NEAM Insights

May Overview Fed minutes from the last FOMC meeting highlighted a shifting policy tendency of the committee, from one with an “easing bias” to a more balanced two-way outlook for future interest rate decisions to account for persistently elevated inflation. While participants generally saw a potentially longer holding pattern until more certainty emerged on the economic implications from the Middle East conflict, the minutes shared that “many participants” would have favored a statement that removed an easing bias regarding future policy decisions. Read More

April Overview Minutes from the Fed’s March meeting provided insight into potential outcomes at the April meeting. At the time of the March meeting, the committee felt that risks to both the inflation and employment sides of its mandate were “elevated,” with conflict in the Middle East magnifying these challenges. Read More

March Overview The Fed held steady at its most recent meeting, keeping its policy rate range at current levels. With the labor market stable but moderating, inflation still above target and geopolitical uncertainty rising, Chair Powell emphasized that future policy decisions would remain data-dependent. The Fed also commented that the economy appears on track, supported by “resilient” consumer spending and increasing business investment. Their median economic estimates showed GDP increasing over the next three years along with higher headline and core inflation. Unemployment projections remained relatively constant, with the rate expected to fall in 2027, albeit to a lesser extent than previously envisioned. Against the backdrop of rising Middle East tensions, uncertainty around these projections increased, particularly with respect to inflation. Despite this uncertainty, the median projection continues to reflect one rate cut in 2026, followed by an additional 25 basis point reduction in 2027. Read More

February Overview With stabilizing employment data and “somewhat elevated” inflation, the Fed held rates steady at its last meeting. The minutes from the meeting highlighted a range of views amongst participants. The “vast majority” of Fed officials thought that downside risks to employment had moderated and wanted to see more progress on the inflation front before considering further rate cuts. Two Fed governors dissented from the decision and supported another rate cut. However, “several” not only backed the decision to leave the Fed funds rate unchanged but would have preferred a more balanced statement that alluded to the possibility of future rate hikes as well as cuts. With the risks to the dual mandate seemingly moving back into balance, incoming data appears set to drive future Fed decisions. A change in Fed chair, subject to Senate confirmation, injects some added uncertainty into potential Fed decisions, though. Read More

January Overview As the labor market stabilizes even while inflation remains above target, the Fed’s decision to keep the benchmark rate at 3.5%-3.75% reflects the Committee’s preference to wait for additional economic data before taking further action. Noting that the unemployment rate is steadying and payroll additions remain low, while upgrading the language related to the pace of growth to “solid” from “moderating,” the Fed still highlighted that inflation remains above their target. When viewed in the aggregate, the data led the Committee to decide to hold rates at their current levels until a clearer picture of the path of employment and inflation emerges. Read More

December Overview At its most recent meeting in December, the Fed reduced its benchmark rate by 25 basis points, bringing the range to 3.50-3.75%. With the cut, the Fed has now acted at its last three meetings. With the committee having moved the rate 175 basis points since September 2024, the decision to lower the rate did not appear to be a straightforward one. A total of nine committee members voted in favor of the cut. Read More

November Overview With the Fed facing a combination of a slowing labor market, above target inflation and reduced available data from the government shutdown, it was no surprise to see that the October meeting’s minutes highlighted a growing disparity of views with respect to near-term policy. The minutes shared that “participants expressed strongly differing views about what policy decision would most likely be appropriate at the Committee’s December meeting.” Read More

October Overview The Fed once again reduced its benchmark rate at its October meeting, setting the range at 3.75-4.00%. In doing so, the Fed reduced the level to its lowest point since November 2022, bringing the cumulative rate down by 150 basis points since its most recent peak. The decision to do so was not unanimous, with one vote to cut further, and one to hold steady accompanying the majority who voted in favor of the 25-basis point cut. Read More

September Overview At its September meeting, the Fed lowered its benchmark rate range by 25 basis points to 4.00-4.25%. It marked the first move since December 2024. With the employment outlook weakening, Powell stated “the balance of risks has shifted.” Although inflation remains a concern and leaves their dual mandate “in tension,” the Fed, which has no “risk-free path,” believes that “downside risks to employment have risen,” lending support to the committee’s ultimate decision to reduce their benchmark rate range. The move was accompanied by the release of the most recent Summary of Economic Projections, which showed real GDP growing slightly from previous estimates, while unemployment projections remained level to slightly lower and core inflation estimates also tracked a slower course on the way to the Fed’s ultimate target of 2.0%. While policy is not on a “pre-set path,” and remains data dependent, median estimates from the SEP highlight further action, with estimates for the Fed’s benchmark rate showing another 50 basis points of easing by year end, followed by an additional 25 basis points in 2026 and again in 2027. Read More

August Overview With downside risks to employment and upside risks to inflation continuing to present themselves, the minutes from the July FOMC meeting showed that more participants saw tariff induced risks to inflation as a more pressing issue than those impacting the labor market at that time, stating, “a majority of participants judged the upside risk to inflation as the greater of these two risks.” Read More