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FOMC Past Records:
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.
Updates on 22 August 2019 FOMC Minutes of Committee meeting held on July 30-31, 2019, released on 21 August 2019, 2pm EDT. Real residential investment declined again in the second quarter. Although starts of new single-family homes rose in June, the average in the second quarter was lower than in the first quarter; starts of multifamily units fell back in June but rose for the second quarter as a whole. Building permit issuance for new single-family homes—which tends to be a good indicator of the underlying trend in construction of such homes—was at roughly the same level in June as its first-quarter average. On net in May and June, sales of new homes declined, while sales of existing homes rose.
Real non-residential private fixed investment edged down in the second quarter, as a decline in expenditures on non-residential structures more than offset an increase in expenditures for business equipment and intellectual property. Forward-looking indicators of fixed investment were mixed. Orders for nondefense capital goods excluding aircraft increased in June, and some measures of business sentiment improved. However, analysts' expectations of firms' longer-term profit growth remained soft, trade policy concerns appeared to be weighing on investment, and the number of crude oil and natural gas rigs in operation—an indicator of business spending for structures in the drilling and mining sector—continued to decrease in recent weeks.
In their discussion of monetary policy for this meeting, members noted that while there had been some improvement in economic conditions over the intermeeting period and the overall outlook remained favorable, significant risks and uncertainties attending the outlook remained. In particular, sluggish U.S. business fixed investment spending and manufacturing output had lingered, suggesting that risks and uncertainties associated with weak global economic growth and in international trade were weighing on the domestic economy. Strong labor markets and rising incomes continued to support the outlook for consumer spending, but modest growth in prices and wages suggested that inflation pressures remained muted. Inflation had continued to run below the Committee's 2 percent symmetric objective. Market-based measures of inflation compensation moved up modestly from the low levels recorded in June, but a portion of this change likely reflected the expectation by market participants of additional near-term monetary accommodation. Survey-based measures of longer-term inflation expectations were little changed. On this basis, all but two members agreed to lower the target range for the federal funds rate to 2 to 2-1/4 percent at this meeting.
Consistent with its statutory mandate, the Committee seeks 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, the Committee decided to lower the target range for the federal funds rate to 2 to 2-1/4 percent. This action supports the Committee's view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.
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.
Updates on 1 August 2019 FOMC Press Release on 31 July 2019, 2:00 p.m. EDT To foster maximum employment and price stability, the Committee decided to lower the target range for the federal funds rate to 2.0 - 2.25 %.
FOMC Press Conference on 31 July 2019 (video).
Updates on 11 July 2019 #FOMC Minutes of Meeting held on 18-19 June 2019, released on 10 July 2019, 2pm EDT To foster maximum employment and price stability, the Committee decided to maintain the target range for the federal funds rate at 2.25% to 2.50%. Due to uncertainties economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective, the Committee will continue to assess the situations with time.
Implementation Note issued on June 19, 2019 is here. Besides the above mentioned, overnight reverse repurchase operations will be at an offering rate of 2.25%, 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 will continue to roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month that exceeds $15 billion, and to continue reinvesting in agency mortgage-backed securities the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $20 billion. Semi-annual Monetary Policy Report to the Congress by Chair Jerome H. Powell on 10 July 2019, 10am EDT is here.
Updates on 7 July 2019 (SGT)
Federal Reserve Published Monetary Policy Report to Congress dated 5 July 2019.
Updates on 26 June 2019 Federal Reserve Published on 25 June 2019: A Conversation with Jerome H. Powell, Tuesday, June 25, 2019
Updates on 20 June 2019 FOMC Press Released on 19 June 2019: Federal Reserve issues FOMC statement Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2.25% to 2.50%. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2% objective as the most likely outcomes, but uncertainties about this outlook have increased. In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective. FOMC Statement (19 June 2019)
Read Chair Powell's opening statement from the FOMC press conference here.
Updates on 23 May 2019 FOMC Minutes (30 April – 1 May 2019) released on 22 May 2019 The Committee decided to maintain the federal funds rate in a target range of 2.25% to 2.50%, including overnight reverse repurchase operations at an offering rate of 2.25%, 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 decided to roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month that exceeds $15 billion. The Committee decided to continue reinvesting in agency mortgage-backed securities the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $20 billion. Small deviations from these amounts for operational reasons are acceptable.
The Committee decided 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 30 April 2019 FOMC Press Conference on 30 April 2019 To foster maximum employment and price stability, the Committee decided to maintain the target range for the federal funds rate at 2.25% to 2.50%. Welcome to Singapore!
Minutes of the Federal Open Market Committee (FOMC) dated 19-20 March 2019 ◦The Committee intends to slow the reduction of its holdings of Treasury securities by reducing the cap on monthly redemptions from the current level of $30 billion to $15 billion beginning in May 2019. ◦The Committee intends to conclude the reduction of its aggregate securities holdings in the System Open Market Account (SOMA) at the end of September 2019. ◦The Committee intends to continue to allow its holdings of agency debt and agency mortgage-backed securities (MBS) to decline, consistent with the aim of holding primarily Treasury securities in the longer run. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2.25-2.50 %. The Committee continues to view sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee's symmetric 2% objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
Other past records were being wiped off in our terminated Twitter account on 10 April 2019.
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