FOMC reaffirms long-run goals and monetary policy strategy
The Federal Open Market Committee (FOMC) has reaffirmed its 'Statement on Longer-Run Goals and Monetary Policy Strategy,' effective January 27, 2026. The Committee remains committed to its statutory mandate of promoting maximum employment, stable prices, and moderate long-term interest rates.
Dual Mandate at the Core
The Federal Open Market Committee (FOMC) reiterated its unwavering commitment to its congressional mandate of fostering maximum employment, stable prices, and moderate long-term interest rates.
The Committee emphasizes clear communication of its monetary policy decisions to reduce uncertainty and enhance transparency.
Its strategy is designed to achieve these goals across diverse economic conditions, primarily by adjusting the target range for the federal funds rate.
The FOMC views maximum employment as the highest sustainable level, acknowledging it is not directly measurable and evolves over time due to nonmonetary factors.
Policy decisions are thus informed by flexible assessments, considering a wide range of indicators.
Anchoring the 2 Percent Target
The FOMC reaffirms its 2 percent inflation target, measured by the annual change in the personal consumption expenditures price index, as essential for price stability.
Well-anchored longer-term inflation expectations are crucial for achieving this goal and promoting maximum employment.
Policy actions influence the economy with a lag, and goal attainment also depends on a stable financial system.
The Committee reviews these principles annually in January and conducts a thorough public review of its strategy approximately every five years.
Steady Course in Shifting Tides
This reaffirmation underscores the Federal Reserve's commitment to policy continuity amidst evolving economic conditions.
While largely a routine procedural step, it signals stability in the central bank's long-term strategic framework.
For market participants, it reinforces the predictability of the Fed's overarching goals, even as tactical decisions adapt.