FOMC

Minutes of the
Federal Open Market Committee
December 17–18, 2024

FEDERAL RESERVE SYSTEM

Minutes of the Federal Open Market
Committee
December 17–18, 2024
A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal
Reserve System was held in the offices of the Board of Governors on Tuesday, December 17, 2024, at
10:30 a.m. and continued on Wednesday, December 18, 2024, at 9:00 a.m. 1

Developments in Financial Markets and Open Market Operations

The manager turned first to a review of developments in financial markets. Nominal Treasury yields
fluctuated over the intermeeting period and were slightly higher, on net, than in early November.
Treasury yields had risen notably since their trough in mid-September, with the rise in the 10-year
nominal yield driven largely by increases in real yields. Liquidity in Treasury markets deteriorated
somewhat following the U.S. election but remained well within the ranges observed over the past three
years. With near-term measures of inflation compensation a little higher over the intermeeting period
and longer-term measures little changed, the manager noted that there were few signs of concern
about persistent inflationary pressures in market prices. Equity prices largely sustained the gains that
they had experienced in anticipation of, and immediately following, the U.S. election.

The manager noted that market expectations for the path of the federal funds rate were little changed
over the intermeeting period. Markets had almost fully priced in a 25 basis point cut in the target
range for the federal funds rate at this meeting, and all respondents from the Open Market Desk’s
Survey of Primary Dealers and Survey of Market Participants expected the same. Survey respondents
anticipated that the pace of rate cuts would slow considerably in 2025, with the median respondent
expecting 75 basis points of cuts for the full year; options and futures prices suggested a somewhat
lower level of expected policy easing in 2025. However, in discussing both survey and market
expectations, the manager noted that there was considerable uncertainty among market participants
about the path of the federal funds rate in the year ahead.

The manager also discussed balance sheet policy expectations. The average estimate of survey
respondents for the timing of the end of balance sheet runoff shifted a bit later, to June 2025. This
shift mainly reflected revisions to estimates by respondents who had expected balance sheet runoff to
end in the last quarter of 2024 or in early 2025.

1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of

Governors of the Federal Reserve System is referenced as the “Board” in these minutes.
 2 December 17–18, 2024

Regarding international developments, the manager noted that market participants expected central
banks in nearly all advanced foreign economies (AFEs) to continue to reduce their policy rates in
2025. In contrast to the U.S., market expectations for policy rates at the end of 2025 in most AFEs
had shifted lower over the intermeeting period. The manager noted that this widening between U.S.
and foreign interest rates appeared to be a major contributor to the increase in the trade-weighted
U.S. dollar index observed over the intermeeting period.

The manager then turned to money markets and Desk operations. Unsecured overnight rates had
remained stable over the intermeeting period, and with the exception of temporary pressures around
month-end and Treasury auction settlement dates, rates on overnight repurchase agreements (repo)
were little changed. The manager noted that, on average, market participants appeared to be
expecting upward pressure in repo markets around year-end comparable with that seen at the
September quarter-end. Based on term and forward-settling repo volumes, market participants
appeared to have been more proactive than in recent years in preparing for the year-end, which the
manager judged could help mitigate somewhat the extent of upward pressure on repo rates during
that time.

Pricing in the federal funds market continued to be insensitive to day-to-day changes in the supply of
reserves over the intermeeting period. The manager noted that this outcome was consistent with
reserves remaining abundant and that various other indicators, as well as responses about banks’
desired reserve levels from the Federal Reserve’s Senior Financial Officer Survey, pointed to the same
conclusion. Looking ahead, the manager raised the possibility that the potential reinstatement of the
debt limit in 2025 could result in substantial shifts in Federal Reserve liabilities that could pose
challenges in assessing reserve conditions.

Usage of the overnight reverse repurchase agreement (ON RRP) facility continued its decline over the
intermeeting period. The recent decrease in ON RRP usage was attributable in part to increases in net
Treasury bill issuance, which made Treasury bill rates more attractive. In the near term, the manager
judged that ON RRP volumes were likely to rise because of an expected decline in net Treasury bill
issuance and typical year-end dynamics. The manager also noted that the potential reinstatement of
the debt limit could keep ON RRP balances elevated for some time in 2025.

