Russia's invasion of Ukraine is taking a toll on human and economic life. The financial repercussions for the United States are highly unpredictable, although in the short term, the invasion and accompanying events are expected to increase inflation and weigh on economic activity.
The Committee's long-run objective is to achieve maximum employment and inflation at a rate of 2%. With the appropriate tightening of monetary policy, the Committee anticipates that inflation will return to its target of 2%, and the labor market will continue robust. To help achieve these objectives, the Committee agreed to increase the target range for the federal funds rate to 0.25 to 0.5 percent and thinks that further increases will be warranted. Additionally, the Committee anticipates that it will begin lowering its holdings of Treasury securities, agency debt, and agency mortgage-backed securities at a future meeting.
Economic activity and employment indicators have continued to improve. Job gains have been robust in recent months, and the unemployment rate has fallen significantly. Inflation continues to be elevated, owing to supply and demand mismatches caused by the pandemic, increased energy prices, and broader pricing pressures.
The Committee would be prepared to change the stance of monetary policy as necessary if risks materialized that would jeopardize the Committee's objectives.
The vote was 8-1 at this meeting. James Bullard voted against this motion, preferring to boost the target range for the federal funds rate by 0.5 percentage point to 3/4 percent at this meeting.
Stocks reversed gains following the FOMC statement. While the yield on the 10-year Treasury note fell, the curve humped.
The FOMC's next meeting is scheduled for May 4, 2022.
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