast to market-based measures of inflation compensation, survey- and model- based measures of inflation expectations were little changed over the intermeeting period.
Broad equity price indexes were volatile but changed little, on net, over the intermeeting period. Equity prices showed sensitivity to economic data and policymaker communications. Developments regarding artificial intelligence (AI) also contributed to the volatility of the stock prices of the largest technology companies. The manager noted that capital expenditures on equipment and infrastructure related to AI by a set of large technology companies accelerated this year and that these firms were increasingly relying on debt to finance such expenditures.
Regarding international developments, the trade-weighted dollar index was little changed over the intermeeting period. Outside forecasters continued to expect that the dollar would depreciate modestly next year. Many of these forecasters expected a larger reduction in policy rates in the U.S. than in other advanced-economy jurisdictions, though their confidence in this view appeared to diminish somewhat in light of the resilience of the U.S. economy.
The manager noted that money market conditions continued to tighten over the intermeeting period and that the staff assessed that conditions were consistent with the level of reserves having declined to the ample region. Rates on Treasury repurchase agreements (repo) remained relatively elevated and volatile over the intermeeting period. Investors attributed firmness in repo rates to a decline in available liquidity and continued large Treasury debt issuance. Higher repo rates, along with a lower level of reserves, continued to contribute to upward pressure on the spread between the effective federal funds rate (EFFR) and the interest rate on reserve balances. The manager noted that the correlation between this spread and the level of reserve balances had risen notably over the past couple of months and that the EFFR had moved up faster than it had during the previous episode of balance sheet runoff. Consistent with elevated repo rates, usage of overnight reverse repo operations remained low, while both the frequency and volume of standing repo operations increased over the intermeeting period. Some other key indicators of reserve ampleness, such as the share of payments by banks occurring later in the day and the share of domestic banks borrowing in the federal funds market, also pointed to ample reserve conditions.
The manager next discussed the expected trajectory of key components of the Federal Reserve's balance sheet. Over the next several months, seasonal fluctuations in nonreserve liabilities were projected to lead to significant declines in reserves at the end of December, in late January, and especially in mid-to-late April if securities holdings in the System Open Market Account (SOMA) were to remain unchanged. The manager noted that the projected fall in reserves in April caused by tax inflows to the Treasury General Account (TGA)âwhich is a Federal Reserve liabilityâwas particularly large and thus judged that reserves were likely to fall below the ample range if the size of the SOMA portfolio were to remain unchanged.
In light of this projected decline in reserves as well as recent developments in money markets, the manager recommended that the Committee consider starting reserve management purchases (RMPs) this month to maintain an ample level of reserves on an ongoing basis. Because of the substantial projected decline in reserves in mid-to-late April, the manager judged that it would be prudent to start RMPs soon, maintain a somewhat elevated pace of net purchases until then, and then decrease the monthly pace substantially thereafter. Respondents to the Desk survey expected RMPs to begin soon. Over one-third of respondents expected RMPs to be announced at this meeting and begin by next month, and most respondents anticipated them to begin before the end of the first quarter of 2026. While the estimated size of expected purchases varied considerably across respondents, on average, respondents anticipated net purchases of about $220 billion over the first 12 months of purchases.
The manager then turned to a discussion of standing repo operations and the essential role they play in supporting the implementation of monetary policy. While usage of these operations had increased recently, there had been days when a large volume of repo trades occurred well above the operations' minimum bid rate, suggesting reluctance by some potential participants to engage in standing repo operations. Market outreach suggested that this reluctance reflected misperceptions about the intended purpose of standing repo operations and that the effectiveness of these operations could be enhanced by Federal Reserve communications that explicitly clarified that the purpose of the operations is to support monetary policy implementation. Market participants also suggested that reluctance to use standing repo operations reflected in part specific operational features, and they offered a number of suggestions to enhance the effectiveness of the operations, such as allowing them to be centrally cleared and eliminating the aggregate limit of $500 billion per day. Given the importance of standing repo operations for monetary policy implementation, the manager proposed to clarify their intended role in official communications, convey the expectation that they would be used when economically sensible, and eliminate their aggregate limit.
By unanimous vote, the Committee ratified the Desk's domestic transactions over the intermeeting period. There were no intervention operations in foreign currencies for the System's account during the intermeeting period.
Special Topic: Balance Sheet Issues
Participants discussed developments in money markets and whether starting RMPs was warranted to maintain reserves at levels consistent with the Committee's ample-reserves framework laid out in its 2019 Statement Regarding Monetary Policy Implementation and Balance Sheet Normalization. With the continued increases in the spreads between money market interest rates and administered rates, as well as some other indicators of tightening money market conditions, participants judged that reserve balances had declined to ample levels. Accordingly, participants assessed that it was appropriate to begin RMPs and initiate purchases of shorter-term Treasury securities to maintain an ample supply of reserves over time.
The discussion was preceded by staff presentations. The staff emphasized that a range of levels of reserve balances was consistent with ample and presented indicators showing that money market conditions pointed to reserves being within the ample range. In particular, the spreads of the EFFR and of other money market rates to the interest rate on reserve balances had increased relatively quickly since mid-September. Additionally, several other indicators of liquidity in short-term funding markets, including the volatility of repo rates and their sensitivity to Treasury coupon issuance, pointed to reserves being within the ample range. The staff emphasized the role that standing repo operations had played in ensuring that the federal funds rate remained within its target range, even on days of elevated demand for nonreserve liabilities. The staff also noted the implications of reserves varying within the ample range for volatility and market functioning in money markets, the size of the Federal Reserve's balance sheet, and the use of standing repo operations.
The staff noted that maintaining ample reserves over time would require the SOMA security portfolio to expand to accommodate trend growth in the demand for reserves and nonreserve liabilities. In addition, under the ample-reserves framework, the size of the SOMA portfolio would need to be sufficient to accommodate significant seasonal variation in the demand for nonreserve liabilities, such as that driven by fluctuations in TGA balances. The staff presented options for how the Desk could structure RMPs to maintain an ample supply of reserves. They noted the benefits of granting the Desk flexibility to adjust the sizes of RMPs in anticipation of or in response to swings in reserve demand and the demand for nonreserve liabilities. The staff also noted that, consistent with the goal of returning to a primarily Treasury portfolio expressed in the Committee's 2022 Principles for Reducing the Size of the Federal Reserve's Balance Sheet and a preference to shift the SOMA portfolio composition toward that of Treasury securities outstanding, RMPs could be conducted primarily in Treasury bills.
Participants agreed that recent money market conditions pointed to reserves being within the ample range and that beginning RMPs would be prudent to maintain a supply of ample reserves. A couple of participants remarked that the recent increase in the spread between the EFFR and the interest rate on reserve balances had been faster than during the Federal Reserve's 2017â19 runoff experience, and a couple of participants observed that triparty repo rates had been averaging somewhat above the interest rate on reserve balances. Participants expressed their preferences for purchases to be in Treasury bills so that the SOMA portfolio composition would begin to shift toward that of Treasury securities outstanding, though no decision was made on the composition of the portfolio in the long run. Policymakers generally emphasized the importance of communicating that RMPs would be made solely to ensure interest rate control and smooth market functioning and had no implications for the stance of monetary policy.
Participants generally agreed that providing the Desk flexibility to adjust the size and timing of RMPs was important because of the significant variation in the demand for Federal Reserve liabilities and the uncertainty surrounding projections of this demand. When discussing how to structure RMPs in light of this variation, several participants emphasized that they preferred to front-load purchases so that the total level of reserves supplied to the market would be enough to manage large anticipated seasonal swings in nonreserve liabilities without having to rely on standing repo operations. Some other participants, however, preferred to limit balance sheet size by conducting RMPs closer to periods of elevated demand for nonreserve liabilities and relying more on standing repo operations to damp upward pressure on rates. Several participants noted that aligning variation in SOMA Treasury bill holdings with variation in nonreserve liabilities would insulate reserve supply from TGA changes, citing research by the Federal Reserve staff.
Participants also discussed the role of standing repo operations and commented on their importance for interest rate control in the ample-reserves regime. Some participants emphasized their preference that standing repo operations play a more active role in rate control, with material usage during periods of elevated pressures in money markets. A couple of participants added that effective standing repo operations may allow for a smaller balance sheet on average. Several participants preferred to rely more on RMPs to maintain an ample level of reserves.
Various participants noted that a more precise definition of "ample" would help clarify the Committee's intentions in implementing an ample-reserves framework. A few participants noted the difficulties of aiming to target an appropriate level of reserves because of the potential shifts in reserve demand. Some participants offered a view that an ample-reserves definition should focus on the level of money market rates in relation to the interest rate on reserve balances, with a few of those participants highlighting that such an approach would avoid some of the challenges of targeting a particular level of reserves given potential shifts in reserve demand. A couple of participants expressed the view that a definition of "ample reserves" that resulted in a larger supply of reserves than necessary to implement the Committee's framework could lead to excessive risk-taking by leveraged investors.
Staff Review of the Economic Situation
The information available at the time of the meeting indicated that real gross domestic product (GDP) had expanded moderately over this year. The unemployment rate had edged up and the pace of payroll employment increases had slowed through September; more recent labor market indicators were consistent with these developments. Consumer price inflation had moved up since earlier in the year and remained somewhat elevated.
The unemployment rate ticked up to 4.4 percent in September, continuing the gradual upward trend seen since the middle of the year. The average monthly pace of total payroll gains continued to be slower in the third quarter than early in the year. Other available labor market indicatorsâsuch as initial claims for unemployment insurance benefits, rates of job openings and layoffs, and survey measures of households' and businesses' perceptions of the balance between labor demand and supplyâwere consistent with a gradual cooling in labor market conditions since September. The employment cost index for total private-sector labor compensation rose 3.5 percent over the 12 months ending in September, and average hourly earnings for all employees increased 3.8 percent over the same 12-month period. Both measures of hourly labor compensation growth were close to their year-earlier rates.
Total consumer price inflationâas measured by the 12âmonth change in the price index for personal consumption expenditures (PCE)âwas 2.8 percent in September. Core PCE price inflation, which excludes changes in consumer energy prices and many consumer food prices, was also 2.8 percent in September. Both total and core PCE price inflation were somewhat higher than earlier in the year. Core services price inflation had moved down, but core goods price inflation had picked up, which the staff largely attributed to the effects of higher tariffs.
The available indicators suggested that real GDP growth was solid in the third quarter, although the average rate of increase over the first three quarters of the year was moderate and slower than its 2024 pace. Real private domestic final purchasesâwhich comprises PCE and private fixed investment spending and which often provides a better signal of underlying economic momentum than does GDPâappeared to have risen faster than GDP over the first three quarters of the year but also had slowed relative to last year. Real goods imports declined in August, reversing the increase in the preceding month, while real goods exports edged down further. The federal government shutdown was expected to reduce real GDP growth around 1 percentage point in the fourth quarter, with a corresponding boost to output growth in the first quarter of 2026.
Foreign economic activity continued to expand at a below-trend pace in the third quarter, with real GDP having contracted in Mexico and Japan and having grown at only a lackluster pace in Europe. By contrast, economic activity in emerging Asia remained robust amid continued strong external demand for high-tech products and Chinese firms having boosted exports to markets other than the U.S.
Headline inflation continued to run near central bank targets in many foreign economies, aided by declines in global energy prices so far this year. Core inflation, however, remained persistently elevated in some economies. A few foreign central banks reduced their policy rates, including the Bank of Canada and the Bank of Mexico, with most others leaving them unchanged.
Staff Review of the Financial Situation
Over the intermeeting period, both the market-implied expected path of the federal funds rate and nominal Treasury yields edged up on net. Changes in nominal yields reflected increases in real yields, while inflation compensation declined a bit, especially at shorter horizons. Broad equity prices were little changed. While the one-month option-implied volatility on the S&P 500 index at one point reached its highest level since early April, it ended the period roughly unchanged. Investment- and speculative-grade corporate bond spreads increased somewhat but remained at low levels.
In foreign financial markets, longer-term yields increased notably over the intermeeting period because of various country-specific factors, including stronger-than-expected employment gains in Canada and rising odds of further monetary policy tightening and fiscal expansion in Japan. In addition, in the euro area, stronger-than-expected data on economic activity and European Central Bank communications regarded as signaling less accommodative policy contributed to rising yields. Foreign equity indexes and the broad dollar index were little changed, on net, over the intermeeting period.
Conditions in U.S. short-term funding markets remained orderly but were generally tighter over the intermeeting period. In secured markets, liquidity conditions were tighter, on average, amid robust Treasury issuance, declining reserve balances in recent months, and month-end pressures. Over the intermeeting period, the average level of reserve balances was around $2.9 trillion, about $500 billion lower relative to the level of reserve balances at the start of the Federal Reserve's balance sheet reductions in June 2022.
In domestic credit markets, conditions for businesses, households, and municipalities were little changed on balance. Financing conditions remained somewhat restrictive for households and small businesses. Meanwhile, large and midsize businesses continued to access credit markets at a solid pace. Credit performance was largely unchanged, with delinquency rates for small businesses, commercial real estate (CRE), and consumer loans remaining elevated. Yields on corporate bonds increased somewhat. Rates on 30-year fixed-rate conforming residential mortgages, as well as yields on non-agency commercial mortgage-backed securities (CMBS), rose moderately.
