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December 13, 2023US MONETARY POLICY At its scheduled Federal Open Market Committee (FOMC) meeting, the Federal Reserve announced that it will maintain the target range for the federal funds rate 5.25% to 5.50%. The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May 2022.
Economic activity in the United States has slowed from its pace in the third quarter of 2023 reflecting tighter financial and credit conditions. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has fallen to 3.7% in November 2023.
US inflation has eased in recent months but remains elevated. The United States Consumer Price Index (not seasonally adjusted) for All Urban Consumers increased 3.1% year-over-year in November 2023.
The Federal Reserve projects US economic activity to increase 2.6% in 2023, 1.4% in 2024 and 1.8% in 2025. Compared to the September projections, this represents an upgrade for 2023 and a downgrade for 2024, and no change for 2025. Inflation is expected to average 3.2% this year before declining to 2.4% in 2024 and 2.2% in 2025. Inflation projections (core personal consumer expenditures) are also slightly downgraded for the 2023, 2024, and 2025 from the September projections. Unemployment rate is projected to be at 3.8% in 2024, 4.1% in 2025, and 4.1% in 2025. Projections for unemployment remained unchanged from the September forecast.
The Committee will continue to monitor economic developments and is prepared to adjust the monetary policy measures as appropriate, taking into account information on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. The next scheduled FOMC meeting will be held on January 30 - January 31, 2024.
Source: US Federal Reserve, FOMC Statement, Summary of Economic Projections (December 13, 2023)
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