FOMC holds federal funds target at 3.5%–3.75% and appoints five review task forces

The Chair of the Federal Open Market Committee said the committee decided to maintain the target range for the federal funds rate at 3 and 1/2 to 3 and 3/4 percent and reaffirmed a policy of maintaining ample reserves in the banking system.

"The committee decided to maintain the target range for the Fed funds rate at 3 and 1/2 to 3 and 3/4%," the Chair said, framing the move as consistent with the Fed's dual mandate of price stability and maximum employment.

The Chair summarized the committee's economic assessment, saying economic activity is expanding at a "solid pace" despite elevated uncertainty related in part to the conflict in the Middle East. Productivity growth and capital investment were described as strong, and the unemployment rate was said to have "changed little." The Chair also warned that inflation has been running well above the Fed's long-stated 2 percent goal "for more than 5 years," calling persistently high prices a burden for the American people.

The median projections presented to the committee showed real GDP rising 2.2 percent this year and 2.3 percent next year; total personal consumption inflation at 3.6 percent this year and 2.3 percent next year; an unemployment rate near 4.3 percent; and a median appropriate federal funds rate of about 3.8 percent at year-end and 3.6 percent at the end of next year.

On institutional reforms, the Chair announced an initiative that will create task forces in five areas "central to the broad conduct of monetary policy." "I'm appointing a task force in each of five areas," the Chair said, listing Fed communications, the Fed's balance sheet, use and reliance on existing data sources, productivity and jobs (including artificial intelligence), and inflation frameworks.

Each task force, the Chair said, will include external experts and Fed staff, and is charged to "start with first principles, ask hard questions, examine current practice, [and] consider alternatives," ultimately proposing next steps for policymakers. The Chair said more details and recommendations will be provided in the coming weeks.

The committee's stated decisions and the task-force initiative were presented as efforts to deliver price stability and to assess whether changes in practice would improve the conduct of monetary policy. No formal vote tallies were announced in the remarks provided.

The Chair closed by emphasizing the Fed's mission to be "clear-eyed about its mission, fit for purpose, and focused on the future," and said the system will provide more information on the initiative in the weeks ahead.