Credit remained generally available to most businesses, households, and municipalities. Bank loans expanded at a solid pace, and issuance in public and private credit markets was strong, as relatively high interest rates did not appear to significantly restrain borrowing in these markets. By contrast, indicators of credit growth for households and small businesses remained sluggish amid high borrowing costs.
Credit performance was little changed in most markets, and credit quality for corporate bonds and leveraged loans had not shown signs of deterioration following two high-profile bankruptcy filings in the fall. There were no nonfinancial corporate bond defaults in September or October, bringing the 12-month trailing default rate below the 35th percentile of its postâGlobal Financial Crisis distribution. The 12-month trailing default rate for leveraged loans declined a bit in October but remained at an elevated level. Delinquency rates on CRE loans at banks were largely unchanged in the third quarter and remained above pre-pandemic levels, while CMBS delinquency rates had moved sideways since the beginning of the year. Measures of credit performance for household debt were little changed recently.
Staff Economic Outlook
Relative to the forecast prepared for the October meeting, real GDP growth was projected to be modestly faster, on balance, through 2028, primarily reflecting greater projected support from financial market conditions and somewhat stronger expected potential output growth. After 2025, GDP growth was expected to remain above potential through 2028 as the drag from higher tariffs waned and fiscal policy and financial market conditions continued to support spending. As a result, the unemployment rate was expected to decline gradually after this year and reach a level a little below the staff's estimate of the natural rate of unemployment by 2027.
The staff's inflation forecast for 2025 and 2026 was a little lower, on balance, than the one prepared for the October meeting but similar for 2027 and 2028. Tariff increases were expected to continue to put upward pressure on inflation this year and next. Thereafter, inflation was projected to return to its previous disinflationary trend and to reach 2 percent in 2028.
The staff still viewed the uncertainty around the forecast as elevated, given cooling labor market conditions, still-elevated inflation, and the uncertainty about government policy changes and their effects on the economy. Risks around the forecasts for employment and real GDP growth continued to be seen as skewed to the downside, as softening labor market conditions and elevated economic uncertainty raised the risk of a sharper-than-expected weakening in the economy. Risks around the inflation forecast continued to be seen as skewed to the upside, with the upward pressure on inflation this year and nextâafter more than four years of inflation being above 2 percentâraising the possibility that inflation would prove to be more persistent than the staff expected.
Participants' Views on Current Conditions and the Economic Outlook
In conjunction with this FOMC meeting, participants submitted their projections of the most likely outcomes for real GDP growth, the unemployment rate, and inflation for each year from 2025 through 2028 and over the longer run. The projections were based on participants' individual assessments of appropriate monetary policy, including their projections of the federal funds rate. Participants also provided their individual assessments of the level of uncertainty and the balance of risks associated with their projections. The Summary of Economic Projections was released to the public after the meeting.
Participants observed that overall inflation had moved up through September since earlier in the year and remained somewhat above the Committee's 2 percent longer-run goal, but more recent inflation data produced by the government were unavailable. Most participants remarked that core inflation had been pushed up by higher tariffs that boosted goods prices, even as some participants noted that housing services inflation had moved down closer to levels seen during previous periods when inflation was near 2 percent. A couple of participants commented that inflation in some nonmarket services categories had been affected by special factors, and thus were unlikely to provide a clear signal about broader inflationary pressures. A majority of participants remarked that overall inflation had been above target for some time and had not moved closer to the 2 percent objective over the past year.
Regarding the outlook for inflation, participants generally expected inflation to remain somewhat elevated in the near term before moving gradually to 2 percent. Many participants emphasized that they expected that the effects of tariffs on core goods inflation would wane, although some expressed uncertainty about when these effects would diminish or the extent to which tariffs would ultimately be passed through to final goods prices. Some participants stated that their business contacts had reported persistent input cost pressures unrelated to tariffs, although several of these participants noted that weaker demand limited the ability of some firms to raise prices or that business productivity gains might enable some firms to manage these cost pressures. A majority of participants expected continued disinflation in housing services, and a few participants expected continued disinflation in core nonhousing services. Participants generally judged that the risks to inflation remained tilted to the upside, although several participants commented that they considered these upside risks to have decreased. Some participants highlighted the risk that elevated inflation might prove more persistent than expected.
Participants noted that market- and survey-based measures of longer-term inflation expectations remained stable. A few participants remarked that measures of near-term inflation expectations had been elevated earlier in 2025 but had declined from those peaks. Participants emphasized the importance of maintaining well-anchored longer-run inflation expectations to help return inflation to the Committee's 2 percent objective in a timely manner, and some participants noted concerns that a more prolonged period of above-target inflation could risk an increase in longer-run expectations.
With regard to the labor market, participants observed that labor market conditions had continued to soften and that the unemployment rate had edged up in September. Participants reported relying on private-sector and limited government data, as well as information provided by businesses and community contacts, to assess more recent labor market conditions. Most participants remarked that some of the most recent indicators of labor market conditions, including survey-based measures of job availability or reports of planned layoffs, pointed to continued softening. Some participants noted, however, that other indicators, such as weekly initial unemployment insurance claims and measures of job postings, suggested more stability. Several participants commented that lower-income households were especially concerned about their employment prospects. Participants observed that hiring had remained subdued, and some participants pointed to survey-based measures or reports from business contacts that suggested that current hiring plans remained muted. Participants generally viewed the low dynamism in the labor market as reflecting both lower labor demand amid economic uncertainty or efforts by businesses to contain costs and decreased labor supply associated with lower immigration, the aging of the population, or reduced labor force participation.
Participants generally assessed that, under appropriate monetary policy, the labor market likely would stabilize next year but noted that their outlook for the labor market was still quite uncertain, especially amid the delays in the release of government data. Most participants judged that risks to the labor market remained tilted to the downside. Several participants viewed the rise in the unemployment rates for groups historically more sensitive to cyclical changes in economic activity, the possibility that layoffs could push the unemployment rate sharply higher in a low-hiring environment, or the concentration of job gains in a few less cyclically sensitive sectors as potentially signaling greater fragility in the labor market.
Participants observed that overall economic activity appeared to be expanding at a moderate pace. Many participants viewed aggregate consumption spending as solid, although several pointed to signs of some recent slowing. A majority of participants mentioned evidence of stronger spending growth for higher-income households, while lower-income households had become increasingly price sensitive and were making adjustments to their spending in response to the outsized cumulative increase in the prices of basic goods and services over the past several years. A couple of participants remarked that the housing sector showed some signs of stabilizing and that recent declines in mortgage rates would provide support to the sector. Some participants commented that economic activity had also been supported by robust business fixed investment, with several pointing to investment by the technology sector in particular. A couple of participants commented that the agricultural sector continued to face headwinds because of high input costs or reduced capacity in the food processing industry even though prices for many agricultural products had risen over the past year. Several participants noted that there could be swings in measures of economic activity associated with the government shutdown, which could make it more difficult over coming months to determine the underlying trend in growth.
Participants generally anticipated that the pace of economic growth would pick up in 2026 and that, in the medium term, economic activity would expand at about the same pace as potential output. Many participants expected growth to be supported by fiscal policy, changes in regulatory policy, or somewhat favorable financial market conditions. Nevertheless, participants judged that uncertainty about their forecast of real GDP growth remained high. Moreover, a number of participants noted that structural factors such as technological progress and higher productivity growth, possibly reflecting increasing use of AI, could boost economic growth without generating price pressures and could also damp job creation. These participants remarked that it could be difficult in real time to determine the extent to which economic conditions reflect such structural factors as opposed to cyclical ones.
In their consideration of monetary policy at this meeting, participants noted that inflation had moved up since earlier in the year and remained somewhat elevated. Participants further noted that available indicators suggested that economic activity had been expanding at a moderate pace. They observed that job gains had slowed this year and that the unemployment rate had edged up through September. Participants assessed that more recent indicators were consistent with these developments. In addition, they judged that downside risks to employment had risen in recent months.
Against this backdrop, most participants supported lowering the target range for the federal funds rate at this meeting, while some preferred to keep the target range unchanged. A few of those who supported lowering the policy rate at this meeting indicated that the decision was finely balanced or that they could have supported keeping the target range unchanged. Those who favored lowering the target range for the federal funds rate generally judged that such a decision was appropriate because downside risks to employment had increased in recent months and upside risks to inflation had diminished since earlier in 2025 or were little changed. Some of these participants emphasized that lowering the target range for the federal funds rate at this meeting was in line with a forward-looking approach to the pursuit of the Committee's dual-mandate objectives. These participants noted that reducing the policy rate at this meeting would be consistent with the projected decline in inflation over coming quarters while contributing to a strengthening of economic activity in 2026 that would help stabilize labor market conditions after this year's cooling. Those who preferred to keep the target range for the federal funds rate unchanged at this meeting expressed concern that progress toward the Committee's 2 percent inflation objective had stalled in 2025 or indicated that they needed to have more confidence that inflation was being brought down sustainably to the Committee's objective. These participants also noted that longer-term inflation expectations could rise should inflation not return to 2 percent in a timely manner. Some participants who favored or could have supported keeping the target range unchanged suggested that the arrival of a considerable amount of labor market and inflation data over the coming intermeeting period would be helpful in making judgments on whether a rate reduction was warranted. A few participants judged that lowering the federal funds rate target range at this meeting was not justified because data received over the intermeeting period did not suggest any significant further weakening in the labor market. One participant agreed with the need to move toward a more neutral monetary policy stance but preferred lowering the target range by 1/2 percentage point at this meeting.
In considering the outlook for monetary policy, participants expressed a range of views about the restrictiveness of the Committee's policy stance. Most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation declined over time as expected. With respect to the extent and timing of additional adjustments to the target range for the federal funds rate, some participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting. A few participants observed that such an approach would allow policymakers to assess the lagged effects on the labor market and economic activity of the Committee's recent moves toward a more neutral policy stance while also giving policymakers time to acquire more confidence about inflation returning to 2 percent. All participants agreed that monetary policy was not on a preset course and would be informed by a wide range of incoming data, the evolving economic outlook, and the balance of risks.
In discussing risk-management considerations that could bear on the outlook for monetary policy, participants generally judged that upside risks to inflation remained elevated and that downside risks to employment were elevated and had increased since the middle of 2025. Most participants noted that a move toward a more neutral policy stance would help forestall the possibility of a major deterioration in labor market conditions. Many of these participants also judged that the available evidence pointed to a reduced probability that tariffs would lead to persistent inflation pressures. These participants observed that it was appropriate for the Committee to ease its policy stance in response to downside risks to employment, thereby helping to bring the risks to achieving the dual-mandate goals into better balance, and suggested that a move toward a more neutral policy stance at this meeting would leave policymakers well positioned to determine the extent and timing of additional adjustments to the policy rate, with these judgments being based on the incoming data, the evolving outlook, and the balance of risks. By contrast, several participants pointed to the risk of higher inflation becoming entrenched and suggested that lowering the policy rate further in the context of elevated inflation readings could be misinterpreted as implying diminished policymaker commitment to the 2 percent inflation objective. Participants judged that a careful balancing of risks was required and agreed on the importance of well-anchored longer-term inflation expectations in achieving the Committee's dual-mandate objectives.
Committee Policy Actions
In their discussions of the monetary policy decision for this meeting, members agreed that available indicators suggested that economic activity had been expanding at a moderate pace. They also agreed that job gains had slowed this year and that the unemployment rate had edged up through September. Members observed that more recent indicators were consistent with these developments. They noted that inflation had moved up since earlier in the year and remained somewhat elevated. They agreed that the Committee was attentive to the risks to both sides of its dual mandate and that downside risks to employment had risen in recent months.
In support of the Committee's goals and in light of the shift in the balance of risks, nine members agreed to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3-3/4 percent. Three members voted against that decision; two preferred to leave the target range unchanged, while the other preferred to lower the target range 1/2 percentage point. Members agreed that, in considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee would carefully assess incoming data, the evolving outlook, and the balance of risks. All members agreed that the postmeeting statement should relay this judgment about additional rate adjustments and that it also should affirm their strong commitment both to supporting maximum employment and to returning inflation to the Committee's 2 percent objective.
Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would continue to monitor the implications of incoming information for the economic outlook. They would be prepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede the attainment of the Committee's goals. Members also agreed that their assessments would take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
In light of the meeting's discussion of balance sheet considerations, members agreed that reserve balances had declined to ample levels and that the Committee would initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis. They also agreed to remove the aggregate limit on standing repo operations.
At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the SOMA in accordance with the following domestic policy directive, for release at 2:00 p.m.:
"Effective December 11, 2025, the Federal Open Market Committee directs the Desk to:
Undertake open market operations as necessary to maintain the federal funds rate in a target range of 3-1/2 to 3-3/4 percent.
Conduct standing overnight repurchase agreement operations at a rate of 3.75 percent.
Conduct standing overnight reverse repurchase agreement operations at an offering rate of 3.5 percent and with a per-counterparty limit of $160 billion per day.
Increase the System Open Market Account holdings of securities through purchases of Treasury bills and, if needed, other Treasury securities with remaining maturities of 3 years or less to maintain an ample level of reserves.
Roll over at auction all principal payments from the Federal Reserve's holdings of Treasury securities. Reinvest all principal payments from the Federal Reserve's holdings of agency securities into Treasury bills."
The vote also encompassed approval of the statement below for release at 2:00 p.m.:
"Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3-3/4* percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis."
Voting for this action: Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller.