The manager discussed market expectations regarding a technical adjustment that would lower the
ON RRP offering rate to the bottom of the target range for the federal funds rate. Based on the Desk
surveys and market outreach, most market participants expected such an adjustment at this meeting.
Market participants’ views varied on how much downward pressure this adjustment would put on
money market rates, but repo rates were generally expected to fall more than the federal funds rate.
 Minutes of the Federal Open Market Committee 3

The manager concluded by noting that the Desk was planning to add a second standing repo facility
(SRF) auction on each day of the week spanning year-end. The manager viewed these additional
auctions as technical exercises that could improve the Federal Reserve’s understanding of how SRF
auction times can support effective policy implementation and market functioning during periods of
expected money market pressures.

By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting
period. There were no intervention operations in foreign currencies for the System’s account during
the intermeeting period.

Staff Review of the Economic Situation

The information available at the time of the meeting indicated that real gross domestic product (GDP)
had continued to expand at a solid pace in 2024. Labor market conditions had eased since early
2024, but the unemployment rate remained low. Consumer price inflation was below its year-earlier
rate but was still somewhat elevated.

Total consumer price inflation—as measured by the 12-month change in the price index for personal
consumption expenditures (PCE)—was 2.3 percent in October, below the 3.0 percent rate seen a year
earlier. Core PCE price inflation—which excludes changes in consumer energy prices and many
consumer food prices—was 2.8 percent in October, lower than its 3.4 percent rate a year earlier. In
November, the 12-month change in the consumer price index (CPI) was 2.7 percent, and core CPI
inflation was 3.3 percent; both were below their year-earlier rates. Given both the CPI and producer
price index data, the staff estimated that total PCE price inflation would be reported as 2.5 percent
over the 12 months ending in November and that core PCE price inflation would be 2.8 percent.

Recent data suggested that labor market conditions had eased slightly further but remained solid.
Average monthly nonfarm payroll gains over October and November were a little below their pace in
the third quarter. The staff estimated that job gains were held down by the effects of labor strikes and
hurricanes in October and were boosted by a similar amount in November after those effects
unwound. The unemployment rate ticked up to 4.2 percent in November, and both the labor force
participation rate and the employment-to-population ratio moved down a bit further. The
unemployment rates for African Americans and for Hispanics also moved up, and both rates were
above those for Asians and for Whites. The ratio of job vacancies to unemployment held steady at 1.1
in November, slightly lower than its level just before the pandemic. Average hourly earnings for all
employees rose 4 percent over the 12 months ending in November—the same rate as in the previous
month.

Real GDP posted a solid gain in the third quarter that was similar to its second-quarter pace. Real
private domestic final purchases (PDFP)—which comprises PCE and private fixed investment and
 4 December 17–18, 2024

which often provides a better signal than GDP of underlying economic momentum—rose faster than
real GDP in the third quarter. Exports rose briskly in the third quarter; import growth was even faster.
In the fourth quarter, available economic indicators suggested that real GDP growth remained solid,
with growth of real PDFP still outpacing that of real GDP. Imports fell more than exports in October,
with real imports of capital goods dropping back after brisk growth earlier in the year.

Foreign economic growth picked up in the third quarter, notably in the euro area and in Mexico.
Recent economic indicators, however, suggested much weaker momentum in foreign economies in
the fourth quarter, with lackluster manufacturing activity and subdued private consumption spending.
In China, growth in retail sales slowed, suggesting that domestic demand remained weak. Strength in
high-tech goods production continued abroad, mainly in Asia excluding China, supported by buoyant
U.S. demand.

Inflation in foreign economies continued to ease. In most AFEs, headline inflation slowed to near or
below target levels, mainly reflecting the pass-through of lower energy prices earlier in the year.
Services inflation, however, remained high in some of those economies. In China, inflation remained
close to zero, in part due to falling food prices. By contrast, in some Latin American countries, most
notably Brazil, inflation continued to increase, partly because of currency depreciation.

Staff Review of the Financial Situation

The market-implied path of the federal funds rate over the next year edged higher, on net, since the
U.S. election, as investors assessed the implications of incoming inflation data and potential economic
policy changes for the near-term economic outlook. Communications by Federal Reserve officials
contributed to investors’ perceptions of a slower timeline for policy rate reductions. Nominal Treasury
yields across the maturity spectrum initially increased but then reversed those increases, ending the
intermeeting period little changed. Measures of near-term inflation compensation moved up, while
those of longer-term inflation compensation were little changed.

Broad equity prices rose, with more pronounced increases in stock prices in cyclical sectors amid
increased investor optimism for corporate profits, and high-yield bond spreads narrowed. The VIX—a
forward-looking measure of near-term equity market volatility—fell notably and remained well below
pre-election levels.

