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FOMC Past Records:

 

Updates on 4 January 2020:

Minutes of the Federal Open Market Committee dated December 10–11, 2019 (Published on 4 January 2019, SGT)

Extracts:

Real residential investment appeared to be increasing further after rising solidly in the third quarter. Both starts and building permit issuance for single-family homes increased in October, and starts of multifamily units also rose. Existing home sales continued to increase in October, al­though new home sales edged down following a solid gain in the third quarter. All told, the data on construction and sales continued to suggest that the decline in mortgage rates since late 2018 has been boosting housing activity.

 

Real non-residential private fixed investment remained weak overall after declining in the second and third quarters. Nominal shipments and new orders of nondefense capital goods excluding aircraft increased solidly in October following a string of decreases, al­though many forward-looking indicators pointed to continued softness in business equipment spending. Most measures of business sentiment were still downbeat, analysts' expectations of firms' longer-term profit growth edged down further, and concerns about trade developments continued to weigh on firms' investment decisions. Nominal business expenditures for non-residential structures outside of the drilling and mining sector continued to decline in October, and the total number of crude oil and natural gas rigs in operation—an indicator of business spending for structures in the drilling and mining sector—fell further through early December.

 

Financing conditions in the residential mortgage market remained accommodative over the intermeeting period. Mortgage rates were little changed since the October FOMC meeting. Consistent with this year's decline in mortgage rates, home-purchase originations and refinancing originations both rose. Mortgage credit standards were little changed.

 

Financing conditions in consumer credit markets remained generally supportive of growth in consumer spending, al­though conditions continued to be tight for nonprime borrowers. Auto loans increased, consistent with significant declines in auto loan interest rates this year. Credit card debt grew at a solid pace, and interest rates on credit card debt began to fall. Consumer asset‑backed securities issuance was strong through October as spreads stabilized at levels that were somewhat above their post-crisis averages.

 

"Effective December 12, 2019, 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 1.5 to 1.75 percent. In light of recent and expected increases in the Federal Reserve's non-reserve liabilities, the Committee directs the Desk to continue purchasing Treasury bills at least into the second quarter of 2020 to maintain over time ample reserve balances at or above the level that prevailed in early September 2019. The Committee also directs the Desk to continue conducting term and overnight repurchase agreement operations at least through January 2020 to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation. In addition, the Committee directs the Desk to conduct overnight reverse repurchase operations (and reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering rate of 1.45 percent, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.

 

The Committee directs the Desk to continue rolling over at auction all principal payments from the Federal Reserve's holdings of Treasury securities and to continue reinvesting all principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month. Principal payments from agency debt and agency mortgage-backed securities up to $20 billion per month will continue to be reinvested in Treasury securities to roughly match the maturity composition of Treasury securities outstanding; principal payments in excess of $20 billion per month will continue to be reinvested in agency mortgage-backed securities. Small deviations from these amounts for operational reasons are acceptable.

 

The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency mortgage-backed securities transactions."

 

Updates on 12 December 2019

Federal Reserve issues FOMC statement from the December 10-11 FOMC Meeting

Extracts:

On a 12 month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.

 

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1.5% to 1.75%. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.

 

Federal Reserve Board and FOMC release economic projections from the December 10-11 FOMC meeting

 

Updates on 27 November 2019

Federal Reserve: Speech by Chair Jerome H. Powell “Building on the Gains from the Long Expansion” (dated 25 November 2019 EDT)

Extracts:

In August, the Bureau of Labor Statistics previewed a likely revision to its count of payroll job creation for the 12 months ended March 2019. The preview indicated that job gains over that period were about half a million lower than previously reported. On a monthly basis, job gains were likely about 170,000 per month, rather than 210,000. While this news did not dramatically alter our outlook, it pointed to an economy with somewhat less momentum than we had thought.3

 

