BOSTON, MA, September 20, 2023 — The Federal Open Market Committee (FOMC) met today to assess the state of the U.S. economy and monetary policy.

What We Learned

As projected, the FOMC left the Federal Funds Target Rate (fed funds) unchanged at 5.25-5.50%, demonstrating the Fed’s commitment to its dual mandate. While virtually no one was expecting a move, the FOMC’s dot plot and updated Summary of Economic Projections were highly anticipated. Although inflation appears to be headed in the right direction, the Fed remains firmly focused on its 2% objective, with 12 of the 19 Committee members favoring another rate hike in 2023 (more than the futures market is currently pricing). Additionally, the median September dot plot projects two rates cuts in 2024, less than the prior estimate of four cuts. It also projects fed funds to end 2024 at 5.1% (higher than the 4.6% level projected in June).

The sentiment changed slightly from the July meeting. Job growth moved from “robust” to “slower” and economic activity switched from a “moderate” to a “solid” pace of expansion. Chair Powell used the press conference to reiterate the dual mandate of price stability and full employment, indicating the Fed would “proceed carefully” in determining its next move while continuing to assess incoming data. The continued tightening of conditions achieved through Quantitative Tightening was also referenced.

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