Well, what's been in that package of medicine?
First thing we did when we showed up this morning, the FOMC decided to maintain the target rate for the federal funds rate at 3 and 3/4 to 4%, in support of the Federal Reserve's dual mandate. Economic activity is expanding at a strong pace. While uncertainty remains, owing in part to geopolitical developments, domestic spending has been resilient. Productivity growth is strong and capital investment robust. Job gains have kept pace with the workforce and the unemployment rate has changed little. But inflation remains elevated. The committee believes that the accumulation of more information will help it determine the policy stance appropriate to ensure a timely return of inflation to the 2% goal. And I think we can do that and make the economy more durable, have it last longer, and still achieve stable prices.
Economic growth has strengthened. The GDP increase in the first half of this year was revised up from an earlier estimate of 1.8% up to 2.4%. And the third quarter appears to have brought an even more rapid advance led by healthy consumer spending, likely running above 3% growth, and business investment likely rising at about a double-digit pace. Capital expenditures are at a historically high share of GDP. High-tech investment is leading the acceleration.
Their best thoughts. And I think the conclusions they come to, the recommendations they come to, will be fed into the FOMC. Now, with this objective in mind, we've decided on a change in our FOMC schedule starting next fall. We believe eight meetings per year is the right number for the FOMC. But in 2027, one meeting will focus exclusively on broad monetary policy strategy with neither a vote on the federal funds rate nor a policy statement anticipated.
I mentioned, I think at a prior press conference, if you were trying to do the most harm to the least well-off among us, you would let the last 6 years of inflation above the Fed's target, usually well above the Fed's target, you'd let that continue. So, that's the most important thing we can do as we look out the window, and that's what we plan to do. You probably heard me say this: we will deliver price stability, no ifs, ands, or buts, and that continues to be the case.
The story is not just robust, not just strong, but it is broadening. And so, if you want to tell the story somehow that this is strength we're seeing only in narrow pockets. When consumers interrogate reality, they look outside their window, too. They go to the gas station, too. And they see that prices are up. I am not going to be the guy who says that oil prices haven't gone up, and when they fill up their tank, they don't see it. And so, inflation's gone up in expectations in the very near term because they're doing what we're doing, interrogating reality. But if you look out over the horizon, if you look at most, but not all, measures, what you see is households, businesses, financial markets, they have the confidence that they should have that the central bank will deliver price stability.
In an event in the Oval Office on October 7th of this year, President Trump said, and I quote, "Kevin is great, but Kevin's one vote out of a board with numerous people that were put on by Obama and Biden and a couple by me. So you have a board that would like to see the country do badly in my opinion." Do you agree with those comments?
James, I appreciate the question. I'm not going to be responding to quotes from public officials. What I can tell you is my experience in 5 months here. We just came out of a heck of a family fight. A serious, sober discussion. I think we came to the right policy decision for this moment. And I'm honored to be here and honored to be the chairman of this group.
My musings about what happens when this group gets together 6 weeks from now. But my judgment is that we might learn a lot in orders.
The economy is pointing in the right direction. Is the economy running too hot? Is the economy running too strong?
That isn't the judgment of most of my colleagues. Part of it is we never know what potential growth really is, Howard. My judgment is we have seen an improvement in productivity. We can't measure it precisely. I think most of that change in productivity precedes everything we're talking about, super intelligence. But productivity has been moving higher in the economy, however imperfectly measured, I think for a couple of years. And so economic growth is higher, but that doesn't tell me that economic growth is somehow causing inflation, making our job harder. But we'll be continuing to look at those issues.
The goal in my view, and you've heard me say this before, isn't to throw sand in the gears of the economy and throw people out of work. I don't think we have to do that.
Dominant means in a timely, regular, and information-rich.
As you know, the midterm elections are in 6 days. Did the midterms factor into the Fed's decision to stay on hold? And if not, how can you assure the American public that politics were not at play here?
So, politics played no role in the decision. I just spent 2 days with my colleagues upstairs. I didn't hear an utterance about politics. I didn't hear a reference to politics, elections, what's happening in the next week or so. Didn't hear anything about it. And I don't believe it had any role in the decision, not just for me, but my colleagues around the room. But, I will say it's an information-rich interval in the coming period, having nothing to do with politics.
Due to geopolitical events. That's something that we're going to have to interrogate. What are the effects on the Fed's dual mandate?
Thank you. Thank you, guys.
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