Uncertainty about how our policies are affecting the economy also entered our discussions. As you know, we set our policy interest rate to achieve our goals of maximum employment and stable prices. In doing so, we often refer to certain benchmarks. One of these is the interest rate that would be neutral—neither restraining the economy nor pushing it upward. We call that rate "r*" (pronounced "r star"). A policy rate above r* would tend to restrain economic activity, while a setting below r* would tend to speed up the economy. A second benchmark is the natural rate of unemployment, which is the lowest rate of unemployment that would not create upward pressure on inflation. We call that rate "u*" (pronounced "u star"). You can think of r* and u* as two of the main stars by which we navigate. In an ideal world, policymakers could rely on these stars like mariners before the advent of GPS. But, unlike celestial stars on a clear night, we cannot directly observe these stars, and their values change in ways that are difficult to track in real time. Standard estimates of r* and u* made by policymakers and other analysts have been falling since 2012 (figure 2). Since the end of last year, incoming data—especially muted inflation data—prompted analysts inside and outside the Fed to again revise down their estimates of r* and u*.4 Taken at face value, a lower r* would suggest that monetary policy is providing somewhat less support for employment and inflation than previously believed, and the fall in u* would suggest that the labor market was less tight than believed.5 Both could help explain the weakness in inflation. As with the revised jobs data, these revised estimates of the stars were not a game changer for policy, but they provided another reason why a somewhat lower setting of our policy interest rate might be appropriate.

 

How did we add up all of these considerations? To help keep the U.S. economy strong in the face of global developments and to provide some insurance against ongoing risks, we progressively eased the stance of monetary policy over the course of the year. First, we signaled that increases in our short-term interest rate were unlikely. Then, from July to October, we reduced the target range for the federal funds rate by 3/4 percentage point. The full effects of these monetary policy actions will be felt over time, but we believe they are already helping to support consumer and business sentiment and boosting spending in interest-sensitive sectors, such as housing and consumer durable goods.

 

We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective. Looking ahead, we will be monitoring the effects of our policy actions, along with other information bearing on the outlook, as we assess the appropriate path of the target range for the federal funds rate. Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Policy is not on a preset course.

 

Updates on 21 November 2019

FOMC Minutes for 29-30 October 2019 (published on 20 November 2019, 2pm EDT)

 

With effective from October 31, 2019, FOMC will maintain the federal funds rate in a target range of 1.5% to 1.75% percent. FOMC decided to purchase Treasury bills at least into the second quarter of next year to maintain over time ample reserve balances at or above the level that prevailed in early September 2019. FOMC will conduct term and overnight repurchase agreement operations at least through January of next year to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation. In addition, FOMC will conduct overnight reverse repurchase operations (and reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering rate of 1.45%, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.

 

FOMC will continue rolling over at auction all principal payments from the Federal Reserve's holdings of Treasury securities and to continue reinvesting all principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month. Principal payments from agency debt and agency mortgage-backed securities up to $20 billion per month will continue to be reinvested in Treasury securities to roughly match the maturity composition of Treasury securities outstanding; principal payments in excess of $20 billion per month will continue to be reinvested in agency mortgage-backed securities. Small deviations from these amounts for operational reasons are acceptable.

 

FOMC will engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency mortgage-backed securities transactions.

 

In determining the timing and size of future adjustments to the target range for the federal funds rate, FOMC will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2% inflation objective. This assessment will take into account a wide range of information, includin measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

 

Updates on 15 November 2019

The Federal Reserve’s Review of Its Monetary Policy Strategy, Tools, and Communication Practices

 

The Federal Reserve Act instructs the Fed to conduct monetary policy "so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates." Our review this year takes this statutory mandate as given and also takes as given that inflation at a rate of 2% is most consistent over the longer run with the congressional mandate.