Voting against this action: Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting; and Austan D. Goolsbee and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
Consistent with the Committee's decision to lower the target range for the federal funds rate to 3-1/2 to 3-3/4* percent, the Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on reserve balances to 3.65 percent, effective December 11, 2025. The Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point decrease in the primary credit rate to 3.75 percent, effective December 11, 2025.2
It was agreed that the next meeting of the Committee would be held on TuesdayâWednesday, January 27â28, 2026. The meeting adjourned at 10:30 a.m. on December 10, 2025.
Notation Vote
By notation vote completed on November 18, 2025, the Committee unanimously approved the minutes of the Committee meeting held on October 28â29, 2025.
Attendance
Jerome H. Powell, Chair
John C. Williams, Vice Chair
Michael S. Barr
Michelle W. Bowman
Susan M. Collins
Lisa D. Cook
Austan D. Goolsbee
Philip N. Jefferson
Stephen I. Miran
Alberto G. Musalem
Jeffrey R. Schmid
Christopher J. Waller
Beth M. Hammack, Neel Kashkari, Lorie K. Logan, Anna Paulson, and Sushmita Shukla, Alternate Members of the Committee
Thomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of Richmond, Atlanta, and San Francisco, respectively
Joshua Gallin, Secretary
Matthew M. Luecke, Deputy Secretary
Brian J. Bonis, Assistant Secretary
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel
Richard Ostrander, Deputy General Counsel
Trevor A. Reeve, Economist
Stacey Tevlin, Economist
Beth Anne Wilson, Economist
Shaghil Ahmed, Brian M. Doyle, Eric M. Engen,3 Carlos Garriga, Joseph W. Gruber, William Wascher, and Egon Zakrajšek, Associate Economists
Roberto Perli, Manager, System Open Market Account
Julie Ann Remache, Deputy Manager, System Open Market Account
Jose Acosta, Senior System Engineer II, Division of Information Technology, Board
Sriya Anbil, Group Manager, Division of Monetary Affairs, Board
Alyssa Arute,4 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board
Alessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board
Michael Blume, Principal Software Developer, Division of Monetary Affairs, Board
Camille Bryan, Senior Project Manager, Division of Monetary Affairs, Board
Mark A. Carlson, Senior Adviser, Division of Monetary Affairs, Board
Michele Cavallo, Special Adviser to the Board, Division of Board Members, Board
Stephanie E. Curcuru, Deputy Director, Division of International Finance, Board
Marnie Gillis DeBoer, Senior Associate Director, Division of Monetary Affairs, Board
Laura J. Feiveson, Special Adviser to the Board, Division of Board Members, Board
Andrew Figura, Senior Associate Director, Division of Research and Statistics, Board
Jonas Fisher, Senior Vice President, Federal Reserve Bank of Chicago
Glenn Follette, Associate Director, Division of Research and Statistics, Board
Greg Frischmann, Senior Special Counsel, Legal Division, Board; Special Adviser to the Board, Division of Board Members, Board
Jenn Gallagher, Assistant to the Board, Division of Board Members, Board
Brian Gowen,4 Capital Markets Trading Principal, Federal Reserve Bank of New York
Christopher J. Gust,4 Associate Director, Division of Monetary Affairs, Board
James Hebden, Principal Economic Modeler, Division of Monetary Affairs, Board
Gabriel Herman,4 Quantitative Principal, Federal Reserve Bank of New York
Valerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board
Jane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board
Michael T. Kiley, Deputy Director, Division of Monetary Affairs, Board
Kyungmin Kim,4 Principal Economist, Division of Monetary Affairs, Board
Elizabeth Klee, Deputy Director, Division of Monetary Affairs, Board
Eric J. Kollig, Special Assistant to the Board, Division of Board Members, Board
Anna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond
Andreas Lehnert, Director, Division of Financial Stability, Board
Eric LeSueur,4 Policy and Market Analysis Advisor, Federal Reserve Bank of New York
Kurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board
Logan T. Lewis, Section Chief, Division of International Finance, Board
Laura Lipscomb, Special Adviser to the Board, Division of Board Members, Board
Edith Liu, Section Chief, Division of Monetary Affairs, Board
Benjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board
Andrew Meldrum,4 Associate Director, Division of Monetary Affairs, Board
Jason Miu,4 Associate Director, Federal Reserve Bank of New York
Linsey Molloy,4 Associate Director, Federal Reserve Bank of New York
Raven Molloy, Deputy Associate Director, Division of Research and Statistics, Board
Fernanda Nechio, Vice President, Federal Reserve Bank of San Francisco
Edward Nelson, Senior Adviser, Division of Monetary Affairs, Board
Giovanni Nicolò, Principal Economist, Division of Monetary Affairs, Board
Anna Nordstrom, Head of Markets, Federal Reserve Bank of New York
Alyssa T. O'Connor, Special Adviser to the Board, Division of Board Members, Board
Michael G. Palumbo, Senior Associate Director, Division of Research and Statistics, Board
Matthias Paustian, Assistant Director, Division of Research and Statistics, Board
Paolo A. Pesenti, Director of Monetary Policy Research, Federal Reserve Bank of New York
Caterina Petrucco-Littleton,5 Deputy Associate Director, Division of Consumer and Community Affairs, Board; Special Adviser to the Board, Division of Board Members, Board
Eugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board
Odelle Quisumbing,6 Assistant to the Secretary, Office of the Secretary, Board
Andrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis
William E. Riordan,4 Capital Markets Trading Advisor, Federal Reserve Bank of New York
Romina D. Ruprecht,4 Senior Economist, Division of Monetary Affairs, Board
Zeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board
Donald Keith Sill, Interim Director of Research, Federal Reserve Bank of Philadelphia
James M. Trevino,4 Principal Economic Modeler, Division of Monetary Affairs, Board
Skander J. Van den Heuvel, Associate Director, Division of Financial Stability, Board
Willem Van Zandweghe, Vice President, Federal Reserve Bank of Cleveland
Clara Vega, Deputy Associate Director, Division of Research and Statistics, Board
Annette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board
Jeffrey D. Walker,4 Senior Associate Director, Division of Reserve Bank Operations and Payment Systems, Board
Min Wei, Senior Associate Director, Division of Monetary Affairs, Board
Randall A. Williams, Group Manager, Division of Monetary Affairs, Board
Jonathan Willis, Vice President, Federal Reserve Bank of Atlanta
Rebecca Zarutskie, Senior Vice President, Federal Reserve Bank of Dallas
_______________________
Joshua Gallin
Secretary
1. The Federal Open Market Committee is referenced as the "FOMC" and the "Committee" in these minutes; the Board of Governors of the Federal Reserve System is referenced as the "Board" in these minutes. Return to text
2. In taking this action, the Board approved requests to establish that rate submitted by the Board of Directors of the Federal Reserve Banks of New York, Philadelphia, St. Louis, and San Francisco. The vote also encompassed approval by the Board of Governors of the establishment of a 3.75 percent primary credit rate by the remaining Federal Reserve Banks, effective on December 11, 2025, or the date such Reserve Banks inform the Secretary of the Board of such a request. (Secretary's note: Subsequently, the Federal Reserve Banks of Boston, Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas were informed of the Board's approval of their establishment of a primary credit rate of 3.75 percent, effective December 11, 2025.) Return to text
3. Attended from the discussion of the economic and financial situation through the end of Wednesday's session. Return to text
4. Attended through the discussion of balance sheet issues. Return to text
5. Attended Tuesday's session only. Return to text
6. Attended through the discussion of balance sheet issues and the discussion of monetary policy. Return to text
* On December 30, 2025, shortly after publication, two references to the upper bound of the federal funds rate target range in the HTML version of the December Minutes were corrected from â3-1/4â to â3-3/4â percent. The PDF version of these Minutes was unchanged. Return to text
|
2025-12-10
|
2025-12-10
|
Statement
|
Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-1/2 to 3â3/4 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
The Committee judges that reserve balances have declined to ample levels and will initiate purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves on an ongoing basis.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting; and Austan D. Goolsbee and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
For media inquiries, please email [email protected] or call 202-452-2955.
Implementation Note issued December 10, 2025
|
2025-10-29
|
2025-10-29
|
Statement
|
Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action were Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
For media inquiries, please email [email protected] or call 202-452-2955.
Implementation Note issued October 29, 2025
|
2025-10-29
|
2025-11-19
|
Minute
|
Minutes of the Federal Open Market Committee
October 28â29, 2025
A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, October 28, 2025, at 9:00 a.m. and continued on Wednesday, October 29, 2025, at 9:00 a.m.1
Developments in Financial Markets and Open Market Operations
The manager turned first to an overview of broad market developments during the intermeeting period. Market participants left their macroeconomic outlooks little changed, and they appeared to continue to interpret data made available over the period as consistent with a resilient economy. In line with the stable outlook, investors' expectations for the path of the policy rate, whether market based or survey based, were virtually unchanged over the period. Investors expected a 25 basis point lowering in the target range for the federal funds rate at the October meeting and another 25 basis point lowering at the December meeting, although some uncertainty around the December meeting was evident in responses to the Open Market Desk's Survey of Market Expectations (Desk survey) as well as in market prices.
The manager turned next to developments in Treasury markets and market-based measures of inflation compensation. Treasury yields were little changed, on net, over the period, consistent with stable expectations for the policy rate. Inflation compensation moved lower over the period, particularly for shorter tenors, with staff models attributing these recent movements to temporary factors.
Broad equity indexes continued to rise over the period, with the largest technology companies performing strongly on market participants' optimism about artificial intelligence (AI). The manager noted that rising stock prices were consistent with expectations for continued robust growth in earnings. Corporate bond spreads increased a bit this period but remained low in absolute terms. A couple of well-publicized bankruptcies, as well as some credit losses reported by some banks, led to increased investor scrutiny of credit markets, with investors reportedly closely tracking the riskiest segments of credit markets for signs of weakening and noting the possibility of future losses.
Regarding international developments, the manager noted that the trade-weighted dollar index rose somewhat over the period. Despite its recent appreciation, the dollar remained weaker against all major currencies since the beginning of the year, and outside forecasters continued to expect that the dollar would depreciate modestly over the medium term.
The manager highlighted that recent changes in money market conditions indicated that the level of reserves could be approaching ample. Rates on Treasury repurchase agreements (repo) moved notably higher relative to the interest rate on reserve balances (IORB). Investors attributed this movement to a decline in available liquidity amid ongoing balance sheet runoff and continued large Treasury debt issuance. Higher repo rates induced a fairly rapid increase in the effective federal funds rate (EFFR) relative to the IORB, with signs that the EFFR might increase further. The manager noted this increase was widespread, with many participants paying higher rates in the federal funds market regardless of their reasons for borrowing. Consistent with the move higher in repo rates, the overnight reverse repurchase agreement (ON RRP) facility had seen usage fall to de minimis levels. Meanwhile, the standing repo facility (SRF) was used more frequently over the period, albeit not in large volumes. Pressures in money markets resulted in notable movements in some other indicators of reserve ampleness. For example, payments by banks shifted to later in the day, suggesting that banks may have been economizing on reserves. In addition, the share of domestic banks borrowing in the federal funds market increased. The estimated elasticity of the EFFR with respect to changes in the supply of reserves was stable during the period. That outcome, however, was likely due to the aftereffects of the debt ceiling resolution, which likely affected the estimated elasticity. A related concept, the elasticity of repo rates to changes in repo volumes, increased significantly since late August.
The manager recommended that the Committee consider stopping the runoff of the System Open Market Account (SOMA) portfolio soon. Continuing runoff would imply that volatility in money markets likely would continue to intensify. He noted that excessive money market rate volatility would pose risks to both the control of the policy rate and the stability of funding in the repo market, which in turn could affect the stability of the U.S. Treasury market. The manager also noted that further reductions in the size of the portfolio may prove short lived because they would bring forward the time when the Desk would need to restart purchases of securities to maintain ample reserves.
The manager next discussed the expected trajectory of the balance sheet. Respondents to the Desk survey had come to expect an earlier date for the end of portfolio runoff. Market outreach suggested further revisions to expectations in the week after the survey concluded, and the staff estimated that if respondents had been asked more recently, almost half would have said they expected the Committee to announce an end to runoff at this meeting.
In the absence of material take-up at the ON RRP facility, and assuming balance sheet runoff would end, the staff estimated that reserves would continue to gradually decline amid projected increases in other Federal Reserve liabilities. At times, such as during quarter- and year-ends and tax dates, reserves were projected to dip to quite low levels. Against this backdrop, the staff would continue to monitor indicators of reserve conditions closely.
The manager noted that the Desk would begin using a new trading platform in the near future to conduct its repo and reverse repo operations, with other operations to follow in coming quarters. In addition, he informed the Committee that there were no intervention operations in foreign currencies for the SOMA during the intermeeting period.
By unanimous vote, the Committee ratified the Desk's domestic transactions over the intermeeting period.
Special Topic: The Standing Repo Facility
The staff provided background on the SRF, including potential benefits and costs of central clearing for SRF transactions. The main potential benefit mentioned was greater effectiveness of the SRF in helping to maintain control of the federal funds rate. Central clearing could increase counterparties' willingness to use the SRF when there is upward pressure on repo rates, which would damp pressures on the federal funds rate. The main potential costs mentioned were increased systemic importance of providers of central clearing, the potential for central clearing of the SRF to enable greater nonbank leverage in the Treasury market, and the expansion of the Federal Reserve's footprint in financial markets.
