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Real-time News
On December 31st, the Federal Reserve meeting minutes, in its staff economic outlook, noted that overall, real GDP growth is expected to accelerate slightly through 2028 compared to the projections prepared for the October meeting. This primarily reflects the anticipated greater support from financial market conditions and stronger expectations for potential output growth. After 2025, as the negative impact of high tariffs diminishes and fiscal policy and financial market conditions continue to support spending, GDP growth is expected to remain above potential growth through 2028. Consequently, the unemployment rate is expected to gradually decline after this year, reaching a level slightly below the staffs estimated natural rate of unemployment in 2027. Overall, staffs inflation projections for 2025 and 2026 are slightly lower than those presented at the October meeting, but their projections for 2027 and 2028 remain similar to previous projections.On December 31st, the Federal Reserve meeting minutes revealed that participants generally expected economic growth to accelerate in 2026, and that economic activity to expand at roughly the same pace as potential output over the medium term. Many participants anticipated that adjustments to fiscal and regulatory policies, or more favorable financial market conditions, would support economic growth. However, participants believed that uncertainty regarding their forecasts for real GDP growth remained high. Furthermore, some participants noted that structural factors such as technological progress and productivity gains (potentially reflecting increased applications of artificial intelligence) could promote economic growth without creating price pressures, but could also dampen job growth.On December 31st, the Federal Reserve meeting minutes revealed that, in discussing risk management factors that could influence the outlook for monetary policy, participants generally agreed that upside risks to inflation remained high, while downside risks to employment were also high and had increased since mid-2025. Most participants noted that a shift to a more neutral policy stance would help prevent a significant deterioration in labor market conditions. Many of these participants also believed that existing evidence suggested a reduced likelihood of tariffs causing persistent inflationary pressures. In contrast, some participants noted that upside risks to inflation could be deeply entrenched and argued that further cuts to policy rates, given persistently high inflation data, could be misinterpreted as a weakening commitment by policymakers to the 2% inflation target.December 31st - The Federal Reserve meeting minutes stated that, in discussing the monetary policy decision, members unanimously agreed that existing indicators suggest economic activity is expanding at a moderate pace. They also unanimously agreed that job growth has slowed this year, and the unemployment rate rose slightly through September. Members noted that recent indicators are consistent with these trends. They observed that inflation has risen since the beginning of the year and remains at a high level. They unanimously agreed that the Committee is closely monitoring the risks on both sides of its dual mandate, and that downside risks to employment have increased in recent months.On December 31, the Federal Reserve meeting minutes revealed that, based on discussions regarding the balance sheet, committee members unanimously agreed that reserves had fallen to an adequate level and that the Committee would begin purchasing short-term Treasury securities as needed to maintain an adequate supply of reserves. They also agreed to remove the total cap on standing repurchase operations.
