The FOMC January 28-29, 2025, meeting minutes shows the participants:
- The risk to maximum employment and price stability were roughly in balance
- The progress toward the 2% inflation goal had slowed with both upward and downward pressure going forward
- Looking for additional evidence of continued disinflation
- Labor market remains solid, and unemployment rate had stabilized
- The economy had continued to expand at a solid pace with consumer spending and economic activities stronger than anticipated
- Observing a K shape economy
- Surveys from different districts simultaneously show optimism about economic outlook from an expectation of easing regulations and change in tax policies on the one hand and increased uncertainty regarding potential changes in federal government policies on the other hand
- There is evidence of a tightening of financial conditions
- There is cross-current of factors. Many pointed to upside risks to inflation from possible effects of potential changes in trade and immigration policy, geopolitical developments to disrupt supply chains, a stronger-than expected household spending and introduction if new government policies.
- This all lead to increased uncertainty. The Committee believes it is well positions to take time to assess evolving economic outlook. As such the policy is not on a pre-set course and the Committee is to take a careful approach in considering additional adjustments.
- The process of reducing the Federal Reserve’s securities holdings continues (Quantitative Tightening).
- Current target range for the federal funds rate of 4 ¼ to 4 ½ may not be far above its neutral level.
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