In deciding at its last meeting to hold interest rates steady, the Federal Open Market Committee considered continued economic growth and a strong labor market, as well as “modest further progress” toward the FOMC’s 2 percent inflation objective in recent months, according to the latest FOMC minutes released Wednesday.
Committee members “remained highly attentive to inflation risks,” the minutes showed, with participants noting that progress in reducing inflation has been slower in 2024 than projected. Discussion at the meeting focused on several aspects of how inflation is affecting economic activity and monetary policy, including the risk of “un-anchoring” consumers’ and businesses’ long-term inflation expectations. Committee members also discussed broader downside risks, with “a few participants point[ing] to downside risks to economic activity associated with the fragility of some parts of the CRE sector or the vulnerable balance sheet positions of some banks,” the minutes showed.
Overall, committee members decided, “with labor market tightness having eased and inflation having declined over the past year, the risks to achieving the Committee’s employment and inflation goals had moved toward better balance, leaving monetary policy well positioned to deal with the risks and uncertainties faced in pursuing both sides of the Committee’s dual mandate.”
