The Federal Open Market Committee (FOMC) approved the decision by a 12 – 0 vote.
Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability, the policy statement said.
Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient. Productivity growth is strong, and capital investment is robust. Job gains have kept pace with the workforce, and the unemployment rate has changed little, it said.
Meanwhile updated quarterly economic projections showed 16 of 18 Fed officials projecting at least one more quarter-percentage-point hike by the end of this year.
“I would be hard-pressed to describe broad financial conditions as restrictive. This view was widely shared by the Committee. So we removed a dose of accommodation,” Fed Chairman Kevin Warsh said in a press conference.
For more than five years, inflation has been running above target. So, our predominant focus is on the price-stability side of our mandate. The plain fact is that inflation is too high and has been for too long, he noted.
“The committee’s unanimous vote shows our resolve to achieve price stability on a timelier basis. We aim to ensure that credit and financial conditions are consistent over time with our mandate, that relative price changes in some sectors of the economy do not broaden, that inflation compensation in market prices stays low, and that inflation expectations remain well-anchored,” Warsh said.
“In my meetings these last few weeks—in Jackson Hole, in Asheville at the G-20 meeting, which the U.S. hosted, and at a central bank conference in Basel—it was evident that most advanced economies are facing price pressures. Their central banks are making their own judgments, consistent with their own remits. Our decision today reflects our best judgment in service to our remit,” he noted.
