Economy

The Committee held the target range for the federal funds rate at 4.25 to 4.5 percent, with Chair Powell characterizing the stance as modestly restrictive and appropriate to guard against inflation risks. Powell emphasized that inflation remained somewhat above the 2 percent goal even setting aside tariff effects, while describing the labor market as broadly in balance with payroll gains averaging 150,000 per month and unemployment at 4.1 percent. He framed higher tariffs as beginning to push up some goods prices, with a base case that the effect represents a one-time shift in the price level rather than persistent inflation. Two members dissented in favor of a quarter-point cut, which Powell described as thoughtfully argued, and he noted the Committee made no decisions about September and issued no updated Summary of Economic Projections. He reiterated that policy should remain restrictive because inflation was the variable farther from the Committee's goal.

“modestly restrictive policy seems appropriate”

“Inflation has eased significantly from its highs in mid-2022 but remains somewhat elevated relative to our 2 percent longer-run goal.”