May 07, 2025
March 19, 2025
Jerome H. Powell
May 7, 2025 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
Recent Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, 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 around about the economic outlook has increased. increased further. The Committee is attentive to the risks to both sides of its dual mandate. mandate and judges that the risks of higher unemployment and higher inflation have risen.
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 mortgage‑backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion. 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; Neel Kashkari; Adriana D. Kugler; Alberto G. Musalem; and Jeffrey R. Schmid. Voting against this action was Christopher J. Waller, who supported no change for the federal funds target range but preferred to continue the current pace of decline in securities holdings. Waller. Neel Kashkari voted as an alternate member at this meeting.
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Implementation Note issued March 19, May 7, 2025
Our summary
What changed
- The FOMC removed the April plan to slow balance sheet runoff by cutting the Treasury redemption cap from $25 billion to $5 billion, leaving the reduction language out of the current statement.
- The economic outlook language was updated: uncertainty is now said to have increased further, and the FOMC judges that risks of higher unemployment and higher inflation have risen.
- The statement added a note that swings in net exports have affected the data, while still describing economic activity as expanding at a solid pace.
- The voting roster changed: Neel Kashkari joined as an alternate member, and Jeffrey Schmid is no longer listed; Christopher Waller now votes with the majority, with no dissents noted.
Implications
The removal of the balance sheet slowdown language suggests the FOMC may have completed or paused that adjustment, possibly indicating a shift in balance sheet policy stance.
The stronger risk language—citing increased uncertainty and higher risks to both unemployment and inflation—signals a more cautious or hawkish tilt, which markets might interpret as a lower likelihood of near-term rate cuts.
Summary generated automatically from the statements. Not investment advice.
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 maintain the interest rate paid on reserve balances at 4.4 percent, effective
March 20,May 8, 2025. - 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
March 20,May 8, 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 4-1/4 to
4-1/24‑1/2 percent. - Conduct standing overnight repurchase agreement operations with a minimum bid rate of 4.5 percent and with an aggregate operation limit of $500 billion.
- Conduct standing overnight reverse repurchase agreement operations at an offering rate of 4.25 percent and with a
per-counterpartyper‑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
March that exceeds a cap of $25 billion per month. Beginning on April 1, roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing ineach calendar month that exceeds a cap of $5 billion per month. Redeem Treasury coupon securities up tothesethis monthlycapscap and Treasury bills to the extent that coupon principal payments are less than the monthlycaps.cap. - Reinvest the amount of principal payments from the Federal Reserve's holdings of agency debt and agency
mortgage-backedmortgage‑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."
- In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 4.5 percent.
Press conference
May 7, 2025, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said the first-quarter GDP decline was likely driven by businesses importing goods ahead of potential tariffs, and that private domestic final purchases grew at a solid 3 percent rate in the first quarter.
- The chair said payroll job gains averaged 155,000 per month over the past three months, with the unemployment rate at 4.2 percent and wage growth moderating but still outpacing inflation.
- The chair said total PCE prices rose 2.3 percent over the 12 months ending in March, while core PCE prices rose 2.6 percent, and that near-term inflation expectations have moved up due to tariff concerns.
- The chair said the tariff increases announced so far have been significantly larger than anticipated, and if sustained, they are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.
- The chair said the FOMC continued its five-year review of the monetary policy framework, focusing on inflation dynamics, with plans to wrap up the review by late summer.
Summary generated automatically from the transcript and the statement.