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July 27, 2022US 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 a three quarters of a point to 2.25 to 2.50 per cent. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities. As of June, Treasury securities will be reduced by up to $30 billion per month for 3 months prior to an increase to $60 billion per month and agency debt and agency mortgage-backed securities will be reduced up to $17.5 billion per month for 3 months before increasing to $35 billion per month.
While job gains hve been robust and the unemployment rate remained low in recent months, spending and production have softened. The war in Ukraine continues to put upward pressure on inflation and weigh on global economic activity.
Inflation remains elevated reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures. The United States Consumer Price Index for All Urban Consumers increased 9.1 per cent year-over-year in June 2022.
The Committee will continue to monitor economic developments and is prepared to adjust the monetary policy measures as appropriate. The next scheduled FOMC meeting will be held on September 20-21, 2022. A summary of updated Economic Projections will be provided at the same time.
Source: US Federal Reserve, FOMC Statement
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