At its scheduled Federal Open Market Committee (FOMC) meeting on July 31st, 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. The monthly redemption cap on Treasury securities will remain at $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities.

Recent economic indicators show that US economy has continued to expand at a solid pace. US real GDP growth was estimated at 2.1% in the first half of 2024, down from 3.1% in the same period of 2023. Consumer spending has slowed but remains robust, and investment has picked up from a slow pace in the previous year. Strong demand has been supported by improved supply conditions over the past year. Job gains have remained strong with unemployment remaining low. Broad labour market indicators suggest that conditions in the labour market have returned to pre-pandemic conditions. Inflation has eased, but remains elevated above the 2% target rate. The United States Consumer Price Index (not seasonally adjusted) for All Urban Consumers increased 3.0% year-over-year in June 2024.

The Committee will continue to monitor economic developments and is prepared to adjust the monetary policy measures as appropriate, considering information on labor market conditions, inflation pressures and inflation expectations, and financial and international developments. The next scheduled FOMC meeting will be held on September 17-18, 2024.

Source: US Federal Reserve, FOMC Press Release