Full December Decision Statement
Recent indicators of spending and production point to modest growth, with job growth continuing to be strong and the unemployment rate holding steady.
Stay low. Inflation remains stubbornly high, reflecting pandemic-related supply-demand imbalances, higher food and energy prices, and broader price pressures.
The Russo-Ukrainian war resulted in enormous human and economic suffering. Wars and related events put upward pressure on inflation and weigh on global economic activity. The Committee is paying close attention to inflation risks.
The Committee seeks to achieve full employment and a longer-term inflation rate of 2 percent. In support of these objectives, the Committee decided to increase the target range for the federal funds rate to 4.25 percent to 4.50 percent. The Committee expects that further increases in the target range will be appropriate to achieve a sufficiently restrictive stance of monetary policy to allow inflation to return to 2 percent 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 monetary policy impacts on economic activity and inflation, and economic and financial developments.
In addition, the Committee will continue to reduce its holdings of government bonds, agency debt, and agency mortgage-backed securities, as described in the “Project to Reduce the Size of the Fed’s Balance Sheet” published in May. The committee is strongly committed to getting inflation back to its 2% target.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of subsequent information for the economic outlook, and will be prepared to adjust the stance of monetary policy appropriately if risks arise that may impede the Committee’s objectives. The committee’s assessment will take into account a wide range of information, including public health data, labor market conditions, indicators of inflation 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 in December
The chart below shows GDP, unemployment and PCE inflation forecasts:
Below is a dot plot of the FOMC’s forecast for the federal funds rate:
