Full statement of the December decision
Recent spending and output indicators point to modest growth, with employment growth continuing to be strong and the unemployment rate stable.
Keep low. Inflation remains stubbornly high, reflecting pandemic-related supply-demand imbalances, higher food and energy prices, and broader price pressures.
The Russo-Ukrainian war has caused enormous human and economic suffering. Wars and related events put upward pressure on inflation and weigh on global economic activity. The Committee pays close attention to inflation risks.
The Committee seeks to achieve full employment and a long-term inflation rate of 2%. In support of these goals, the Committee has decided to increase the target range for the federal funds rate from 4.25% to 4.50%. The Committee expects that further increases in the target range will be appropriate to achieve a monetary policy stance tightening enough to allow inflation to return to 2 per cent over time.
In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the timing of the effects of monetary policy on economic activity and inflation, and economic and financial developments.
In addition, the Committee will continue to reduce its holdings in government bonds, agency debt and agency mortgage-backed securities, as outlined in the “Plan to Reduce the Size of the Fed’s Balance Sheet” released in May. The committee is strongly committed to returning inflation to its 2% target.
In assessing the appropriate monetary policy stance, the Committee will continue to monitor the implications of subsequent information for the economic outlook and will stand ready to adjust the monetary policy stance appropriately if risks arise that could impede the achievement of the Committee’s objectives. The committee’s assessment will take into account a wide range of information, including data on public health, labor market conditions, indicators of inflationary pressure and inflation expectations, as well as data on financial and international developments.
Supporters of this monetary policy resolution include FOMC Chairman Jerome Powell, Vice Chairman John Williams, Michael Barr, Michelle Bowman, Lael Brainard, Bu James Bullard, Susan Collins, Lisa Cook, Esther George, Philip Jefferson, Loretta Mester and Christopher Waller.
From the Fed’s December statement:please click me
Summary of Economic Projections (SEP) updated as of December
The chart below shows the forecasts for GDP, unemployment and PCE inflation:
Below is a dot plot of the FOMC’s forecast for the federal funds rate:
