The Federal Reserve’s Federal Open Market Committee voted 10-2 on October 28 to keep its target range for the federal funds rate at 3.75% to 4%. The committee said the decision supports its dual mandate and that it will continue maintaining ample reserves in the banking system.
The FOMC described economic activity as expanding at a strong pace, with resilient domestic spending, strong productivity growth and robust capital investment. It said job gains have kept pace with the workforce and the unemployment rate has changed little. The committee also noted that uncertainty remains elevated, partly because of geopolitical developments.
Inflation remains elevated, the statement said. The committee said it needs more information to determine the appropriate policy stance for returning inflation to its 2% goal. Lisa D. Cook and Beth M. Hammack dissented, preferring to raise the target range by a quarter of a percentage point.
In related implementation decisions, the Federal Reserve’s Board of Governors unanimously maintained the interest rate paid on reserve balances at 3.90%, effective October 29. The Board also kept the primary credit rate at 4.0%. The FOMC directed the New York Fed’s Open Market Desk to conduct operations aimed at keeping the federal funds rate within the target range and maintaining an ample level of reserves.
Sources: Federal Reserve Press Releases.