Most participants commented on the potential for central clearing of SRF transactions.2 Among those who commented, almost all noted that the SRF supports the effective implementation and transmission of monetary policy as well as smooth market functioning, and that central clearing of SRF transactions could improve the effectiveness of the facility. A few participants raised concerns about risks associated with centrally clearing the SRF, including increased systemic importance of providers of central clearing. Participants who commented generally supported further study of central clearing of SRF transactions.
Special Topic: Balance Sheet Issues
The FOMC's "Plans for Reducing the Size of the Federal Reserve's Balance Sheet," announced in May 2022, indicated that the Committee intended to cease balance sheet runoff when reserve balances are judged to be somewhat above a level consistent with ample reserves. Since then, the size of the Federal Reserve's balance sheet had declined substantially. In addition, money market conditions had tightened recently, which suggested that reserve balances may be moving closer to ample. In light of these developments, participants discussed whether to stop balance sheet runoff soon and what the maturity composition of the SOMA Treasury portfolio (SOMA portfolio) should be in the longer run. Views on the latter would guide the investment of principal payments received on the Federal Reserve's holdings of agency securities as well as the composition of securities to be purchased once reserve management purchases would be needed. Consequently, participants agreed that their discussions at this meeting would help inform the Committee's future decisions regarding the long-run composition of the SOMA portfolio.
The participants' discussion was preceded by a staff presentation. The staff reviewed the composition of the SOMA portfolio and provided some considerations regarding the SOMA portfolio's long-run composition, including issues related to market functioning, potential macroeconomic implications, interactions with the Treasury's management of the federal debt, monetary policy implementation, and the Federal Reserve's net income. The presentation noted that the current share of Treasury bills in the SOMA portfolio was smaller than the bill share of total Treasury securities outstanding. The staff also noted that if the Committee preferred a SOMA portfolio with a proportional or greater share of Treasury bills relative to total outstanding, policymakers could wait to make that decision because the current share of Treasury bills in the portfolio was small and the monthly amounts of principal payments received on the Federal Reserve's holdings of agency securities that would need to be reinvested once balance sheet runoff stopped were modest.
Participants agreed that the recent tightening in money market conditions indicated that it would soon be appropriate to end balance sheet runoff and that reinvestments of principal payments received on agency securities holdings should be directed into Treasury bills. Various participants highlighted the need to continue to monitor money market conditions. Participants also agreed that a larger share of Treasury bills than the current portfolio allocation would be desirable in the long run. A larger share of Treasury bills would shift the SOMA portfolio composition toward that of Treasury securities outstanding. Many participants indicated that a greater share of Treasury bills could provide the Federal Reserve with more flexibility to accommodate changes in the demand for reserves or changes in nonreserve liabilities and thereby help to maintain an ample level of reserves. Several participants also noted that a greater share of Treasury bills could increase flexibility for future monetary policy accommodation without having to raise the level of reserves. The majority of participants indicated that a larger share of Treasury bills would also reduce Federal Reserve income volatility.
Some participants indicated that during a transition phase, purchases to reach a larger share of Treasury bills in the SOMA portfolio could reduce the availability of short-term Treasury securities to the private sector and potentially affect market functioning. They thus favored a measured approach to purchasing Treasury bills. A couple of other participants noted the absence of market functioning problems in past episodes when purchases focused on Treasury bills. A number of participants noted that the expected pace of paydowns of agency securities in the near term was around only $15 billion to $20 billion per month, and that redirecting these proceeds into Treasury bills once balance sheet runoff ended likely would not adversely affect market functioning.
Overall, most participants favored a long-run composition of the SOMA portfolio that matched the composition of Treasury securities outstanding, indicating that a proportional allocation would provide enough flexibility and may be simpler to communicate. Some participants indicated that they favored a larger-than-proportional share of Treasury bills, citing the benefits of having even greater flexibility than available under a proportional allocation. Various participants noted that it was not necessary to decide on the long-run composition of the SOMA portfolio at this time, as the shift toward a long-run composition would take place over a number of years.
Staff Review of the Economic Situation
The information available at the time of the meeting indicated that growth of real gross domestic product (GDP) had moderated over the first half of the year. Information on the labor market was limited by the federal government shutdown; however, available indicators were consistent with a continued gradual cooling in the labor market without any evidence of a sharp deterioration. Consumer price inflation had moved up since earlier in the year and remained somewhat elevated.
Total consumer price inflationâas measured by the 12-month change in the price index for personal consumption expenditures (PCE)âwas estimated to have been 2.8 percent in September based on data from the consumer price index. Core PCE price inflation, which excludes changes in consumer energy prices and many consumer food prices, was also estimated to have been 2.8 percent in September. These estimates implied that total PCE price inflation had risen 0.5 percentage point relative to a year ago and that core PCE inflation was unchanged from its year-earlier rate.
Real GDP posted a strong gain in the second quarter following a decline in the first quarter, although the average increase over the first half of the year was slower than the average pace seen over 2024. Real private domestic final purchases (PDFP)âwhich comprises PCE and private fixed investment and which often provides a better signal of underlying economic momentum than GDPâhad risen faster than GDP over the first half but had also slowed relative to its 2024 rate of increase. PDFP growth appeared to have continued at a solid pace in the third quarter, though the government shutdown had reduced the amount of data that was available to gauge third-quarter economic activity. Available data suggested that net exports positively contributed to GDP growth in the third quarter. After falling sharply in the second quarter and then rising somewhat in July, real imports of goods appeared to have resumed falling in August. U.S. real goods exports appeared to have declined moderately in August after having increased modestly in the first half of the year. The government shutdown was expected to reduce GDP growth for as long as it continued, with a corresponding boost to growth once the government reopened and government production and purchases returned to normal levels.
Recent activity indicators suggested that foreign real GDP growth slowed in the third quarter relative to the first half of the year. Growth in China softened amid fading fiscal stimulus and a persistent property-sector downturn, while indicators in Europe continued to point to subdued activity. Slower foreign growth was driven in part by weaker exports due to reduced U.S. demand and lower investment due to elevated uncertainty, likely reflecting the effects of the U.S. tariffs. Growth in some foreign economies, especially in Mexico and parts of Asia, was supported by continued strong demand for high-tech products, originating primarily from the U.S.
Headline inflation was near central banks' targets in many foreign economies, aided by declines in global energy prices. However, core inflation remained elevated in some economies, notably Brazil, Mexico, and the U.K. By contrast, inflation in China continued to be subdued. In response to lackluster economic activity, some foreign central banksâincluding the Bank of Canada, the Sveriges Riksbank, and the Bank of Mexicoâcut their policy rates further over the intermeeting period.
Staff Review of the Financial Situation
Over the intermeeting period, both the market-implied expected path of the federal funds rate through the end of 2026 and nominal Treasury yields were little changed on net. At short maturities, real yields rose somewhat as measures of inflation compensation decreased amid declines in oil prices. At longer maturities, real yields and inflation compensation were little changed on net.
Broad equity price indexes increased moderately, boosted by technology firms with positive earnings news and AI-related investor optimism. Credit spreads were little changed, on net, and remained very low by historical standards. The one-month option-implied volatility on the S&P 500 index was largely unchanged, on net, and remained near the median of its historical distribution.
Risk appetite in foreign financial markets was generally strong. On net, foreign equity indexes were moderately higher, and technology stocks outperformed in several economies, largely reflecting continued investor optimism regarding AI. Market-based policy expectations and longer-term yields declined in most major advanced foreign economies, in part because of weak economic data. By contrast, yields in Japan rose amid political developments that led to expectations for increased fiscal spending. The broad dollar index increased modestly, primarily driven by the relative strength of U.S. economic data.
Conditions in U.S. short-term funding markets tightened materially over the intermeeting period but remained orderly. Late in the period, the spread between the EFFR and the IORB reached the narrowest level since the runoff of the Federal Reserve's balance sheet began in 2022. The Secured Overnight Financing Rate occasionally printed above the minimum bid rate at the SRF, and SRF take-up occurred on several days. The average usage of the ON RRP facility fell to its lowest level since 2021. Taken together, these developments suggested that reserve balances were moving closer to ample levels.
In domestic credit markets, borrowing costs of businesses, households, and municipalities remained significantly lower than the highs observed in 2023 but elevated relative to their average postâGlobal Financial Crisis levels. Yields on corporate bonds and leveraged loans edged down. Rates on 30-year fixed-rate conforming residential mortgages were little changed on net. Yields on commercial mortgage-backed securities (CMBS) moved up modestly. Interest rates on credit card accounts edged up a touch in August.
Credit remained generally available but relatively tight for small businesses. Issuance of corporate bonds, leveraged loans, and private credit was robust in recent months. Core loans on banks' books continued to increase in the third quarter, driven primarily by strong growth in commercial and industrial (C&I) lending. In the residential mortgage market, credit remained easily available for high-credit-score borrowers but less so for low-score borrowers. Consumer credit remained generally available for most households.
Banks in the October Senior Loan Officer Opinion Survey on Bank Lending Practices reported, on net, an easing in bank lending conditions on C&I loans for large firms and those with low exposures to international trade. Banks also eased standards for commercial real estate loans, credit cards, and auto loans over the third quarter. The overall level of bank lending standards aggregated across all loan categories was estimated to be around the median level observed since 2011.
Credit quality was generally stable at levels somewhat weaker than during the pre-pandemic period. The credit performance of corporate bonds, leveraged loans, and private credit remained stable. The use of distressed exchanges among leveraged loan borrowers and payment-in-kind interest among private credit borrowers, however, remained elevated. Delinquency rates on small business loans continued to be moderately above pre-pandemic levels, and those on CMBS remained elevated through September. Delinquency rates on most mortgage loan types, by contrast, stayed near historical lows. Credit card delinquency rates inched down in September, while auto loan delinquency rates ticked up, and both rates stood above their pre-pandemic levels.
The staff provided an updated assessment of the stability of the U.S. financial system and, on balance, continued to characterize the system's financial vulnerabilities as notable. The staff judged that asset valuation pressures were elevated. For public equities, price-to-earnings ratios stood at the upper end of their historical distribution. Nonprice indicators, such as the number of newly launched leveraged exchanged-traded products, also reflected high and broad-based investor demand for risky assets.
Vulnerabilities associated with nonfinancial business and household debt were characterized as moderate. Corporate debt grew modestly over the past few years, and household balance sheets remained strong. The rapid growth of private credit moderated somewhat, but recent bankruptcies raised concerns about credit quality and hidden leverage in this market. House prices remained high but flattened out in the past year, and the likelihood of severe distress among mortgage borrowers appeared to be notably lower than following the previous period of elevated house prices, in part because of stronger underwriting standards and near historical highs for homeowners' equity.
Vulnerabilities associated with leverage in the financial sector were characterized as notable. Hedge fund leverage, on average, remained elevated and increased further, driven by both a shift toward more leveraged strategies and an increase in leverage within strategies. Available data suggested that hedge fund exposure to Treasury markets doubled over the past two years. By contrast, banks remained resilient, with high regulatory capital ratios and improved funding structure, although their market-adjusted capital ratios remained depressed and sensitive to long-term interest rates.
Vulnerabilities associated with funding risks were characterized as moderate. The amount of total short-run funding instruments and cash management vehicles as a fraction of GDP grew in recent years but remained in the middle of its historical range. The total market capitalization of stablecoins, some of which may be vulnerable to runs, grew significantly in the past two years.
Staff Economic Outlook
Relative to the forecast prepared for the September meeting, real GDP growth was projected to be modestly stronger, on balance, through 2028, reflecting stronger expected potential output growth and greater projected support from financial conditions. GDP growth after 2025 was expected to remain above potential until 2028 as the drag from higher tariffs waned, with financial conditions becoming a tailwind for spending. As a result, the unemployment rate was expected to decline gradually after this year before flattening out at a level slightly below the staff's estimate of the natural rate of unemployment.
The staff's inflation forecast was broadly similar to the one prepared for the September meeting, with tariff increases expected to put upward pressure on inflation in 2025 and 2026. Thereafter, inflation was projected to return to its previous disinflationary trend.
The staff continued to view the uncertainty around the forecast as elevated, citing a cooling labor market, still-elevated inflation, heightened uncertainty about government policy changes and their effects on the economy, and the limited availability of data caused by the government shutdown. Risks around the employment and GDP forecasts continued to be seen as skewed to the downside, as elevated economic uncertainty and a cooling labor market raised the risk of a sharper-than-expected weakening in labor market conditions and output growth. Risks around the inflation forecast continued to be seen as skewed to the upside, as the elevated levels of some measures of expected inflation and more than four consecutive years of actual inflation above 2 percent raised the possibility that this year's projected rise in inflation would prove to be more persistent than the staff anticipated.
Participants' Views on Current Conditions and the Economic Outlook
In their discussion of inflation, participants observed that overall inflation had moved up since earlier in the year and remained somewhat above the Committee's 2 percent longer-run goal. Participants generally noted that core inflation had remained elevated, as disinflation in housing services had been more than offset by higher goods inflation, reflecting in part the effects of tariff increases implemented earlier in the year. Several participants observed that, setting aside their estimates of tariff effects, inflation was close to the Committee's target. Many participants, however, remarked that overall inflation had been above target for some time and had shown little sign of returning sustainably to the 2 percent objective in a timely manner.