 

Our existing monetary policy strategy is laid out in the Committee's Statement on Longer-Run Goals and Monetary Policy Strategy. First adopted in January 2012, the statement indicates that the Committee seeks to mitigate deviations of inflation from 2% and deviations of employment from assessments of its maximum level. In doing so, the Federal Open Market Committee (FOMC) recognizes that these assessments of maximum employment are necessarily uncertain and subject to revision.

 

As a practical matter, our current strategy shares many elements with the policy framework known as "flexible inflation targeting."12 However, the Fed's mandate is much more explicit about the role of employment than that of most flexible inflation-targeting central banks, and our statement reflects this by stating that when the two sides of the mandate are in conflict, neither one takes precedence over the other.

 

The review of our current framework is wide ranging, and we are not prejudging where it will take us, but events of the past decade highlight three broad questions that we will seek to answer with our review.

 

Updates on 14 November 2019

Testimony by Federal Reserve Chair Powell on the economic outlook

Over the past year, weakness in global growth, trade developments, and muted inflation pressures have prompted the FOMC to adjust its assessment of the appropriate path of interest rates. Since July, the Committee has lowered the target range for the federal funds rate by 0.75% point. These policy adjustments put the current target range at 1.50% to 1.75%.

 

The Committee took these actions to help keep the U.S. economy strong and inflation near our 2.00% objective and to provide some insurance against ongoing risks. As monetary policy operates with a lag, the full effects of these adjustments on economic growth, the job market, and inflation will be realized over time. We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2.00% objective.

 

We will be monitoring the effects of our policy actions, along with other information bearing on the outlook, as we assess the appropriate path of the target range for the federal funds rate. Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. Policy is not on a preset course.

 

Updates on 31 October 2019

FOMC statement released on 30 October 2019, 2pm EDT

To foster maximum employment and price stability, in light of the implications of global developments for the economic outlook as well as muted inflation pressures, FOMC decided to lower the target range for the federal funds rate to 1.5% to 1.75%.

 

Updates on 10 October 2019

FOMC Minutes for 17-18 September 2019, released on 9 October 2019 EDT.

Effective September 19, 2019, the FOMC to maintain the federal funds rate in a target range of 1.75% to 2%, including overnight reverse repurchase operations at an offering rate of 1.70%, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.

FOMC to continue rolling over at auction all principal payments from the Federal Reserve's holdings of Treasury securities and to continue reinvesting all principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month. Principal payments from agency debt and agency mortgage-backed securities up to $20 billion per month will continue to be reinvested in Treasury securities to roughly match the maturity composition of Treasury securities outstanding; principal payments in excess of $20 billion per month will continue to be reinvested in agency mortgage-backed securities. Small deviations from these amounts for operational reasons are acceptable.

FOMC will engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency mortgage-backed securities transactions.

In determining the timing and size of future adjustments to the target range for the federal funds rate, FOMC will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2% inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

 

Updates on 9 October 2019

Federal Reserve: Speech by Chair Jerome H. Powell “Data-Dependent Monetary Policy in an Evolving Economy” dated 8 October 2019 EDT

In summary, data dependence is, and always has been, at the heart of policymaking at the Federal Reserve. We are always seeking out new and better sources of information and refining our analysis of that information to keep us abreast of conditions as our economy constantly reinvents itself. Before wrapping up, I will discuss recent developments in money markets and the current stance of monetary policy.

 

I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy, to which I now turn.

 

Our goal in monetary policy is to promote maximum employment and stable prices, which we interpret as inflation running closely around our symmetric 2 percent objective. At present, the jobs and inflation pictures are favorable. Many indicators show a historically strong labor market, with solid job gains, the unemployment rate at half-century lows, and rising prime-age labor force participation. Wages are rising, especially for those with lower-paying jobs. Inflation is somewhat below our symmetric 2 percent objective but has been gradually firming over the past few months. FOMC participants continue to see a sustained expansion of economic activity, strong labor market conditions, and inflation near our symmetric 2 percent objective as most likely. Many outside forecasters agree.