Foreign financial market pricing reflected weaker-than-expected foreign data releases, expectations of
further policy easing by foreign central banks, and potential changes in U.S. trade policy. Accordingly,
foreign bond yields generally declined relative to their U.S. counterparts, contributing to dollar
appreciation against most foreign currencies. Foreign equities generally underperformed U.S.
equities, in part reflecting investors’ expectations of economic growth diverging further between the
U.S. and the rest of the world.
 Minutes of the Federal Open Market Committee 5

Many foreign central banks eased their policy rates during the intermeeting period, including the Bank
of Canada, the European Central Bank, and the Swiss National Bank, among the AFEs, and the central
banks of Hong Kong, India, Korea, and Mexico, among the emerging market economies. An exception
was the Central Bank of Brazil, which increased its policy rate 100 basis points and signaled further
hikes in the face of inflationary pressures.

Conditions in U.S. short-term funding markets remained generally stable over the intermeeting period,
with the lowering of the target range for the federal funds rate in November fully passing through to
both secured and unsecured reference rates. Money market funds’ (MMFs) usage of the ON RRP
facility was lower, on average, than in the previous intermeeting period, reflecting increased holdings
of Treasury bills amid sizable net bill issuance. Overall, MMF assets under management stayed near
record highs. Spreads of unsecured commercial paper maturing over year-end remained within typical
ranges, and global offshore dollar funding markets continued to be stable.

In domestic markets, borrowing costs for households, businesses, and municipalities remained
elevated despite small declines in most credit segments. Rates on 30-year fixed-rate conforming
residential mortgages declined but stayed elevated. Interest rates on credit cards and new auto loans
continued to be at historical highs, although interest rates on new auto loans decreased further.
Borrowing costs for leveraged loan borrowers declined slightly. Interest rates on newly originated
commercial and industrial (C&I) loans ticked down in the third quarter, and interest rates on short-
term loans to small businesses remained unchanged. Yields on an array of fixed-income securities,
including investment- and speculative-grade corporate bonds and commercial mortgage-backed
securities (CMBS), decreased slightly but remained elevated.

Financing in capital markets continued to be broadly available for large-to-midsize businesses and
municipalities. For small businesses, however, credit availability remained relatively tight, and loan
originations stayed subdued in October. C&I loans by banks increased moderately in October and
were flat through November after modest growth in the third quarter. After stalling in the third quarter,
commercial real estate (CRE) loan growth picked up moderately in October and remained subdued
through late November. Meanwhile, agency CMBS issuance continued to be weak in October, while
non-agency CMBS issuance was strong in October and in the first three weeks of November, reflecting
a high volume of refinancing activity.

Credit continued to be generally available for most households. Even so, auto loans were little
changed in the third quarter, and growth of revolving credit was weak into November. Credit in the
residential mortgage market continued to be readily available for high-credit-score borrowers, while
credit availability for low-credit-score borrowers improved, on net, over the six months through
October.
 6 December 17–18, 2024

Credit quality remained solid for large-to-midsize firms, municipalities, and most home mortgage
borrowers. The credit performance of corporate bonds and leveraged loans was generally stable. At
banks, delinquency rates on C&I loans were stable and remained within the range observed over the
past decade. Delinquency rates on small business loans continued to increase through October, as
did delinquencies on small business credit cards through September. In CRE markets, credit
performance deteriorated further as aggregate CMBS delinquency rates rose through October, driven
by delinquencies on office loans. At banks, delinquency rates on CRE loans ticked up through
September from already elevated levels. Regarding household credit quality, delinquency rates on
most residential mortgages were largely unchanged and stood near historical lows. However, the
delinquency rate on Federal Housing Administration mortgages, which are disproportionately used by
borrowers with lower credit scores and smaller down payments, remained above pre-pandemic levels.
Delinquency rates on credit cards continued to increase, albeit at a slower pace than earlier in the
year, while delinquency rates on auto loans were unchanged.

Staff Economic Outlook

The staff projection at the December meeting was for economic conditions to stay solid. Given the
elevated uncertainty regarding specifics about the scope and timing of potential changes to trade,
immigration, fiscal, and regulatory policies and their potential effects on the economy, the staff
highlighted the difficulty of selecting and assessing the importance of such factors for the baseline
projection and featured a number of alternative scenarios. After incorporating the recent data and
preliminary placeholder assumptions about potential policy changes, real GDP growth was projected to
be slightly slower than in the previous baseline forecast, and the unemployment rate was expected to
be a bit higher but to remain near the staff’s estimate of its natural rate.