Participants generally expected inflation to remain somewhat elevated in the near term before moving gradually to 2 percent. Several participants pointed to the persistence in core nonhousing services inflation as a factor that may keep overall inflation above 2 percent in the near term. Many participants expected some additional pickup in core goods inflation over the next few quarters, driven in part by further pass-through of tariffs to firms' pricing. Several participants expressed uncertainty about the timing and magnitude of tariff-related price effects, noting that some businesses were reportedly waiting to adjust prices until tariff policies seemed more settled. Drawing on reports from their District contacts, several participants remarked that businesses, including those not directly affected by tariffs, indicated that they planned to raise prices gradually in response to higher tariff-related input costs. A few participants suggested that potential recent productivity gains achieved through automation and AI may help businesses support their profit margins and limit the extent to which cost increases are passed on to consumers. A few participants commented that the softer labor market would likely help keep inflationary pressures in check. A couple of participants noted that recent changes in immigration policies would lessen housing demand and strengthen the disinflation in housing services prices.
Participants generally noted that most measures of short-term inflation expectations had eased somewhat from their peaks earlier in the year and that most survey-based and market-based measures of longer-term inflation have shown little net change since the end of last year, which suggested that longer-term inflation expectations remained well anchored. Participants emphasized the importance of maintaining well-anchored inflation expectations to help return inflation to the Committee's 2 percent objective in a timely manner, and many noted concerns that the prolonged period of above-target inflation could risk an increase in longer-term expectations.
With regard to the labor market, participants observed that the data available before the government shutdown indicated that job gains had slowed this year and that the unemployment rate had edged up but remained low through August. Participants commented on the lack of the Employment Situation report for September during this intermeeting period and reported relying on private-sector and limited government data, as well as information provided by businesses and community contacts, to assess labor market conditions. Participants pointed to recent available indicators, including survey-based measures of job availability, as being consistent with layoffs and hiring having remained low as well as a labor market that had gradually softened through September and October but had not sharply deteriorated. Participants generally attributed the slowdown in job creation to both reduced labor supplyâstemming from lower immigration and labor force participationâand less labor demand amid moderate economic growth and elevated uncertainty. Many participants remarked that structural factors such as investment related to AI and other productivity-enhancing technologies may be contributing to softer labor demand.
Regarding the outlook for the labor market, participants generally expected conditions to soften gradually in coming months and the labor market to remain less dynamic than earlier in the year, with businesses reluctant to add workers but also hesitant to lay off employees. Several participants described the lack of job turnover and hesitancy among businesses to add jobs as adding downside risks to the labor market, noting that a further weakening in labor demand could push the unemployment rate sharply higher. A few participants viewed the rise in the unemployment rates for groups historically more sensitive to cyclical changes in economic activity, or the concentration of job gains in less-cyclical sectors, as signaling potential broader labor market weakness. Some participants noted the apparent divergence between subdued job growth and moderate GDP growth, with several suggesting that this pattern might persist over time as advances in AI boost productivity growth while demographic factors constrain labor supply.
Participants noted that available indicators suggested that economic activity appeared to have been expanding at a moderate pace, although a number of participants observed that the lack of government-provided spending data since the shutdown made it challenging to gauge the more recent strength of overall activity. Participants generally noted that consumer spending had shown signs of firming in recent months after the slowdown observed early in the year. Many participants, however, remarked on a divergence in spending patterns across income groups, noting that consumption growth appeared to be disproportionately supported by higher-income households benefiting from strong equity markets, while lower-income households demonstrated increased price sensitivity and spending adjustments in response to high prices and elevated economic uncertainty. A couple of participants expressed concern about the relatively narrow base of support for consumption growth, noting the potential vulnerability should high-income consumer spending weaken. A couple of participants mentioned continued weakness in the housing market, despite some recent signs of stabilization, and that housing-affordability challenges remained a significant constraint on the sector.
Regarding the business sector, many participants highlighted strong investment in technology, particularly spending related to AI and data centers. Some participants suggested that those investments could boost productivity and thus aggregate supply. A few participants noted that lower business taxes or further expected easing in government regulations would likely support business activity and productivity growth over time. Some participants remarked that financial conditions were supportive of economic activity. A few participants mentioned the persistent headwinds facing the agricultural sector from compressed profit margins due to low crop prices, elevated input costs, and retrenched demand from abroad.
Participants generally judged that uncertainty about the economic outlook remained elevated. Participants saw risks to both sides of the Committee's dual mandate, with many indicating that downside risks to employment had increased since earlier in the year, as the unemployment rate ticked up and the pace of job gains slowed, leaving the labor market more susceptible to any negative shock. Many participants continued to see upside risks to their inflation outlook, pointing to the possibility that elevated inflation could prove more persistent than currently expected even after the effects of this year's tariff increases fade. A few participants remarked on the risk that trade tensions could disrupt global supply chains and weigh on overall economic activity. Many participants observed that the divergence between solid economic growth and weak job creation created a particularly challenging environment for policy decisions, requiring careful monitoring of incoming data to distinguish between cyclical weakness and structural changes in the relationship between output and employment. When discussing uncertainty, various participants expressed concern about the potential effect of a prolonged government shutdown, both on near-term economic activity and on the ability to accurately assess economic conditions because of limitations to the availability of federal government data. Several participants, however, remarked that other private and public indicators, as well as information in the Beige Book and obtained from District contacts, continued to provide useful signals about economic conditions.
In their discussion of financial stability, a number of participants pointed to some recent failures of firms involved in nonbank credit activity. These participants suggested that there were various reasons for concern about developments in the private credit sector, which included risks related to loan quality, the sector's funding practices, poor underwriting and collateral practices, banks' exposure to the sector, and the possibility of the transmission of strains in the sector to the real economy. A few participants noted that recent years' growth in private credit was an example of traditional financial activity moving outside the existing U.S. regulatory framework. Some participants commented on stretched asset valuations in financial markets, with several of these participants highlighting the possibility of a disorderly fall in equity prices, especially in the event of an abrupt reassessment of the possibilities of AI-related technology. A couple of participants cited risks associated with high levels of corporate borrowing.
In their consideration of monetary policy at this meeting, participants noted that inflation had moved up since earlier in the year and remained somewhat elevated. Participants further noted that available indicators suggested that economic activity had been expanding at a moderate pace. They observed that job gains had slowed this year and that the unemployment rate had edged up but remained low through August. Participants assessed that more recent indicators were consistent with these developments. In addition, they judged that downside risks to employment had risen in recent months. Against this backdrop, many participants were in favor of lowering the target range for the federal funds rate at this meeting, some supported such a decision but could have also supported maintaining the level of the target range, and several were against lowering the target range. Those who favored or could have supported a lowering of the target range for the federal funds rate toward a more neutral setting generally observed that such a decision was appropriate because downside risks to employment had increased in recent months and upside risks to inflation had diminished since earlier this year or were little changed. Those who preferred to keep the target range for the federal funds rate unchanged at this meeting expressed concern that progress toward the Committee's inflation objective had stalled this year, as inflation readings increased, or that more confidence was needed that inflation was on a course toward the Committee's 2 percent objective, while also noting that longer-term inflation expectations could rise should inflation not return to 2 percent in a timely manner. One participant agreed with the need to move toward a more neutral monetary policy stance but preferred a 1/2 percentage point reduction at this meeting. In light of their assessment that reserve balances had reached or were approaching ample levels, almost all participants noted that it was appropriate to conclude the reduction in the Committee's aggregate securities holdings on December 1 or that they could support such a decision.
In considering the outlook for monetary policy, participants expressed a range of views about the degree to which the current stance of monetary policy was restrictive. Some participants assessed that the Committee's policy stance would be restrictive even after a potential 1/4 percentage point reduction in the policy rate at this meeting. By contrast, some participants pointed to the resilience of economic activity, supportive financial conditions, or estimates of short-term real interest rates as indicating that the stance of monetary policy was not clearly restrictive. In discussing the near-term course of monetary policy, participants expressed strongly differing views about what policy decision would most likely be appropriate at the Committee's December meeting. Most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate as the Committee moved to a more neutral policy stance over time, although several of these participants indicated that they did not necessarily view another 25 basis point reduction as likely to be appropriate at the December meeting. Several participants assessed that a further lowering of the target range for the federal funds rate could well be appropriate in December if the economy evolved about as they expected over the coming intermeeting period. Many participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for the rest of the year. All participants agreed that monetary policy was not on a preset course and would be informed by a wide range of incoming data, the evolving economic outlook, and the balance of risks.
In discussing risk-management considerations that could bear on the outlook for monetary policy, participants generally judged that upside risks to inflation remained elevated and that downside risks to employment were elevated and had increased since the first half of the year. Many participants agreed that the Committee should be deliberate in its policy decisions against the backdrop of these two-sided risks and reduced availability of key economic data. Most participants suggested that, in moving to a more neutral policy stance, the Committee was helping forestall the possibility of a major deterioration in labor market conditions. Many of these participants also judged that, with more evidence having accumulated that the effect on overall inflation of this year's higher tariffs would likely be limited, it was appropriate for the Committee to ease its policy stance in response to downside risks to employment. Most participants noted that, against a backdrop of elevated inflation readings and a very gradual cooling of labor market conditions, further policy rate reductions could add to the risk of higher inflation becoming entrenched or could be misinterpreted as implying a lack of policymaker commitment to the 2 percent inflation objective. Participants judged that a careful balancing of risks was required and agreed on the importance of well-anchored longer-term inflation expectations in achieving the Committee's dual-mandate objectives.
Committee Policy Actions
In their discussions of monetary policy for this meeting, members agreed that available indicators suggested that economic activity had been expanding at a moderate pace. They also agreed that job gains had slowed this year and that the unemployment rate had edged up but remained low through August. Members observed that more recent indicators were consistent with these developments. They noted that inflation had moved up since earlier in the year and remained somewhat elevated. They agreed that the Committee was attentive to the risks to both sides of its dual mandate and that downside risks to employment had risen in recent months.
In support of the Committee's goals and in light of the shift in the balance of risks, almost all members decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent. Two members voted against that decision. One of these members preferred to lower the target range 1/2 percentage point, while the other member preferred to leave the target range unchanged. Almost all members agreed to conclude the reduction of the Committee's securities holdings on December 1. One member who voted against the Committee's policy rate decision at the meeting also preferred an immediate end to balance sheet runoff. Members agreed that, in considering additional adjustments to the target range for the federal funds rate, the Committee would carefully assess incoming data, the evolving outlook, and the balance of risks. All members agreed that the postmeeting statement should affirm their strong commitment both to supporting maximum employment and to returning inflation to the Committee's 2 percent objective.
Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would continue to monitor the implications of incoming information for the economic outlook. They would be prepared to adjust the stance of monetary policy if risks emerged that could impede the attainment of the Committee's goals. Members also agreed that their assessments would take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the SOMA in accordance with the following domestic policy directive, for release at 2:00 p.m.:
"Effective October 30, 2025, the Federal Open Market Committee directs the Desk to:
Undertake open market operations as necessary to maintain the federal funds rate in a target range of 3-3/4 to 4 percent.
Conduct standing overnight repurchase agreement operations with a minimum bid rate of 4.0 percent and with an aggregate operation limit of $500 billion.
Conduct standing overnight reverse repurchase agreement operations at an offering rate of 3.75 percent and with a per-counterparty limit of $160 billion per day.
Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in October and November that exceeds a cap of $5 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap. Beginning on December 1, roll over at auction all principal payments from the Federal Reserve's holdings of Treasury securities.
Reinvest the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities (MBS) received in October and November that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding. Beginning on December 1, reinvest all principal payments from the Federal Reserve's holdings of agency securities into Treasury bills.
Allow modest deviations from stated amounts for reinvestments, if needed for operational reasons."
The vote also encompassed approval of the statement below for release at 2:00 p.m.:
"Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments."
Voting for this action: Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller.
Voting against this action: Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting.
Consistent with the Committee's decision to lower the target range for the federal funds rate to 3-3/4 to 4 percent, the Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on reserve balances to 3.90 percent, effective October 30, 2025. The Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point decrease in the primary credit rate to 4.0 percent, effective October 30, 2025.3
It was agreed that the next meeting of the Committee would be held on TuesdayâWednesday, December 9â10, 2025. The meeting adjourned at 10:20 a.m. on October 29, 2025.
Notation Vote
By notation vote completed on October 7, 2025, the Committee unanimously approved the minutes of the Committee meeting held on September 16â17, 2025.
