Economy

Powell held the federal funds rate at 3.5 to 3.75 percent, pausing after 75 basis points of cuts across the prior three meetings and calling the current stance appropriate for both mandates. He described the economy as expanding at a solid pace with resilient consumer spending and an AI-driven data-center buildout, while core PCE inflation held at 3.0 percent for the 12 months ending in December, which he attributed largely to tariff effects on goods prices that he characterized as a one-time increase. The Committee revised its statement to drop the prior language about rising downside risks to employment, citing an improved growth outlook and some signs of labor-market stabilization after a period of softening. Powell said the risks to both sides of the dual mandate had diminished and stressed a meeting-by-meeting, data-dependent approach with policy not on a preset course. Two members, Miran and Waller, dissented in favor of a quarter-point cut, and Powell noted this was among his final meetings as Chair before an expected leadership transition.

“Having lowered our policy rate by 75 basis points over the course of our previous three meetings, we see the current stance of monetary policy as appropriate to promote progress toward both our maximum-employment and 2 percent inflation goals.”

“remains somewhat elevated relative to our 2 percent longer-run goal”