In the staff’s baseline projection, the inflation forecast for 2024 was slightly higher than the one
prepared for the previous meeting, reflecting upside surprises in some recent data. Inflation in 2025
was expected to remain at about the same rate as in 2024, as the effects of the staff’s placeholder
trade policy assumptions held inflation up. Thereafter, inflation was forecast to decline to 2 percent
by 2027, the same as in the projection at the November meeting.

The staff continued to view the uncertainty around the baseline projection as within the range seen
over the past 20 years, a period that encompassed a number of episodes during which uncertainty
about the economy and federal policy changes was elevated. The staff judged that the risks around
the baseline forecasts for employment and real GDP growth were balanced, as concerns about
downside risks from a marked cooling in labor market conditions had eased in recent months. The
risks around the inflation forecast were seen as tilted to the upside, as core inflation had not come
 Minutes of the Federal Open Market Committee 7

down as much as expected in 2024 and the effects of trade policy changes could be larger than the
staff had assumed.

Participants’ Views on Current Conditions and the Economic Outlook

In conjunction with this FOMC meeting, participants submitted their projections of the most likely
outcomes for real GDP growth, the unemployment rate, and inflation for each year from 2024 through
2027 and over the longer run. These projections were based on participants’ individual assessments
of appropriate monetary policy, including their projections of the federal funds rate. The longer-run
projections represented each participant’s assessment of the rate to which each variable would tend
to converge under appropriate monetary policy and in the absence of further shocks to the economy.
The Summary of Economic Projections was released to the public after the meeting.

In their discussion of inflation developments, participants noted that although inflation had eased
substantially from its peak in 2022, it remained somewhat elevated. Participants commented that the
overall pace of disinflation had slowed over 2024 and that some recent monthly price readings had
been higher than anticipated. Nevertheless, most remarked that disinflationary progress continued to
be apparent across a broad range of core goods and services prices. Notably, some participants
observed that in the core goods and market-based core services categories, excluding housing, prices
were increasing at rates close to those seen during earlier periods of price stability. Many participants
noted that the slowing in these components of inflation corroborated reports received from their
business contacts that firms were more reluctant to increase prices, as consumers appeared to be
more price sensitive and were increasingly seeking discounts. With respect to core services prices, a
majority of participants remarked that increases in some components had exceeded expectations over
recent months; many noted, however, that the increases were concentrated largely in non-market-
based price categories and that price movements in such categories typically have not provided
reliable signals about resource pressures or the future trajectory of inflation. Most participants also
remarked that increases in housing services prices remained somewhat elevated, though they
continued to slow gradually, as the pace of rent increases for new tenants continued to moderate and
would eventually be reflected further in housing services prices.

With regard to the outlook for inflation, participants expected that inflation would continue to move
toward 2 percent, although they noted that recent higher-than-expected readings on inflation, and the
effects of potential changes in trade and immigration policy, suggested that the process could take
longer than previously anticipated. Several observed that the disinflationary process may have stalled
temporarily or noted the risk that it could. A couple of participants judged that positive sentiment in
financial markets and momentum in economic activity could continue to put upward pressure on
inflation. All participants judged that uncertainty about the scope, timing, and economic effects of
 8 December 17–18, 2024

potential changes in policies affecting foreign trade and immigration was elevated. Reflecting that
uncertainty, participants took varied approaches in accounting for these effects. A number of
participants indicated that they incorporated placeholder assumptions to one degree or another into
their projections. Other participants indicated that they did not incorporate such assumptions, and a
few participants did not indicate whether they incorporated such assumptions.

Several participants remarked that insofar as recent solid increases in real GDP reflected favorable
supply developments, the strength of economic activity was unlikely to be a source of upward inflation
pressures. Participants cited various factors as being likely to put continuing downward pressure on
inflation, including waning business pricing power, the Committee’s still-restrictive monetary policy
stance, and well-anchored longer-term inflation expectations. Some participants noted that nominal
wage growth had continued to move down. Further, several observed that, with supply and demand in
the labor market being roughly in balance and in light of recent productivity gains, labor market
conditions were unlikely to be a source of inflationary pressure in the near future. However, several
remarked that nominal wage growth remained slightly above the pace likely to be consistent over time
with 2 percent inflation.

In discussing labor market developments, participants viewed recent readings on a range of indicators
as consistent with an ongoing gradual easing in labor market conditions even as the unemployment
rate remained low. Participants cited declines in job vacancies, the quits rate, the rate at which the
unemployed were obtaining jobs, and turnover as consistent with a gradual easing in labor demand.
Participants generally noted, however, that there were no signs of rapid deterioration in labor market
conditions, as layoffs remained low. Participants generally judged that current labor market
conditions were broadly consistent with the Committee’s longer-run goal of maximum employment.

