The Federal Reserve left the federal funds rate unchanged at its July meeting, keeping the target range of 5.25% to 5.5%. In its statement, the committee says "risks to achieving its employment and inflation goals continue to move into better balance" and "there has been some further progress toward the Committee's 2 percent inflation objective."
The decision was unanimous, with Chicago Fed President Austan Goolsbee voting as an alternate due to the retirement of Loretta Mester, who ran the Cleveland Fed.
Yahoo Finance Federal Reserve reporter Jennifer Schonberger reports on the breaking statement.
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This post was written by Stephanie Mikulich.
So Julie Hyman, it is Jennifer Schonberger has details.
No change. Federal Reserve holding rates steady in the range of 5 and a quarter to 5 and a half percent, but stressing that officials see progress towards their inflation goal hinting that they are drawing nearer to a rate cut. The committee changed language in the statement to say that in recent months, there has been quote some further progress toward the committee's 2% inflation goal. That's a change from quote modest further progress in the prior statement. They also noted to risks that risks to both sides of the dual mandate, inflation and full employment, quote, continue to move into better balance versus moved toward better balance in the prior statement. Meaning that now the Fed sees the risks to both the employment and inflation sides of its mandate more equally weighted, whereas before they saw more risk to the inflation side. They say quote, the outlook is uncertain and the committee is attentive to the risks to both sides of its dual mandate. Though officials maintained key language in that statement that they have held since January, the quote, 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 towards 2%. The Central Bank reiterated that inflation has eased over the past year, but characterized it as quote somewhat elevated as opposed to just elevated. Officials also noted that job gains have moderated and that while the unemployment rate has moved higher, it remains quote low. The decision was unanimous. However, Austin Goolsby from the Chicago Fed filled in for Loretta Mester from the Cleveland Fed, since she retired in June and there was no replacement at this time. Back to you.
Jennifer, thank you very much. Largely as expected here in terms of no change. But also, it did seem like there was a little bit of inching towards that loosening of language that might indicate a little bit more decisiveness for September. Um, but Miles, you know, obviously in the press conference, we'll see if we get more nuance on that front.
Yeah, it's nice that we get the press conference. You of course, remember when we used to have this meeting come and go with no commentary from the Fed, um, you know, the Fed chair at that time. So I think the word coming out of the statement that stands out to me is somewhat. You know, Jennifer called it out where you have elevation, or excuse me, inflation remains somewhat elevated. It changed from calling inflation elevated. So they kept the language around needing greater confidence on inflation readings to adjust their policy stance. Um, I think that gives the Fed plenty of wiggle room with the July, you know, coming next month's CPI report and then the August CPR report coming in September ahead of the Fed's next meetings. You have two inflation readings there, plus a couple of PCEs mixed in that you can go to and say, all right, you know, that that's the confidence we need, but taking away that idea of inflation being elevated and calling it somewhat elevated is really, you know, to my quick reading here on the desk, the most important change within that statement that again is opening that door that I think the Fed wants to walk itself through in six weeks.
Yeah. And uh, we want to go back to Jennifer Schonberger now, um, to see what else you want to flag from the statement or the interpretation of it, Jen.
Thanks Julie. I just building on what you guys were just talking about there. The Fed had really a range of things they could do here. And what they ended up doing is just cracking the door open as opposed to swinging the door wide open, right? And I think to the prior person's comments that they said the characterized inflation is somewhat elevated says that they have seen progress on inflation, but they don't have enough of it yet to fully set the table for that rate cut in September. They this signals to me that there's a lot of room between now and September where things could change and they do not want to tie their hands. They want to make sure that the data continues to show progress for July and August. If we're seeing better data that come in line with what they want to see by the time we get to Jackson Hole, then Fed chair Powell can really lay the groundwork. But to me, this is, this is not a wide open. Hey, yeah, we're doing it. We're cracking, they're saying, we're cracking the door open at this point.
Right. Uh, Jen Schonberger, we'll stick with you as we get through the press conference here. We'll hear from you on the other side.
