BOSTON, MA, November 1, 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 expected, the FOMC left the Federal Funds Target Rate (fed funds) unchanged at 5.25-5.50%. With Q3 economic factors displaying strong results, a firm labor market, and obstinate inflation, the Fed remains steadfast in its commitment to its 2% objective and appears unconvinced that the current policy is overly restrictive.

The statement reflected Q3’s strong pace of economic activity and noted a moderation in job gains. Similarly, tighter financial conditions (aka lower market prices) were added and combined with credit conditions to highlight potential slowing in future economic activity. Interestingly, there was little acknowledgment to the moderation in Q3 core-PCE. Chair Powell used the press conference to emphasize that the committee is not yet confident that monetary policy is sufficiently restrictive to bring inflation down to the 2% objective. The Fed will “proceed carefully” meeting to meeting, assessing the data at that point to decide on the future path of monetary policy. The committee is aware of the impact of higher inflation and higher borrowing costs on the American public.

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