With regard to the outlook for the labor market, participants anticipated that under appropriate
monetary policy, conditions in the labor market would likely remain solid. Participants generally noted
that labor market indicators merited close monitoring. Several participants observed that the
evaluation of underlying trends in labor market developments had continued to be challenging and
that assessments of the outlook for the labor market were associated with considerable uncertainty.
Some participants noted that the labor market could soften further, as the recent pace of payroll
growth had been below the rate that would likely keep the unemployment rate constant, given a stable
labor force participation rate.

Participants observed that economic activity had continued to expand at a solid pace and that recent
data on economic activity and consumer spending in particular were, on balance, stronger than
anticipated. Participants remarked that consumption had been supported by a solid labor market,
rising real wages, and elevated household net worth. Several participants cautioned that low- and
moderate-income households continued to experience financial strains, which could damp their
 Minutes of the Federal Open Market Committee 9

spending. A couple of participants cited continued increases in rates of delinquencies on credit card
borrowing and automobile loans as signs of such strains.

With regard to the business sector, several participants noted that favorable aggregate supply
developments—including increases in labor supply, business investment, and productivity—continued
to support a solid expansion of business activity. A majority of participants remarked that the behavior
of equity markets reflected positive sentiment on the part of investors. Many participants also
remarked that District contacts generally reported greater optimism about the economic outlook,
stemming in part from an expectation of an easing in government regulations and changes in tax
policies. In contrast, some participants noted that contacts reported increased uncertainty regarding
potential changes in federal government policies. A couple of participants remarked that the
agricultural sector continued to face significant strains stemming from low crop prices and high input
costs.

In their evaluation of the risks and uncertainties associated with the economic outlook, the vast
majority of participants judged the risks to the attainment of the Committee’s dual-mandate objectives
of maximum employment and price stability to be roughly in balance. In particular, participants saw
two-sided risks to achieving those goals. Almost all participants judged that upside risks to the
inflation outlook had increased. As reasons for this judgment, participants cited recent stronger-than-
expected readings on inflation and the likely effects of potential changes in trade and immigration
policy. Other reasons mentioned included possible disruptions in global supply chains due to
geopolitical developments, a larger-than-anticipated easing in financial conditions, stronger-than-
expected household spending, and more persistent shelter price increases. A few participants
remarked that, in the period ahead, it might be difficult to distinguish more persistent influences on
inflation from potentially temporary ones, such as those stemming from changes in trade policy that
could lead to shifts in the level of prices. Most participants noted that risks to the achievement of the
Committee’s maximum-employment goal appeared to be roughly balanced, though some saw risks to
the labor market as tilted to the downside. Participants pointed to various risks to economic activity
and employment, including downside risks associated with weaker output growth abroad, increased
financial vulnerabilities stemming from overvaluation of risky assets, or an unexpected weakening of
the labor market, and upside risks associated with increased optimism and continued strength in
domestic spending as upside factors.

In their consideration of monetary policy at this meeting, participants generally noted that inflation had
made progress toward the Committee’s objective but remained somewhat elevated. Participants also
observed that recent indicators suggested that economic activity had continued to expand at a solid
pace, labor market conditions had generally eased since earlier in the year, and the unemployment
rate had moved up but remained low. The vast majority of participants viewed it as appropriate to
 10 December 17–18, 2024

lower the target range for the federal funds rate by 25 basis points to 4¼ to 4½ percent. They
assessed that such a further lowering of the target range for the policy rate would help maintain the
strength in the economy and the labor market while continuing to enable further progress on inflation.
A majority of participants noted that their judgments about this meeting’s appropriate policy action
had been finely balanced. Some participants stated that there was merit in keeping the target range
for the federal funds rate unchanged. These participants suggested that the risk of persistently
elevated inflation had increased in recent months, and several of these participants stressed the need
for monetary policy to help foster financial conditions that would be consistent with inflation returning
sustainably to 2 percent. Participants judged that it was appropriate to continue the process of
reducing the Federal Reserve’s securities holdings.

