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February 01, 2023US MONETARY POLICY At its scheduled Federal Open Market Committee (FOMC) meeting, the Federal Reserve announced that it will raise the target range for the federal funds rate by 25 basis points to 4.5% to 4.75%. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May.
While job gains have been robust and the unemployment rate remained low in recent months, recent economic indicators point to modest growth in spending and production. The war in Ukraine continues to put upward pressure on inflation and continues to weigh on global economic activity.
US inflation has eased in recent months but remains elevated. The United States Consumer Price Index for All Urban Consumers increased 6.5% year-over-year in December 2022. This was below the 7.1% increase reported in November 2022, and the smallest 12-month increase since the period ending October 2021.
The Committee anticipates that ongoing increases in the target range will be appropriate. The Committee will continue to monitor economic developments and is prepared to adjust the monetary policy measures as appropriate, taking into account the cumulative tightening of monetary policy as well as the lags with which monetary policy affects economic activity and inflation. The next scheduled FOMC meeting will be held on March 21-22, 2023. A Summary of updated Economic Projections will be provided at the same time.
Source: US Federal Reserve, FOMC Statement
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