Page 286 - DCAC Feb 2026 Files

Inflation & The Federal Reserve

Federal Funds Effective Rate
• In December 2025, the FOMC Federal Funds Effective Rate
reduced the target range of the 6.00%
September 2024:
Federal Funds Rate to 3.50% - 5.25% - 5.50%
5.00%
3.75%, a total of 1.75% in cuts
4.00%
since the peak in rates of the
current cycle. 3.00%
December 2025:
2.00% 3.50% - 3.75%
• The Federal Reserve has been 1.00%
weighing risks to the downside
0.00%
for the labor market and risks to 2007 2008 2009 2011 2012 2013 2015 2016 2017 2019 2020 2021 2023 2024 2025
the upside for inflation.
– Inflation has remained above 12-Month Change to Inflation
the Federal Reserve’s 2% Consumer Price Index
12-Month Change to Inflation (CPI)
target and the impact of 10%

tariffs represents an upside
8%
risk.
6%
– Job market growth has 10-Year Average: 3.01%
4%
slowed significantly,
2%
primarily due to a reduction
20-Year Average: 2.58%
in US immigration. The 0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
unemployment rate has also
been trending upwards. 12-Month Change 10-Year Average 20-Year Average

Source: Federal Reserve Economic Data. Data as of 12/31/25.
21