In discussing the outlook for monetary policy, participants indicated that the Committee was at or near
the point at which it would be appropriate to slow the pace of policy easing. They also indicated that if
the data came in about as expected, with inflation continuing to move down sustainably to 2 percent
and the economy remaining near maximum employment, it would be appropriate to continue to move
gradually toward a more neutral stance of policy over time. Some participants observed that, with the
target range for the federal funds rate having been lowered a total of 100 basis points with this
meeting’s decision, the policy rate was now significantly closer to its neutral value than when the
Committee commenced policy easing in September. In addition, many participants suggested that a
variety of factors underlined the need for a careful approach to monetary policy decisions over coming
quarters. These factors included recent elevated inflation readings, the continuing strength of
spending, reduced downside risks to the outlook for the labor market and economic activity, and
increased upside risks to the outlook for inflation. A substantial majority of participants observed that,
at the current juncture, with its policy stance still meaningfully restrictive, the Committee was well
positioned to take time to assess the evolving outlook for economic activity and inflation, including the
economy’s responses to the Committee’s earlier policy actions. Participants noted that monetary
policy decisions were not on a preset course and were conditional on the evolution of the economy,
the economic outlook, and the balance of risks.

In discussing risk-management considerations that could bear on the outlook for monetary policy, the
vast majority of participants agreed that risks to achieving the Committee’s employment and inflation
goals remained roughly in balance. Many participants observed that the current high degree of
uncertainty made it appropriate for the Committee to take a gradual approach as it moved toward a
neutral policy stance. Participants noted that although inflation was on course to return sustainably to
2 percent over the next few years and the Committee was determined to restore and maintain price
stability, the likelihood that elevated inflation could be more persistent had increased. Most
participants remarked that, with the stance of monetary policy now significantly less restrictive, the
Committee could take a careful approach in considering adjustments to the stance of monetary policy.
 Minutes of the Federal Open Market Committee 11

Many participants noted that the Committee could hold the policy rate at a restrictive level, or ease
policy more slowly, if inflation remained elevated, and several remarked that policy easing could take
place more rapidly if labor market conditions deteriorated, economic activity faltered, or inflation
returned to 2 percent more quickly than anticipated.

Committee Policy Actions

In their discussions of monetary policy for this meeting, members agreed that recent indicators
suggested that economic activity had continued to expand at a solid pace. Labor market conditions
had generally eased since earlier in the year, and the unemployment rate had moved up but remained
low. Members concurred that inflation had made progress toward the Committee’s 2 percent
objective but remained somewhat elevated. Almost all members agreed that the risks to achieving the
Committee’s employment and inflation goals were roughly in balance. Members viewed the economic
outlook as uncertain and agreed that they were attentive to the risks to both sides of the Committee’s
dual mandate.

In support of its goals, the Committee agreed to lower the target range for the federal funds rate by
25 basis points to 4¼ to 4½ percent. One member voted against that decision, preferring to maintain
the target range for the federal funds rate at 4½ to 4¾ percent. In light of their judgment that, after
this meeting, the Committee would likely slow the pace of further adjustments to the stance of
monetary policy, members agreed to indicate that, in considering the extent and timing of additional
adjustments to the target range for the federal funds rate, the Committee would carefully assess
incoming data, the evolving outlook, and the balance of risks. Members agreed to continue to reduce
the Federal Reserve’s holdings of Treasury securities and agency debt and agency mortgage-backed
securities. Members also judged that it was appropriate to make a technical adjustment to the rate
offered at the ON RRP facility by setting it equal to the bottom of the target range for the federal funds
rate, thereby bringing the rate back into an alignment that had existed when the facility was
established as a monetary policy tool. All members agreed that the postmeeting statement should
affirm their strong commitment both to supporting maximum employment and to returning inflation to
the Committee’s 2 percent objective.

Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would
continue to monitor the implications of incoming information for the economic outlook. They would be
prepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede
the attainment of the Committee’s goals. Members also agreed that their assessments would take
into account a wide range of information, including readings on labor market conditions, inflation
pressures and inflation expectations, and financial and international developments.
 12 December 17–18, 2024

At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New
York, until instructed otherwise, to execute transactions in the System Open Market Account in
accordance with the following domestic policy directive, for release at 2:00 p.m.:

“Effective December 19, 2024, the Federal Open Market Committee directs the Desk to:

• Undertake open market operations as necessary to maintain the federal funds rate in a
target range of 4¼ to 4½ percent.

• Conduct standing overnight repurchase agreement operations with a minimum bid rate of
4.5 percent and with an aggregate operation limit of $500 billion.

• Conduct standing overnight reverse repurchase agreement operations at an offering rate

of 4.25 percent and with a per-counterparty limit of $160 billion per day. Setting this rate
at the bottom of the target range for the federal funds rate is intended to support
effective monetary policy implementation and the smooth functioning of short-term
funding markets.

