Summary
- Inflation has eased notably over the past year but remains above the longer-run goal of 2 percent. Inflation is still too high; ongoing progress in bringing it down is not assured, and the path forward is uncertain.
- Longer term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses, and forecasters, as well as measures from financial markets.
- The tightening of policy rate (up by 5.25%) and reduction in securities holdings (more than $1.3 trillion) over the past two years have significantly tightened the stance of monetary policy and are putting downward pressure on economic activity and inflation.
- The strong monetary actions have moved policy rates well into restrictive territory.
- The Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent and to continue the process of significantly reducing securities holdings (i.e., Quantitative Tightening).
- The policy rate is likely at its peak for this tightening cycle, and if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year (not likely in March).
- The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks and is prepared to maintain the current target range for the federal funds rate for longer, if appropriate.
- Reducing policy restraint too soon or too much could result in a reversal of the progress seen on inflation and ultimately require even tighter policy to get inflation back to 2 percent.
- Reducing policy restraint too late or too little could unduly weaken economic activity and employment.
- The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.
- The Committee continues to make decisions on a meeting-by-meeting basis. “We’re not declaring victory at all at this point. We think we have a ways to go.”