December 18, 2024
November 07, 2024
Jerome H. Powell
December 18, 2024 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EST
Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low. Inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.
In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4-1/2 4-1/4 to 4-3/4 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 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 the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Beth M. Hammack; Philip N. Jefferson; Adriana D. Kugler; and Christopher J. Waller. Voting against the action was Beth M. Hammack, who preferred to maintain the target range for the federal funds rate at 4-1/2 to 4-3/4 percent.
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Implementation Note issued November 7, December 18, 2024
Our summary
What changed
- The FOMC lowered the target range for the federal funds rate by 1/4 percentage point to 4-1/4 to 4-1/2 percent.
- The forward guidance now refers to considering the 'extent and timing' of additional adjustments, rather than just 'additional adjustments.'
- Beth M. Hammack dissented, preferring to maintain the target range at 4-1/2 to 4-3/4 percent.
Implications
The shift to 'extent and timing' suggests the FOMC is signaling a more cautious, data-dependent approach to future rate cuts, possibly indicating a slower pace or a pause. The dissent highlights internal disagreement about the path of policy.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2024 | 2025 | 2026 | 2027 | Longer run | |
|---|---|---|---|---|---|
| Real GDP growth | 2.5 was 2.0 | 2.1 was 2.0 | 2.0 | 1.9 was 2.0 | 1.8 |
| Unemployment rate | 4.2 was 4.4 | 4.3 was 4.4 | 4.3 | 4.3 was 4.2 | 4.2 |
| PCE inflation | 2.4 was 2.3 | 2.5 was 2.1 | 2.1 was 2.0 | 2.0 | 2.0 |
| Core PCE inflation | 2.8 was 2.6 | 2.5 was 2.2 | 2.2 was 2.0 | 2.0 | |
| Federal funds rate | 4.4 | 3.9 was 3.4 | 3.4 was 2.9 | 3.1 was 2.9 | 3.0 was 2.9 |
Median projections of FOMC participants; previous: September.
Each dot is one participant's projection of the federal funds rate (%) at the end of each year and in the longer run.
December September median September median
Scroll the chart sideways for the later years.
Implementation Note
The settings that put the decision into effect: the interest rate paid on reserves, the FOMC's instructions to the New York Fed's trading desk, and the discount rate. Changes are marked the same way as in the statement.
- The Board of Governors of the Federal Reserve System voted unanimously to lower the interest rate paid on reserve balances to
4.654.4 percent, effectiveNovember 8,December 19, 2024. - As part of its policy decision, the Federal Open Market Committee voted to direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive: "Effective
November 8,December 19, 2024, 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
4-1/24-1/4 to4‑3/44-1/2 percent. - Conduct standing overnight repurchase agreement operations with a minimum bid rate of
4.754.5 percent and with an aggregate operation limit of $500 billion. - Conduct standing overnight reverse repurchase agreement operations at an offering rate of
4.554.25 percent and with a per-counterparty limit of $160 billion per day. Setting this rate at the bottom of the target range for the federal funds rate is intended to support effective monetary policy implementation and the smooth functioning of short‑term funding markets. - 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 $25 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.
- Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions."
- In a related action, 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
4.754.5 percent, effectiveNovember 8,December 19, 2024. 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, Cleveland, Richmond, Atlanta, Chicago,Minneapolis, Dallas,and San Francisco.
Press conference
December 18, 2024, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said the economy grew at an annual rate of 2.8 percent in the third quarter, about the same pace as the second quarter.
- The chair said the median projection for the federal funds rate is 3.9 percent at the end of next year and 3.4 percent at the end of 2026, higher than in September.
- The chair said the policy rate has been lowered by a full percentage point from its peak, making the stance "significantly less restrictive."
- The chair said some FOMC participants incorporated "highly conditional estimates" of policy effects into their forecasts, while others did not, citing policy uncertainty as a reason for slower rate cuts.
- The chair said the September 2018 Tealbook alternative simulations on tariffs are a "good starting point" for analysis, but the FOMC has not yet faced the question of how to respond to actual tariff policies.
Summary generated automatically from the transcript and the statement.