• Roll over at auction the amount of principal payments from the Federal Reserve’s
holdings of Treasury securities maturing in each calendar month that exceeds a cap of
$25 billion per month. Redeem Treasury coupon securities up to this monthly cap and
Treasury bills to the extent that coupon principal payments are less than the monthly cap.

• Reinvest the amount of principal payments from the Federal Reserve’s holdings of
agency debt and agency mortgage-backed securities (MBS) received in each calendar
month that exceeds a cap of $35 billion per month into Treasury securities to roughly
match the maturity composition of Treasury securities outstanding.

• Allow modest deviations from stated amounts for reinvestments, if needed for
operational reasons.

• Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement
of the Federal Reserve’s agency MBS transactions.”

The vote also encompassed approval of the statement below for release at 2:00 p.m.:

“Recent indicators suggest that economic activity has continued to expand at a solid pace.
Since earlier in the year, labor market conditions have generally eased, and the
unemployment rate has moved up but remains low. Inflation has made progress toward the
Committee’s 2 percent objective but remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent
over the longer run. The Committee judges that the risks to achieving its employment and
 Minutes of the Federal Open Market Committee 13

inflation goals are roughly in balance. The economic outlook is uncertain, and the Committee
is attentive to the risks to both sides of its dual mandate.

In support of its goals, the Committee decided to lower the target range for the federal funds
rate by ¼ percentage point to 4¼ to 4½ percent. In considering the extent and timing of
additional adjustments to the target range for the federal funds rate, the Committee will
carefully assess incoming data, the evolving outlook, and the balance of risks. The
Committee will continue reducing its holdings of Treasury securities and agency debt and
agency mortgage-backed securities. The Committee is strongly committed to supporting
maximum employment and returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to
monitor the implications of incoming information for the economic outlook. The Committee
would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that
could impede the attainment of the Committee’s goals. The Committee’s assessments will
take into account a wide range of information, including readings on labor market conditions,
inflation pressures and inflation expectations, and financial and international developments.”

Voting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr, Raphael
W. Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C. Daly, Philip N. Jefferson, Adriana D. Kugler, and
Christopher J. Waller.

Voting against this action: Beth M. Hammack.

President Hammack dissented because she preferred to maintain the target range for the federal
funds rate at 4½ to 4¾ percent, in light of uneven progress in returning inflation to 2 percent, the
strength of the economy and the labor market, and the state of financial conditions. In her view, with
the current federal funds rate not far from neutral, holding the funds rate at a modestly restrictive
stance for a time was appropriate to ensure that inflation returns to 2 percent in a timely fashion.

Consistent with the Committee's decision to lower the target range for the federal funds rate to 4¼ to
4½ percent, the Board of Governors of the Federal Reserve System voted unanimously to lower the
interest rate paid on reserve balances to 4.4 percent, effective December 19, 2024. The Board of
 14 December 17–18, 2024

Governors of the Federal Reserve System voted unanimously to approve a ¼ percentage point
decrease in the primary credit rate to 4.5 percent, effective December 19, 2024. 2

It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday,
January 28–29, 2025. The meeting adjourned at 10:10 a.m. on December 18, 2024.

Notation Vote
By notation vote completed on November 25, 2024, the Committee unanimously approved the
minutes of the Committee meeting held on November 6–7, 2024.

Attendance
Jerome H. Powell, Chair
John C. Williams, Vice Chair
Thomas I. Barkin
Michael S. Barr
Raphael W. Bostic
Michelle W. Bowman
Lisa D. Cook
Mary C. Daly
Beth M. Hammack
Philip N. Jefferson
Adriana D. Kugler
Christopher J. Waller

Susan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, Jeffrey R. Schmid, and Sushmita Shukla,
Alternate Members of the Committee
Patrick Harker, Neel Kashkari, and Lorie K. Logan, Presidents of the Federal Reserve Banks of
Philadelphia, Minneapolis, and Dallas, respectively
Joshua Gallin, Secretary
Matthew M. Luecke, Deputy Secretary
Brian J. Bonis, Assistant Secretary
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel
Richard Ostrander, Deputy General Counsel
Trevor A. Reeve, Economist
Stacey Tevlin, Economist
Beth Anne Wilson, Economist
Shaghil Ahmed, James A. Clouse, Brian M. Doyle, Edward S. Knotek II, David E. Lebow, Sylvain Leduc,
and William Wascher, Associate Economists

2 In taking this action, the Board approved requests to establish that rate submitted by the Board of Directors of the Federal

Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and San Francisco. The vote also
encompassed approval by the Board of Governors of the establishment of a 4.5 percent primary credit rate by the remaining
Federal Reserve Banks, effective on December 19, 2024, or the date such Reserve Banks inform the Secretary of the Board of
such a request. (Secretary’s note: Subsequently, the Federal Reserve Banks of St. Louis, Minneapolis, Kansas City, and Dallas
were informed of the Board’s approval of their establishment of a primary credit rate of 4.5 percent, effective December 19,
2024.)
 Minutes of the Federal Open Market Committee 15

Roberto Perli, Manager, System Open Market Account

Julie Ann Remache, Deputy Manager, System Open Market Account
Stephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board
Jose Acosta, Senior System Engineer II, Division of Information Technology, Board
Andrea Ajello, Section Chief, Division of Monetary Affairs, Board
David Altig, Executive Vice President, Federal Reserve Bank of Atlanta
Roc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia
Alyssa Arute, 3 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board
Alessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board
Michele Cavallo, Special Adviser to the Board, Division of Board Members, Board
Stephanie E. Curcuru, Deputy Director, Division of International Finance, Board
Riccardo DiCecio, Economic Policy Advisor, Federal Reserve Bank of St. Louis
Eric M. Engen, Senior Associate Director, Division of Research and Statistics, Board
Eric C. Engstrom, Associate Director, Division of Monetary Affairs, Board
Andrew Figura, Associate Director, Division of Research and Statistics, Board
Glenn Follette, Associate Director, Division of Research and Statistics, Board
Jenn Gallagher, Assistant to the Board, Division of Board Members, Board
Michael S. Gibson, Director, Division of Supervision and Regulation, Board
Joseph W. Gruber, Executive Vice President, Federal Reserve Bank of Kansas City
Christopher J. Gust,3 Associate Director, Division of Monetary Affairs, Board
James Hebden, Principal Economic Modeler, Division of Monetary Affairs, Board
François Henriquez, First Vice President, Federal Reserve Bank of St. Louis
Valerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board
Bart Hobijn, Senior Economist and Economic Advisor, Federal Reserve Bank of Chicago
Jane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board
Jordan R. Keitelman,3 Senior Financial Institution Policy Analyst II, Division of Reserve Bank Operations
and Payment Systems, Board
Michael T. Kiley, Deputy Director, Division of Financial Stability, Board
Don H. Kim, Senior Adviser, Division of Monetary Affairs, Board
Anna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond
Andreas Lehnert, Director, Division of Financial Stability, Board
Kurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board

3 Attended through the discussion of developments in financial markets and open market operations.
 16 December 17–18, 2024

Laura Lipscomb, Special Adviser to the Board, Division of Board Members, Board
David López-Salido, Senior Associate Director, Division of Monetary Affairs, Board
Dina Tavares Marchioni,3 Director of Money Markets, Federal Reserve Bank of New York
Jonathan P. McCarthy, Economic Research Advisor, Federal Reserve Bank of New York
Benjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board
Karel Mertens, Senior Vice President, Federal Reserve Bank of Dallas
Ann E. Misback, Secretary, Office of the Secretary, Board
Edward Nelson, Senior Adviser, Division of Monetary Affairs, Board
Alyssa O’Connor, Special Adviser to the Board, Division of Board Members, Board
Anna Orlik, Principal Economist, Division of Monetary Affairs, Board
Michael G. Palumbo, Senior Associate Director, Division of Research and Statistics, Board
Ander Perez-Orive, Principal Economist, Division of Monetary Affairs, Board
Eugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board
Albert Queralto, 4 Section Chief, Division of International Finance, Board
Odelle Quisumbing, 5 Assistant to the Secretary, Office of the Secretary, Board
Andrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis
Denise L. Redfearn, 6 Administrative Specialist, Office of the Secretary, Board
Achilles Sangster II, Lead Information Manager, Division of Monetary Affairs, Board
Shane M. Sherlund, Associate Director, Division of Research and Statistics, Board
Clara Vega, Special Adviser to the Board, Division of Board Members, Board
Min Wei, Senior Associate Director, Division of Monetary Affairs, Board
Randall A. Williams, Group Manager, Division of Monetary Affairs, Board
Paul R. Wood, Special Adviser to the Board, Division of Board Members, Board
Ines Xavier, Senior Economist, Division of Monetary Affairs, Board
Egon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston

_______________________
Joshua Gallin
Secretary

4 Attended Tuesday’s session only.

5 Attended through the discussion of the economic and financial situation.
6 Attended opening remarks for Tuesday session only.