Fed Statement Signals Further Rate Increases are Unlikely in this Economic Cycle

The Fed's July 31, 2024 statement announcing that it will maintain the target range for the federal funds rate at 5.25 to 5.50% signaled that the further rate increases are increasingly unlikely in the current economic cycle. Changes in the statement's text from the June 12, 2024 statement include:

• job gains have slowed;

• the unemployment rate has risen (but is still low);

• inflation remains "somewhat elevated" versus "elevated"; and

• there has been "some" progress toward the Fed's 2% inflation objective versus "modest" progress toward that objective.

Finally, and perhaps most significantly, the Fed referenced that it is attentive to risks "to both sides of its dual mandate" rather than "highly attentive to inflation risks". The Fed's dual mandate is a reference to its two primary economic goals: to maximize employment while maintaining stable prices. This is the first time that any reference to maximizing employment in any way has been made in nearly two years.

Attached is a marked version of the latest Fed statement against the June 12, 2024 statement.

2024.7.31 Marked FOMC Statement.pdf

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