Federal Reserve Leaves Rate Unchanged, Signals Cuts | WSJ
- Inflation has eased without a significant increase in unemployment, but it is still too high.
- Recent indicators suggest that economic activity has been expanding at a solid pace.
- GDP growth for Q4 2022 was 3.3%, and for the year as a whole, GDP expanded at 3.1%.
- The labor market remains tight, with payroll job gains averaging 165,000 jobs per month over the past three months.
- Nominal wage growth has been easing, and job vacancies have declined.
- Inflation has eased over the past year but remains above the Fed's 2% goal.
- Total PCE prices rose 2.6% over the 12 months ending in December, and core PCE prices rose 2.9%.
- Longer-term inflation expectations appear to remain well anchored.
- The FOMC decided to leave the policy interest rate unchanged and continue to reduce securities holdings.
- The Fed's strong actions in tightening monetary policy have moved the policy rate into restrictive territory.
- The risks to achieving employment and inflation goals are moving into better balance.
- The timing of any adjustments to the target range for the federal funds rate will be based on incoming data.
Confidence in Inflation Outlook
- More evidence is needed to build confidence that inflation is moving sustainably down to 2%.
- The committee wants to see continuation of the good data on inflation and a sustained path toward the goal.
- The committee is data dependent and will make decisions meeting by meeting.
- The balance sheet runoff will be discussed at the next meeting in March.
- The Fed sees the balance sheet runoff as an independent tool from rate cuts.
- The economy is solid, the labor market is strong, and inflation is coming down.
- The Fed's goal is to achieve sustained period of strong labor market conditions and price stability.
- The committee is focused on its public mission and committed to its goals.
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