The Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 0.25 percentage points at its July 26 meeting, bringing it to 5.25 to 5.50 percent.
In its meeting statement, the FOMC said it is strongly committed to returning inflation to its 2 percent objective and that it will continue to assess additional information and its implications for monetary policy. It said the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments to determine the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time.
The policy statement acknowledged that inflation remains elevated but noted that tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. It said the extent of these effects remains uncertain. It also reaffirmed that the U.S. banking system is sound and resilient.
In addition to raising the policy rate, the FOMC said it will continue reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities as described in the Plans for Reducing the Size of the Federal Reserve’s Balance Sheet.
Looking ahead, the FOMC said it will continue to monitor the implications of incoming information and that it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. It said the Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
What does this mean for you? Let’s rewind.
July 2023 FOMC Rewind
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