 

But there are risks to this favorable outlook, principally from global developments. Growth around much of the world has weakened over the past year and a half, and uncertainties around trade, Brexit, and other issues pose risks to the outlook. As those factors have evolved, my colleagues and I have shifted our views about appropriate monetary policy toward a lower path for the federal funds rate and have lowered its target range by 50 basis points. We believe that our policy actions are providing support for the outlook. Looking ahead, policy is not on a preset course. The next FOMC meeting is several weeks away, and we will be carefully monitoring incoming information. We will be data dependent, assessing the outlook and risks to the outlook on a meeting-by-meeting basis. Taking all that into account, we will act as appropriate to support continued growth, a strong job market, and inflation moving back to our symmetric 2 percent objective.

 

Updates on 5 October 2019

Speech by Chair Jerome H. Powell on 4 October 2019

Now is a good time to conduct the review. Unemployment is near a half-century low, and inflation is running close to, but a bit below, our 2 percent objective. While not everyone fully shares economic opportunities and the economy faces some risks, overall it is—as I like to say—in a good place. Our job is to keep it there as long as possible. While we believe our strategy and tools have been and remain effective, the U.S. economy, like other advanced economies around the world, is facing some longer-term challenges—from low growth, low inflation, and low interest rates…

So, in this review, we are examining strategies that might better allow us to symmetrically and sustainably achieve 2 percent inflation. Doing so would help prevent inflation expectations among consumers, businesses, and investors from slipping too low, as they appear to have done in several advanced economies. More-firmly anchored expectations, in a virtuous circle, would help keep actual inflation around our target, thus preserving our ability to change interest rates as appropriate to meet our mandate. We are also looking at whether our existing monetary policy tools will be adequate when the next downturn comes. Finally, we are asking whether our communications practices can be improved to better support the effectiveness of our policy.

Chair Jerome H. Powell  (4 October 2019)

 

Updates on 19 September 2019

Federal Reserve issues FOMC statement dated 18 September 2019, 2pm EDT

The Committee decided to lower the target range for the federal funds rate to 1.75% to 2%.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

 

September 18, 2019: FOMC Projections materials, accessible version

 

Updates on 24 August 2019

Federal Reserve: Speech by Chair Powell on challenges for monetary policy on 23 August 2019

Through the FOMC's setting of the federal funds rate target range and our communications about the likely path forward for policy and the economy, we seek to influence broader financial conditions to promote maximum employment and price stability. In forming judgments about the appropriate stance of policy, the Committee digests a broad range of data and other information to assess the current state of the economy, the most likely outlook for the future, and meaningful risks to that outlook. Because the most important effects of monetary policy are felt with uncertain lags of a year or more, the Committee must attempt to look through what may be passing developments and focus on things that seem likely to affect the outlook over time or that pose a material risk of doing so. Risk management enters our decision making because of both the uncertainty about the effects of recent developments and the uncertainty we face regarding structural aspects of the economy, including the natural rate of unemployment and the neutral rate of interest. It will at times be appropriate for us to tilt policy one way or the other because of prominent risks. Finally, we have a responsibility to explain what we are doing and why we are doing it so the American people and their elected representatives in Congress can provide oversight and hold us accountable.

 

We have much experience in addressing typical macroeconomic developments under this framework. But fitting trade policy uncertainty into this framework is a new challenge. Setting trade policy is the business of Congress and the Administration, not that of the Fed. Our assignment is to use monetary policy to foster our statutory goals. In principle, anything that affects the outlook for employment and inflation could also affect the appropriate stance of monetary policy, and that could include uncertainty about trade policy. There are, however, no recent precedents to guide any policy response to the current situation. Moreover, while monetary policy is a powerful tool that works to support consumer spending, business investment, and public confidence, it cannot provide a settled rulebook for international trade. We can, however, try to look through what may be passing events, focus on how trade developments are affecting the outlook, and adjust policy to promote our objectives.

 

 

 

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