For the fourth consecutive meeting, the Federal Reserve Open Market Committee (FOMC) elected to hold rates steady. The decision keeps the target range for the federal funds rate between 5.25% and 5.5%.
Prior to summer 2023, the Federal Reserve increased rates 11 times beginning in March 2022.
During the most recent National Housing Market Update webinar, Zonda chief economist Ali Wolf said while the economy is no longer overheating or on “a fast track to a recession,” the Fed remains “a little bit uncomfortable with inflation.”
In December, the Consumer Price Index (CPI) measured the 12-month average gain for inflation at 3.3%, little changed from the previous month’s 3.1% measurement. Data for the Personal Consumption Expenditures index registered a 12-month gain of 2.6% in December.
As part of its announcement, the Federal Reserve reaffirmed its long-term goal of inflation at a 2% level. The FOMC noted that “inflation has eased over the past year but remains elevated.”
However, in its announcement, the Federal Reserve said the risks to achieving its goal of maximum employment and 2% inflation “are moving into better balance.”
“The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks,” the Committee wrote. “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%.”
In regard to employment, the Federal Reserve noted that job gains have moderated since early 2023 while remaining strong and the unemployment rate has remained low. In the most recent jobs report, the unemployment rate returned to pre-pandemic levels at 3.7%, marginally higher than the post-pandemic low of 3.4% in January 2023.