Attendance
Jerome H. Powell, Chair
John C. Williams, Vice Chair
Michael S. Barr
Michelle W. Bowman
Susan M. Collins
Lisa D. Cook
Austan D. Goolsbee
Philip N. Jefferson
Stephen I. Miran
Alberto G. Musalem
Jeffrey R. Schmid
Christopher J. Waller
Beth M. Hammack, Neel Kashkari, Lorie K. Logan, Anna Paulson, and Sushmita Shukla, Alternate Members of the Committee
Thomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of Richmond, Atlanta, and San Francisco, respectively
Joshua Gallin, Secretary
Matthew M. Luecke, Deputy Secretary
Brian J. Bonis, Assistant Secretary
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel
Richard Ostrander, Deputy General Counsel
Trevor A. Reeve, Economist
Stacey Tevlin, Economist
Beth Anne Wilson, Economist
Brian M. Doyle, Carlos Garriga, Joseph W. Gruber, and William Wascher, Associate Economists
Roberto Perli, Manager, System Open Market Account
Julie Ann Remache, Deputy Manager, System Open Market Account
Daniel Aaronson, Interim Director of Research, Federal Reserve Bank of Chicago
Stephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board
Jose Acosta, Senior System Engineer II, Division of Information Technology, Board
Roc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia
Alyssa Arute,4 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board
Alessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board
Julia Barmeier,4 Lead Financial Institution Policy Analyst, Division of Reserve Bank Operations and Payment Systems, Board
William F. Bassett, Senior Associate Director, Division of Financial Stability, Board
Jose Berrospide, Assistant Director, Division of Financial Stability, Board
Paola Boel, Vice President, Federal Reserve Bank of Cleveland
Erik Bostrom,4 Senior Financial Institution Policy Analyst I, Division of Monetary Affairs, Board
David Bowman,4 Senior Associate Director, Division of Monetary Affairs, Board
Nina Boyarchenko, Financial Research Advisor, Federal Reserve Bank of New York
Falk Braeuning, Vice President, Federal Reserve Bank of Boston
Christian V. Cabanilla,4 Policy Advisor, Federal Reserve Bank of New York
Michele Cavallo, Special Adviser to the Board, Division of Board Members, Board
Kathryn B. Chen,4 Director of Cross Portfolio Policy and Analysis, Federal Reserve Bank of New York
Andrew Cohen,5 Special Adviser to the Board, Division of Board Members, Board
Stephanie E. Curcuru, Deputy Director, Division of International Finance, Board
Marnie Gillis DeBoer,6 Senior Associate Director, Division of Monetary Affairs, Board
Anthony M. Diercks, Principal Economist, Division of Monetary Affairs, Board
Cynthia L. Doniger,4 Principal Economist, Division of Monetary Affairs, Board
Burcu Duygan-Bump, Associate Director, Division of Research and Statistics, Board
Giovanni Favara, Deputy Associate Director, Division of Monetary Affairs, Board
Laura J. Feiveson,7 Special Adviser to the Board, Division of Board Members, Board
Erin E. Ferris,4 Principal Economist, Division of Monetary Affairs, Board
Andrew Figura, Associate Director, Division of Research and Statistics, Board
Aaron Flaaen, Principal Economist, Division of International Finance, Board
Glenn Follette, Associate Director, Division of Research and Statistics, Board
Greg Frischmann, Senior Special Counsel, Legal Division, Board; Special Adviser to the Board, Division of Board Members, Board
Jamie Grasing,4 Senior Data Engineer, Division of Monetary Affairs, Board
Brian Greene,4 Associate Director, Federal Reserve Bank of New York
James Hebden, Principal Economic Modeler, Division of Monetary Affairs, Board
Valerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board
Matteo Iacoviello, Senior Associate Director, Division of International Finance, Board
Jane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board
Sebastian Infante,4 Section Chief, Division of Monetary Affairs, Board
Benjamin K. Johannsen, Assistant Director, Division of Monetary Affairs, Board
Callum Jones, Principal Economist, Division of Monetary Affairs, Board
Michael T. Kiley, Deputy Director, Division of Monetary Affairs, Board
Elizabeth Klee, Deputy Director, Division of Monetary Affairs, Board
Michael Koslow,4 Associate Director, Federal Reserve Bank of New York
Anna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond
Seung Kwak, Senior Economist, Division of Monetary Affairs, Board
Britt Leckman,8 Federal Reserve Board Staff Photographer, Division of Board Members, Board
Andreas Lehnert, Director, Division of Financial Stability, Board
Eric B. Lewin,4 Assistant General Counsel, Federal Reserve Bank of New York
Kurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board
Laura Lipscomb, Special Adviser to the Board, Division of Board Members, Board
Byron Lutz, Deputy Associate Director, Division of Research and Statistics, Board
Dina Tavares Marchioni,9 Director of Money Markets, Federal Reserve Bank of New York
Benjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board
Alisdair G. McKay, Monetary Advisor, Federal Reserve Bank of Minneapolis
Kindra I. Morelock, Information Services Senior Analyst, Division of Monetary Affairs, Board, and Federal Reserve Bank of Chicago
Norman J. Morin, Associate Director, Division of Research and Statistics, Board
David Na,4 Acting Group Manager, Division of Monetary Affairs, Board
Edward Nelson, Senior Adviser, Division of Monetary Affairs, Board
Anna Nordstrom, Head of Markets, Federal Reserve Bank of New York
Caterina Petrucco-Littleton,10 Deputy Associate Director, Division of Consumer and Community Affairs, Board; Special Adviser to the Board, Division of Board Members, Board
Brian Phillips,5 Special Adviser to the Board, Division of Board Members, Board
Eugenio P. Pinto,7 Special Adviser to the Board, Division of Board Members, Board
Christine Repper,11 Manager, Division of Reserve Bank Operations and Payment Systems, Board
William E. Riordan,4 Capital Markets Trading Advisor, Federal Reserve Bank of New York
Samuel Schulhofer-Wohl, Senior Vice President, Federal Reserve Bank of Dallas
Kirk Schwarzbach, Special Assistant to the Board, Division of Board Members, Board
Zeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board
John J. Stevens, Senior Associate Director, Division of Research and Statistics, Board
Mary H. Tian,4 Group Manager, Division of Monetary Affairs, Board
Paula Tkac, Director of Research, Federal Reserve Bank of Atlanta
Annette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board
Jeffrey D. Walker,4 Senior Associate Director, Division of Reserve Bank Operations and Payment Systems, Board
Eric Wallerstein, Special Adviser to the Board, Division of Board Members, Board
Daniel Wilson, Vice President, Federal Reserve Bank of San Francisco
Evan Winerman,4 Deputy Associate General Counsel, Legal Division, Board
Emre Yoldas, Deputy Associate Director, Division of International Finance, Board
Filip Zikes, Special Adviser to the Board, Division of Board Members, Board
_______________________
Joshua Gallin
Secretary
1. The Federal Open Market Committee is referenced as the "FOMC" and the "Committee" in these minutes; the Board of Governors of the Federal Reserve System is referenced as the "Board" in these minutes. Return to text
2. The discussion summarized here draws from remarks made by participants during various portions of the meeting, as the agenda did not include a separate policymaker discussion about the SRF. Return to text
3. In taking this action, the Board approved requests to establish that rate submitted by the Board of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Dallas, and San Francisco. The vote also encompassed approval by the Board of Governors of the establishment of a 4.0 percent primary credit rate by the remaining Federal Reserve Banks, effective on October 30, 2025, or the date such Reserve Banks inform the Secretary of the Board of such a request. (Secretary's note: Subsequently, the Federal Reserve Banks of Cleveland, St. Louis, Minneapolis, and Kansas City were informed of the Board's approval of their establishment of a primary credit rate of 4.0 percent, effective October 30, 2025.) Return to text
4. Attended through the discussion of balance sheet issues. Return to text
5. Attended the discussion of economic developments and the outlook. Return to text
6. Attended through the discussion of developments in financial markets and open market operations. Return to text
7. Attended through the discussion of balance sheet issues, and from the discussion of current monetary policy through the end of the meeting. Return to text
8. Attended opening remarks for Tuesday's session only. Return to text
9. Attended through the discussion of economic developments and the outlook. Return to text
10. Attended Wednesday's session only. Return to text
11. Attended Tuesday's session only. Return to text
|
2025-09-17
|
2025-09-17
|
Statement
|
Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4â1/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgageâbacked securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; Jeffrey R. Schmid; and Christopher J. Waller. Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting.
For media inquiries, please email [email protected] or call 202-452-2955.
Implementation Note issued September 17, 2025
|
2025-09-17
|
2025-10-08
|
Minute
|
Minutes of the Federal Open Market Committee
September 16â17, 2025
A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve System was held in the offices of the Board of Governors on Tuesday, September 16, 2025, at 10:30 a.m. and continued on Wednesday, September 17, 2025, at 9:00 a.m.1
Developments in Financial Markets and Open Market Operations
The deputy manager turned first to an overview of financial market developments during the intermeeting period. Markets appeared to interpret data releases and FOMC communications as indicating that the baseline outlook was little changed but that downside risks to the labor market had increased. Median modal expectations for personal consumption expenditures (PCE) inflation this year and next from the Open Market Desk's Survey of Market Expectations (Desk survey) increased only slightly, and expectations for the unemployment rate increased only marginally overall. However, after the weaker-than-expected July and August employment reports, investors' focus shifted to downside risks to the labor market.
Near-term expectations for the policy rate had moved lower in response to weaker-than-expected employment data and the apparent rise in downside employment risks. Almost all respondents to the Desk survey expected a 25 basis point cut in the target range for the federal funds rate at this meeting, and around half expected an additional cut at the October meeting. The vast majority of survey respondents expected at least two 25 basis point cuts by year-end, with around half expecting three cuts over that time. Respondents' expectations for 2027 and beyond were unchanged, implying that revisions to respondents' near-term expectations reflected an anticipation of a faster return of the federal funds rate to its longer-run level than previously expected. Market-based measures of policy rate expectations were broadly consistent with responses to the Desk survey, reflecting about three 25 basis point cuts by the end of the year.
The deputy manager then discussed developments in Treasury markets and market-based measures of inflation compensation. Nominal Treasury yields fell 20 to 40 basis points over the intermeeting period, with the largest decline occurring at the short end of the yield curve; the curve therefore steepened. Staff models indicated that nearly all the decline in short-term rates was attributable to the shift down in policy rate expectations. Market-based measures of inflation compensation fell slightly over the intermeeting period.
Equity prices continued to rise over the intermeeting period and stood very close to record highs despite the recent weaker-than-expected employment reports. The deputy manager noted this development was consistent with the benign baseline macroeconomic outlook incorporated in most private-sector forecasts and strong realized earnings in technology and other sectors. Corporate bond spreads were little changed over the intermeeting period and remained at tight levels, signaling that investors anticipated relatively moderate credit losses.
Regarding foreign exchange developments, the deputy manager noted that the broad trade-weighted dollar index had generally stabilized and that the dollar returned to trading roughly in line with fundamental macroeconomic drivers over the intermeeting period. The available data continued to suggest foreign demand for U.S. assets remained resilient.
The deputy manager turned next to money markets. The effective federal funds rate remained stable, and repurchase agreement (repo) rates moved higher over the intermeeting period. The increase in repo rates over the period was driven by the increase in net Treasury bill issuance amid the rebuilding of the Treasury General Account (TGA) following the debt ceiling resolution, continued large Treasury coupon issuance, and ongoing reductions in the Federal Reserve's balance sheet. Reserves fell sharply on September 15 in response to an increase in the TGA, driven by tax receipts and significant net issuance of Treasury coupon securities. Repo rates came under additional upward pressure that day, and take-up at the standing repo facility (SRF) reached $1.5 billion. There were some signs of slight upward pressure on rates in the federal funds market but not enough to move the effective federal funds rate. While key indicators remained consistent with abundant reserves, money market rates were expected to continue to increase over time relative to administered rates and to eventually pull the effective federal funds rate higher.
The deputy manager concluded by discussing the trajectory of the balance sheet. If balance sheet runoff were to continue at the current pace, the System Open Market Account (SOMA) portfolio was expected to decline to just over $6 trillion by the end of March, with Federal Reserve notes growing at a gradual pace, the TGA fluctuating around current levels, and usage of the overnight reverse repurchase agreement (ON RRP) facility remaining very low except on quarter-end dates. As a result, the deputy manager expected reserves to be close to the $2.8 trillion range by the end of the first quarter of next year if runoff were to continue at the current pace.
All but one member of the Committee voted to ratify the Desk's domestic transactions over the intermeeting period. Governor Stephen Miran, who had been sworn in as a member of the Board that morning, abstained from voting. There were no intervention operations in foreign currencies for the System's account during the intermeeting period.
Staff Review of the Economic Situation
The information available at the time of the meeting indicated that real gross domestic product (GDP) growth had moderated in the first half of the year. Although the unemployment rate continued to be low, the pace of employment increases had slowed, and labor market conditions had softened. Consumer price inflation remained somewhat elevated.
Total consumer price inflationâas measured by the 12-month change in the PCE price indexâwas estimated to have been 2.7 percent in August, based on the data from the consumer and producer price indexes. Core PCE price inflation, which excludes changes in consumer energy prices and many consumer food prices, was estimated to have been 2.9 percent in August. Both inflation rates were at the upper end of their ranges since the beginning of the year.
Recent data indicated that labor market conditions had softened. The unemployment rate edged up to 4.3 percent in August, a little higher than it had been at the beginning of the year. The participation rate was somewhat lower in August than it was at the beginning of the year. Average monthly increases in total nonfarm payrolls over July and August were weak, and job gains were revised down notably in May and June. The Bureau of Labor Statistics' (BLS) preliminary estimate of the benchmark revision for April 2024 through March 2025 indicated that the level of payrolls for March was more than 900,000 lower than had been reported. The ratio of job vacancies to unemployed workers was 1.0 in August and remained within the narrow range seen over the past year. The employment cost index of hourly compensation for private-sector workers increased 3.5 percent over the 12 months ending in June, and average hourly earnings for all employees rose 3.7 percent over the 12 months ending in August. Both wage growth measures were lower than their year-earlier levels.
