The Fed report

highlights from The FOMC Policy Update
JANUARY 30, 2025

Yesterday, the Federal Open Market Committee (FOMC) released its statement and held a press conference following the conclusion of its January meeting.

FOMC Policy Updates: Key Highlights

As widely expected, the FOMC maintained the target range for the federal funds rate at 4.25-4.50% in a unanimous decision at its first meeting of 2025.
There were no material updates to the Fed’s statement regarding the path of monetary policy, though it did highlight improved stability in the unemployment rate and solid conditions in the labor market.
In 2025, the Fed will conduct its scheduled five-year review of its monetary policy framework, which will include public outreach, a research conference, and assessments of new ideas and feedback, but the 2% long-run inflation target will not be a focus of the review.

notable commentary

Chair Powell maintained an upbeat tone regarding the Fed’s progress on its dual mandate over the past two years and noted that, while still somewhat elevated, longer-term inflation expectations appear to remain well anchored.
Though significant progress has been made, Chair Powell described monetary policy as being “meaningfully above neutral,” while continuing to reinforce that the Fed “does not need to be in a hurry” and that monetary policy decisions are “not on any preset course.”
Chair Powell acknowledged that there is somewhat heightened near-term inflationary uncertainty as the new administration considers implementing broad changes to tariffs, immigration, fiscal policy, and regulatory policy, but he reiterated that policy shifts are to be expected following administration changes and that the FOMC will take a wait-and-see approach so as not to react to potential impacts too early.
On a positive housing-related note, Chair Powell highlighted a steady decline in Owner Equivalent Rent and Housing Services, two key inflation measure inputs that have been elevated, as a key example of progress in underlying data that supports the FOMC’s optimistic outlook for long-run inflation.

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