Real GDP rose in the second quarter after declining in the first quarter, but GDP growth over the first half as a whole was slower than last year. Growth of real private domestic final purchases (PDFP)âwhich comprises PCE and private fixed investment and which often provides a better signal than GDP of underlying economic momentumâhad also moderated in the first half relative to last year. Recent indicators for consumer spending and business investment spendingâparticularly for high-tech equipment and softwareâpointed to further moderate gains in PDFP in the third quarter, but housing-sector activity remained weak. After falling sharply in the second quarter, real imports of goods increased in July, particularly for capital goods. By contrast, exports edged down in July, following modest increases over the first half of the year.
Foreign GDP growth slowed markedly in the second quarter, as the transitory boost due to the front-loading of U.S. imports earlier in the year faded. Canadian economic activity contracted significantly, as exports of price-sensitive industrial supplies fell sharply in the face of higher U.S. tariffs. Economic growth in Mexico and parts of Asia was supported by strong demand for high-tech products.
Headline inflation was near central banks' targets in most foreign economies, aided by past declines in energy prices. However, core inflation remained persistently elevated in some economies, such as Brazil, Mexico, and the U.K. By contrast, inflation in China continued to be subdued. Several foreign central banksâincluding the European Central Bankâheld their policy rates steady, while othersâsuch as the Reserve Bank of New Zealand and the Reserve Bank of Australiaâresumed reducing their policy rates, as disinflation continued.
Staff Review of the Financial Situation
The market-implied path of the federal funds rate decreased notably over the intermeeting period. Options on interest rate futures suggested that market participants were placing a higher probability on greater policy easing by early 2026 than they had just before the July FOMC meeting. Consistent with the downward shift in the implied policy rate path, nominal Treasury yields declined notably, on net, particularly at shorter horizons. Changes in nominal yields were driven primarily by reductions in real Treasury yields as inflation compensation fell to a lesser degree, on net, across maturities.
Broad equity price indexes increased amid strong corporate earnings reports and expectations of lower policy rates, while credit spreads were little changed and remained very low by historical standards. The one-month option-implied volatility on the S&P 500 indexâthe VIXâended the period essentially unchanged, on net, at a moderate level.
Risk sentiment generally improved in global financial markets, supported by trade policy developments that were perceived as reducing negative tail risks to economic growth, strong corporate earnings, and lower interest rates in the U.S. On balance, foreign equity indexes rose moderately, credit spreads narrowed slightly, and the exchange value of the dollar declined modestly. Increased political uncertainty led to volatility of longer-term government bond yields in some advanced foreign economies.
Conditions in U.S. short-term funding markets remained orderly over the intermeeting period, and the FOMC's target policy rate continued to transmit to private rates in the usual manner. Following the increase in the federal debt limit in early July, TGA balances continued to increase, while usage of the ON RRP facility declined notably to its lowest levels since April 2021. Amid increases in the TGA, there were mild upward pressures in secured market rates over the July and August month-ends. Secured rates remained elevated in the lead-up to the mid-September tax and coupon issuance date. On September 15, the Secured Overnight Financing Rate temporarily printed above the minimum bid rate at the SRF amid $1.5 billion in take-up at the facility. Amid these movements in secured rates, the effective federal funds rate remained unchanged relative to the interest rate on reserve balances.
In domestic credit markets, borrowing costs generally declined but remained elevated relative to their average postâGlobal Financial Crisis (GFC) levels. Yields on corporate bonds decreased moderately, while yields on leveraged loans were little changed on net. Interest rates on commercial and industrial (C&I) and short-term business loans remained elevated relative to their post-GFC averages. Rates on 30-year fixed-rate conforming residential mortgages declined moderately, on net, and remained elevated. Yields on higher-rated tranches of commercial mortgage-backed securities (CMBS) moved down modestly, and those on lower-rated tranches of non-agency CMBS declined notably. Interest rates on existing credit card accounts continued to tick up through June, while offer rates on new credit cards were little changed.
Financing from capital markets remained broadly available for medium-sized and large businesses. Gross issuance of nonfinancial corporate bonds across credit categories continued at a strong pace in July and August, and issuance of leveraged loans was robust in recent months. Lending in private credit markets continued at a solid pace in July. After relatively strong growth in the second quarter, C&I loan balances on banks' books also continued to grow at a solid pace in July and August. Commercial real estate (CRE) loans continued to grow at a modest pace in July and August.
Credit remained available for most businesses, households, and municipalities, while credit continued to be relatively tight for small businesses and households with lower credit scores. In the residential mortgage market, credit remained easily available for high-credit-score borrowers who met standard conforming loan criteria but generally tight for low-credit-score borrowers. While consumer credit remained generally available for most households, the growth of revolving credit and auto loans was relatively weak in the second quarter.
Credit quality was generally stable at levels somewhat weaker than during the pre-pandemic period. The credit performance of corporate bonds and leveraged loans remained generally stable, though the default rate for leveraged loans that includes distressed exchanges continued to be elevated. Delinquency rates on small business loans in June and July ticked up and were moderately above pre-pandemic levels. In the CRE market, CMBS delinquency rates remained elevated through August. Regarding household credit quality, the delinquency rates on Federal Housing Administration mortgages remained at the upper end of their range over the past few years. By contrast, delinquency rates on most other mortgage loan types stayed near historical lows. In the second quarter, credit card and auto loan delinquency rates remained at elevated levels but were little changed.
Staff Economic Outlook
Compared with the staff forecast prepared for the July meeting, the projection of real GDP growth was revised up somewhat, on balance, for this year through 2028, primarily reflecting stronger-than-expected data for both consumer spending and business investment as well as financial conditions that were projected to be a little more supportive of output growth. GDP growth was still projected to be faster next year than this year, as the effects of tariff increases and slower net immigration were expected to diminish. The staff continued to expect that the labor market would soften further this year, though the projected path for the unemployment rate in following years was a little lower than in the previous staff forecast. The unemployment rate was projected to move slightly above the staff's estimate of its natural rate through the remainder of this year and then to decline later in the projection as GDP growth picked up.
The staff's inflation projection was only slightly revised from the one prepared for the July meeting. Tariff increases were still expected to raise inflation this year and to provide some further upward pressure on inflation in 2026. Inflation was projected to decline in 2026, to reach 2 percent in 2027, and to remain there in 2028.
The staff continued to view the uncertainty around the projection as elevated, primarily reflecting uncertainty regarding changes to economic policies, including those for trade, immigration, fiscal spending, and regulation, and their associated economic effects. Risks to employment and the labor market were judged to have become a little more tilted to the downside, stemming from the recent softening in labor market conditions amid modest real GDP growth. The staff continued to view the risks around the inflation forecast as skewed to the upside, as the projected rise in inflation this year could prove to be more persistent than assumed in the baseline projection.
Participants' Views on Current Conditions and the Economic Outlook
In conjunction with this FOMC meeting, participants submitted their projections of the most likely outcomes for real GDP growth, the unemployment rate, and inflation for each year from 2025 through 2028 and over the longer run. The projections were based on participants' individual assessments of appropriate monetary policy, including their projections of the federal funds rate. Participants also provided their individual assessments of the level of uncertainty and the balance of risks associated with their projections. The Summary of Economic Projections was released to the public after the meeting.
Participants observed that inflation had moved up since the beginning of the year and remained somewhat above the Committee's 2 percent longer-run goal. Although participants generally assessed that this year's tariff increases had put upward pressure on inflation, some remarked that these effects appeared to have been somewhat muted to date relative to expectations from earlier in the year. A few participants suggested that productivity gains may be reducing inflation pressures. A couple of participants expressed the view that, excluding the effects of this year's tariff increases, inflation would be close to target. A few other participants, however, emphasized that progress of inflation toward the Committee's 2 percent objective had stalled, even excluding the effects of this year's tariff increases.
With regard to the outlook for inflation, participants generally expected that, given appropriate monetary policy, inflation would be somewhat elevated in the near term and would gradually return to 2 percent thereafter. Some participants noted that business contacts had indicated that they would raise prices over time because of higher input costs stemming from tariff increases. Uncertainty remained about the inflation effects of this year's increase in tariffs, though most participants expected these effects to be realized by the end of next year. Some participants remarked that the labor market was not expected to be a source of inflationary pressure. A couple of participants expected that the reduction in net migration would be associated with lower demand and lower inflation, and a couple of participants observed that continued productivity gains would likely reduce inflation pressures. Participants noted that longer-term inflation expectations continued to be well anchored and that it was important they remain so to help return inflation to 2 percent. Various participants stressed the central role of monetary policy in ensuring that longer-term inflation expectations remained well anchored. A majority of participants emphasized upside risks to their outlooks for inflation, pointing to inflation readings moving further from 2 percent, continued uncertainty about the effects of tariffs, the possibility that elevated inflation proves to be more persistent than currently expected even after the inflation effects of this year's tariff increases fade, or the possibility of longer-term inflation expectations moving up after a long period of elevated inflation readings. Some participants remarked that they perceived less upside risk to their outlooks for inflation than earlier in the year.
In their discussion of the labor market, participants observed that job gains had slowed and the unemployment rate had edged up. Participants noted that the low level of estimated job gains over recent months likely reflected declines in growth of both labor supply and labor demand. Participants noted low net immigration or changes in labor force participation as factors reducing labor supply. As for factors that may be reducing labor demand, participants noted moderate economic growth or the effects of high uncertainty on firms' hiring decisions. Under these circumstances, participants cited a number of other indicators as helpful for assessing labor market conditions. These included the unemployment rate, the ratio of job vacancies to unemployed workers, wage growth, the percentage of unemployed workers who find a job, the quits rate among employed workers, and the layoff rate. Participants generally assessed that recent readings of these indicators did not show a sharp deterioration in labor market conditions. A few participants, though, saw recently released labor market data, including revisions to previously released data and the BLS's preliminary estimate of the payroll employment benchmark revision, as indicating that labor market conditions had been softening for longer than was previously reported.
With regard to the outlook for the labor market, participants generally expected that, under appropriate monetary policy, labor market conditions would be little changed or would soften modestly. Several participants noted that the number of monthly job gains consistent with a stable unemployment rate had declined over the past year and would likely remain low, citing the large number of workers nearing retirement age or continued low net immigration. Participants indicated that their outlooks for the labor market were uncertain and viewed downside risks to employment as having increased over the intermeeting period. In support of this view, participants mentioned a number of indicators, including the following: low hiring and firing rates, which are evidence of less dynamism in the labor market; concentrated job gains in a small number of sectors; and increases in unemployment rates for groups that have historically shown greater sensitivity to cyclical changes in economic activity, such as those for African Americans and young people. Several participants saw continuing adoption of artificial intelligence as potentially reducing labor demand. Some participants noted that survey responses indicated that household sentiment regarding the labor market had moved down.
Participants observed that growth of economic activity slowed in the first half of the year relative to last year. Regarding the household sector, participants noted that lower consumption growth had contributed to the slowdown in the growth of economic activity in the first half of the year. Several participants remarked that recent data indicated some firming of consumption expenditures this quarter. Some participants mentioned that households were showing greater price sensitivity, and several participants observed that high-income households were increasingly doing better, economically, than lower-income households. Several participants noted continued weakness in the housing market, and a couple of participants mentioned the possibility of a more substantial deterioration in the housing market as a downside risk to economic activity. For businesses, many participants noted strong high-tech investment. Several participants noted that financial conditions were supportive of economic activity. A few participants commented that the agricultural sector continued to face headwinds because of low crop prices and high input costs.
In their consideration of monetary policy at this meeting, participants noted that inflation had risen recently and remained somewhat elevated, and that recent indicators suggested that growth of economic activity had moderated in the first half of the year. While participants noted the unemployment rate remained low, they observed that it had edged up and job gains had slowed. In addition, they judged that downside risks to employment had risen. Against this backdrop, almost all participants supported reducing the target range for the federal funds rate 1/4 percentage point at this meeting. Participants generally noted that their judgments about this meeting's appropriate policy action reflected a shift in the balance of risks. In particular, most participants observed that it was appropriate to move the target range for the federal funds rate toward a more neutral setting because they judged that downside risks to employment had increased over the intermeeting period and that upside risks to inflation had either diminished or not increased. A few participants stated there was merit in keeping the federal funds rate unchanged at this meeting or that they could have supported such a decision. These participants noted that progress toward the Committee's 2 percent inflation objective had stalled this year as inflation readings increased and expressed concern that longer-term inflation expectations may rise if inflation does not return to its objective in a timely manner. One participant agreed with the need to move policy toward a more neutral stance but preferred a 1/2 percentage point reduction at this meeting. All participants judged it appropriate to continue the process of reducing the Federal Reserve's securities holdings.
In considering the outlook for monetary policy, almost all participants noted that, with the reduction in the target range for the federal funds rate at this meeting, the Committee was well positioned to respond in a timely way to potential economic developments. Participants observed that monetary policy was not on a preset course and would be informed by a wide range of incoming data, the evolving economic outlook, and the balance of risks. Participants expressed a range of views about the degree to which the current stance of monetary policy was restrictive and about the likely future path of policy. Most judged that it likely would be appropriate to ease policy further over the remainder of this year. Some participants noted that, by several measures, financial conditions suggested that monetary policy may not be particularly restrictive, which they judged as warranting a cautious approach in the consideration of future policy changes.
In discussing risk-management considerations that could bear on the outlook for monetary policy, participants generally judged that upside risks to inflation remained elevated and that downside risks to employment were elevated and had increased. Participants noted that, in these circumstances, if policy were eased too much or too soon and inflation continued to be elevated, then longer-term inflation expectations could become unanchored and make restoring price stability even more challenging. By contrast, if policy rates were kept too high for too long, then unemployment could rise unnecessarily, and the economy could slow sharply. Against this backdrop, participants stressed the importance of taking a balanced approach in promoting the Committee's employment and inflation goals, taking into account the extent of departures from those goals and the potentially different time horizons over which employment and inflation are projected to return to levels judged consistent with the Committee's mandate.
Several participants remarked on issues related to the Federal Reserve's balance sheet and implementation of monetary policy. A few participants stated that balance sheet reduction had proceeded smoothly thus far and that various indicators pointed to reserves remaining abundant. Nevertheless, with reserves declining and expected to decline further, they noted that it was important to continue to monitor money market conditions closely and evaluate how close reserves were to their ample level. In that context, a few participants noted that the SRF would help keep the federal funds rate within its target range and ensure that temporary pressures in money markets would not disrupt the ongoing reduction in Federal Reserve securities holdings to the level needed to implement monetary policy efficiently and effectively in the Committee's ample-reserves regime.
Committee Policy Actions
In their discussions of monetary policy for this meeting, members agreed that recent indicators suggested that growth of economic activity had moderated in the first half of the year. To reflect developments in the labor market, they agreed to no longer characterize labor market conditions as solid and instead state that job gains had slowed and that the unemployment rate had edged up but remained low. Members concurred that inflation remained somewhat elevated and agreed to add that inflation had moved up. They agreed that the Committee was attentive to the risks to both sides of its dual mandate and to add that downside risks to employment had risen to reflect their concerns about the labor market.
In support of the Committee's goals and in light of the shift in the balance of risks, almost all members agreed to lower the target range for the federal funds rate 1/4 percentage point to 4 to 4-1/4 percent. One member voted against that decision, preferring to lower the target range 1/2 percentage point at this meeting. Members agreed that, in considering additional adjustments to the target range for the federal funds rate, the Committee would carefully assess incoming data, the evolving outlook, and the balance of risks. All members agreed that the postmeeting statement should affirm their strong commitment both to supporting maximum employment and to returning inflation to the Committee's 2 percent objective.
Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would continue to monitor the implications of incoming information for the economic outlook. They would be prepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede the attainment of the Committee's goals. Members also agreed that their assessments would take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the SOMA in accordance with the following domestic policy directive, for release at 2:00 p.m.:
"Effective September 18, 2025, the Federal Open Market Committee directs the Desk to:
Undertake open market operations as necessary to maintain the federal funds rate in a target range of 4 to 4-1/4 percent.
Conduct standing overnight repurchase agreement operations with a minimum bid rate of 4.25 percent and with an aggregate operation limit of $500 billion.
Conduct standing overnight reverse repurchase agreement operations at an offering rate of 4 percent and with a per-counterparty limit of $160 billion per day.
Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in each calendar month that exceeds a cap of $5 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.
Reinvest the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities (MBS) received in each calendar month that exceeds a cap of $35 billion per month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding.
Allow modest deviations from stated amounts for reinvestments, if needed for operational reasons."
The vote also encompassed approval of the statement below for release at 2:00 p.m.:
"Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment have risen.
In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4 to 4-1/4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments."
Voting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman, Susan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Alberto G. Musalem, Jeffrey R. Schmid, and Christopher J. Waller.
Voting against this action: Stephen I. Miran.
Governor Miran preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting in light of further softening in the labor market over the first half of the year and underlying inflation that in his view was meaningfully closer to 2 percent than was apparent in the data. Governor Miran also expressed the view that additional policy easing was also appropriate to reflect that the neutral rate of interest had fallen due to factors such as increased tariff revenues that had raised net national savings and changes in immigration policy that had reduced population growth.
Consistent with the Committee's decision to lower the target range for the federal funds rate to 4 to 4-1/4 percent, the Board of Governors of the Federal Reserve System voted to lower the interest rate paid on reserve balances to 4.15 percent, effective September 18, 2025. The Board of Governors of the Federal Reserve System voted to approve a 1/4 percentage point decrease in the primary credit rate to 4.25 percent, effective September 18, 2025.2
It was agreed that the next meeting of the Committee would be held on TuesdayâWednesday, October 28â29, 2025. The meeting adjourned at 10:10 a.m. on September 17, 2025.
Notation Vote
By notation vote completed on August 19,â¯2025, the Committee unanimously approved the minutes of the Committee meeting held on July 29â30,â¯2025.
Attendance
Jerome H. Powell, Chair
John C. Williams, Vice Chair
Michael S. Barr
Michelle W. Bowman
Susan M. Collins
Lisa D. Cook
Austan D. Goolsbee
Philip N. Jefferson
Stephen I. Miran
Alberto G. Musalem
Jeffrey R. Schmid
Christopher J. Waller
Beth M. Hammack, Neel Kashkari, Lorie K. Logan, Anna Paulson, and Sushmita Shukla, Alternate Members of the Committee
Thomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of Richmond, Atlanta, and San Francisco, respectively
Joshua Gallin, Secretary
Matthew M. Luecke, Deputy Secretary
Brian J. Bonis, Assistant Secretary
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel
Richard Ostrander, Deputy General Counsel
Trevor A. Reeve, Economist
Stacey Tevlin, Economist
Beth Anne Wilson, Economist
Shaghil Ahmed and William Wascher, Associate Economists
Roberto Perli, Manager, System Open Market Account
Julie Ann Remache, Deputy Manager, System Open Market Account
Daniel Aaronson, Interim Director of Research, Federal Reserve Bank of Chicago
Jose Acosta, Senior System Engineer II, Division of Information Technology, Board
Mary L. Aiken, Acting Director, Division of Supervision and Regulation, Board
Oladoyin Ajifowoke, Program Management Analyst, Division of Monetary Affairs, Board
Roc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia
Alyssa Arute,3 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board
Alessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board
William F. Bassett, Senior Associate Director, Division of Financial Stability, Board
Erik Bostrom, Senior Financial Institution Policy Analyst I, Division of Monetary Affairs, Board
Ellen J. Bromagen, First Vice President, Federal Reserve Bank of Chicago
Brent Bundick, Vice President, Federal Reserve Bank of Kansas City
Michele Cavallo, Special Adviser to the Board, Division of Board Members, Board
Lisa M. Chung,3 Capital Markets Trading Director, Federal Reserve Bank of New York
Juan Carlos Climent, Special Adviser to the Board, Division of Board Members, Board
Daniel M. Covitz, Deputy Director, Division of Research and Statistics, Board
Stephanie E. Curcuru, Deputy Director, Division of International Finance, Board
Andrea De Michelis, Deputy Associate Director, Division of International Finance, Board
Marnie Gillis DeBoer, Senior Associate Director, Division of Monetary Affairs, Board
Anthony M. Diercks, Principal Economist, Division of Monetary Affairs, Board
Laura J. Feiveson, Special Adviser to the Board, Division of Board Members, Board
Glenn Follette, Associate Director, Division of Research and Statistics, Board
Brian Gowen,3 Capital Markets Trading Principal, Federal Reserve Bank of New York
Christopher J. Gust, Associate Director, Division of Monetary Affairs, Board
Valerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board
Colin J. Hottman, Principal Economist, Division of International Finance, Board
Matteo Iacoviello, Senior Associate Director, Division of International Finance, Board
Jane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board
Benjamin K. Johannsen, Assistant Director, Division of Monetary Affairs, Board
Michael T. Kiley, Deputy Director, Division of Monetary Affairs, Board
Elizabeth Klee, Deputy Director, Division of Monetary Affairs, Board
Edward S. Knotek II, Senior Vice President, Federal Reserve Bank of Cleveland
Anna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond
Andreas Lehnert, Director, Division of Financial Stability, Board
Paul Lengermann, Deputy Associate Director, Division of Research and Statistics, Board
Kurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board
Laura Lipscomb, Special Adviser to the Board, Division of Board Members, Board
David López-Salido,4 Senior Associate Director, Division of Monetary Affairs, Board
Byron Lutz, Deputy Associate Director, Division of Research and Statistics, Board
Fernando M. Martin, Senior Economic Policy Advisor II, Federal Reserve Bank of St. Louis
Benjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board
Brent H. Meyer, Assistant Vice President, Federal Reserve Bank of Atlanta
Norman J. Morin, Associate Director, Division of Research and Statistics, Board
Anna Nordstrom, Head of Markets, Federal Reserve Bank of New York
Nicolas Petrosky-Nadeau, Vice President, Federal Reserve Bank of San Francisco
Caterina Petrucco-Littleton, Deputy Associate Director, Division of Consumer and Community Affairs, Board; Special Adviser to the Board, Division of Board Members, Board
Eugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board
Odelle Quisumbing,3 Assistant to the Secretary, Office of the Secretary, Board
Andrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis
Jeanne Rentezelas, First Vice President, Federal Reserve Bank of Philadelphia
Argia Sbordone, Research Department Head, Federal Reserve Bank of New York
Kirk Schwarzbach, Special Assistant to the Board, Division of Board Members, Board
Zeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board
John J. Stevens, Senior Associate Director, Division of Research and Statistics, Board
Jenny Tang, Vice President, Federal Reserve Bank of Boston
Manjola Tase, Principal Economist, Division of Monetary Affairs, Board
Mary H. Tian, Group Manager, Division of Monetary Affairs, Board
Annette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board
Jeffrey D. Walker,3 Senior Associate Director, Division of Reserve Bank Operations and Payment Systems, Board
Rebecca Zarutskie, Senior Vice President, Federal Reserve Bank of Dallas
Andrei Zlate, Group Manager, Division of Monetary Affairs, Board
_______________________
Joshua Gallin
Secretary
1. The Federal Open Market Committee is referenced as the "FOMC" and the "Committee" in these minutes; the Board of Governors of the Federal Reserve System is referenced as the "Board" in these minutes. Return to text
2. In taking this action, the Board approved requests to establish that rate submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco. The vote also encompassed approval by the Board of Governors of the establishment of a 4.25 percent primary credit rate by the remaining Federal Reserve Banks, effective on September 18, 2025, or the date such Reserve Banks inform the Secretary of the Board of such a request. (Secretary's note: Subsequently, the Federal Reserve Banks of Cleveland and St. Louis were informed of the Board's approval of their establishment of a primary credit rate of 4.25 percent, effective September 18, 2025.) Return to text
3. Attended through the discussion of developments in financial markets and open market operations. Return to text
4. Attended opening remarks for Tuesday session only. Return to text
|
2025-07-30
|
2025-07-30
|
Statement
|
Although swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 4-1/4 to 4-1/2 percent. In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgageâbacked securities. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Jeffrey R. Schmid. Voting against this action were Michelle W. Bowman and Christopher J. Waller, who preferred to lower the target range for the federal funds rate by 1/4 percentage point at this meeting. Absent and not voting was Adriana D. Kugler.
For media inquiries, please email [email protected] or call 202-452-2955.
Implementation Note issued July 30, 2025
|
2025-07-30
|
2025-08-20
|
Minute
| "Minutes of the Federal Open Market Committee\n \n (...TRUNCATED)
|
2025-06-18
|
2025-06-18
|
Statement
| "Although swings in net exports have affected the data, recent indicators suggest that economic acti(...TRUNCATED)
|
2025-06-18
|
2025-07-09
|
Minute
| "Minutes of the Federal Open Market Committee\n \n (...TRUNCATED)
|
End of preview. Expand
in Data Studio
FOMC Meeting Statements & Minutes
This repository automatically scrapes and aggregates the Federal Reserve FOMC meeting statements and minutes - creating a dataset that enables tracking US monetary policy changes through time.
It works by polling the website of the U.S. Federal Reserve on a periodic basis and scraping the new statements and minutes as they become available. The scraper runs in a scheduled GitHub Actions workflow, which is available here.
The dataset begins in the year 2000 and the textual data is presented as it is found on the website of the Federal Reserve.
Usage
The updated dataset is located in this repository at communications.csv. If found, new data is added on a weekly basis on Monday mornings.
Data description
Date- Date of the FOMC meeting.Release Date- Release date of the statement/minutes. Note that minutes are usually released with a ~3 week lag from the meeting date.Type- Communication type, either a statement or minutes.Text- The text content of each communication release.
Availability
This dataset is also available on Kaggle, together with related Jupyter notebooks.
Future meetings
The full calendar of FOMC meetings is available on the Federal Reserve website, from where future meeting dates can be extracted.
Related research
Monetary policy decisions shown in the FOMC meeting statements have been analyzed at length in academic research and found to have immediate effects on the volatility and direction of equity index prices[^1] and interest rates[^2]. [^1]: Rosa, C. (2011). Words that shake traders: The stock market's reaction to central bank communication in real time. Journal of Empirical Finance, 18(5), 915-934. [^2]: Gürkaynak, R. S., Sack, B., & Swanson, E. (2005). The sensitivity of long-term interest rates to economic news: Evidence and implications for macroeconomic models. American economic review, 95(1), 425-436.
Background information
The Federal Open Market Committee (FOMC) meets eight times during the year to make decisions regarding the implementation of monetary policy, with the aim of achieving the Federal Reserve's dual mandate: promoting maximum employment and maintaining stable prices (controlling inflation).
The FOMC meeting statement document is one of the main formal communication documents used by the Fed, and contains information about key interest rate decisions, an assessment of the economic outlook, a view on inflation as well as forward guidance. This information helps businesses, investors and the general public take monetary policy into account and make more informed economic decisions.
- Downloads last month
- 55