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+  {
+    "date": "2025-06-18",
+    "title": "FOMC Meeting 2025-06-18",
+    "full_text": "FOMC\nMinutes of the\nFederal Open Market Committee\nJune 17–18, 2025\nFEDERAL RESERVE SYSTEM\n\nMinutes of the Federal Open Market\nCommittee\nJune 17–18, 2025\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Tuesday, June 17, 2025, at\n9:00 a.m. and continued on Wednesday, June 18, 2025, at 9:00 a.m.1\nReview of Monetary Policy Strategy, Tools, and Communications\nCommittee participants continued their discussions related to their review of the Federal Reserve’s\nmonetary policy framework, with a focus on issues related to assessing the risks and uncertainty that\nare relevant for monetary policy and the potential implications of these issues for the FOMC’s policy\nstrategy and communications. The staff reviewed qualitative and quantitative tools that are commonly\nused to measure uncertainty about the economic outlook and the balance of risks, drawing on U.S.\nand international experience. The staff then discussed monetary policy strategies that aim to be\nrobust to a variety of economic environments and ways in which risk-management considerations can\nbe incorporated into monetary policy analysis and decisionmaking. The staff also considered the role\nof scenario analysis as a tool to communicate to the public risks and uncertainty around the economic\noutlook and their implications for monetary policy. Participants noted that risks and uncertainty are important factors affecting their decisionmaking and\nemphasized the need for a policy strategy that aims to achieve the Committee’s maximumemployment and price-stability objectives across a wide range of highly uncertain developments. Participants acknowledged that risks and uncertainty about the economy are pervasive and pose\nchallenges to both the design and communication of monetary policy. They remarked that measuring\nand assessing risks and uncertainty are difficult and that the Committee has been well served by\nrelying on a wide range of indicators, as well as information from business and community contacts, to\ngauge evolving risks, especially during periods of heightened uncertainty. Participants remarked that effective communications about risks and uncertainty help the public\nunderstand the Committee’s decisions and enhance the transparency, accountability, and\neffectiveness of monetary policy decisions. Participants had a preliminary discussion about a range of\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 June 17-18, 2025\nissues related to enhancing the Committee’s suite of communication tools, including possible changes\nto the Summary of Economic Projections (SEP) and a potential broader use of alternative scenarios. Participants highlighted, however, the challenges associated with adjustments to these tools and\nnoted that any revisions to the Committee’s communication policies would need to be considered\ncarefully and receive broad support across participants. Participants agreed to continue their discussions of ways to enhance the Committee’s communication\ntools and practices once they completed their review of their Statement on Longer-Run Goals and\nMonetary Policy Strategy. Participants expected that they would complete that review by late summer. Developments in Financial Markets and Open Market Operations\nThe manager turned first to a review of financial market developments. Over the intermeeting period,\npolicy expectations and Treasury yields rose modestly, credit spreads narrowed, and equity prices\nincreased. Markets were attentive to the de-escalation of trade tensions; generally weaker-thanexpected economic data releases, with the notable exception of the May employment report; and\nprospects for fiscal expansion. These factors, on net, resulted in some paring back of investors’\nperception of downside risk to growth and upside risk to inflation. Results from the Open Market\nDesk’s Survey of Market Expectations were consistent with this interpretation: The median\nrespondent’s expectations for real gross domestic product (GDP) growth and personal consumption\nexpenditures (PCE) inflation for 2025 retraced some of the moves that occurred after the April tariff\nannouncements, though growth expectations were still materially lower and inflation expectations\nremained higher relative to the March survey. The median respondent’s modal path for the federal funds rate in the June survey shifted higher\nthrough 2026 and implied two 25 basis point rate cuts both this year and next year. Market-based\npolicy expectations were largely consistent with survey results, with both the futures-based average\nfederal funds rate path and the options-based modal federal funds rate path shifting higher over the\nintermeeting period. Overall, the changes in the intermeeting period brought policy expectations for\nthe next few quarters back close to where they stood at the time of the March FOMC meeting. However, futures-based policy expectations beyond the next few quarters had not fully retraced the\ndecline seen over the previous intermeeting period, suggesting that perceived medium- and longerterm downside risks to growth remained larger than before the April tariff announcements. Nominal\nTreasury yields rose 15 to 20 basis points, on net, over the intermeeting period. The manager\nobserved that the rise in shorter-maturity yields was consistent with the upward shift in the expected\npolicy rate path. The rise in longer-maturity yields appeared to reflect, in part, market participants’\nincreasing fiscal concerns: In response to a Desk survey question about the top factors behind the\n\nMinutes of the Federal Open Market Committee 3\nrespondents’ forecast of the 10-year yield over the next two years, the fiscal outlook was the factor\ncited by the largest number of respondents. Market-implied inflation compensation for the year ahead fell about 20 basis points over the\nintermeeting period, while longer-term inflation compensation measures were little changed. Liquidity\nconditions for nominal Treasury securities had improved as volatility declined following the stress seen\nin the previous intermeeting period. The events of April, and the more recent focus in markets around\nfiscal sustainability issues, did not appear to have affected demand for Treasury securities at auction;\nan index of auction performance derived from a number of metrics indicated that auction performance\nhad improved modestly over the past several quarters and was currently in line with the longer-run\naverage. Regarding foreign exchange developments, the broad trade-weighted dollar index fell further during\nthe intermeeting period despite increases in U.S. equity prices and short-term Treasury yields. The\nmanager noted that dollar depreciation continued to be consistent with larger downside revisions to\nthe U.S. growth outlook relative to other major economies, which induced increased currency hedging\nflows by foreign investors in U.S. assets. The manager also remarked that the sensitivity of the foreign\nexchange value of the dollar to domestic economic surprises had not fundamentally changed. The\navailable data continued to suggest stability in foreign holdings of U.S. assets. The manager turned next to money markets and Desk operations. Unsecured overnight rates\nremained stable over the intermeeting period. Rates in the repurchase agreement (repo) market were\nsofter relative to the previous intermeeting period, including at the May month-end, as reductions in\nnet Treasury bill issuance amid the ongoing debt limit situation resulted in increased demand for repo. With the softness in repo making the overnight reverse repurchase agreement (ON RRP) facility more\nattractive on a relative basis, usage of the ON RRP facility had been broadly stable, except for the\ntypical spike at month-end. Since the start of the debt issuance suspension period in January, the\nTreasury General Account (TGA) had declined nearly $420 billion, ON RRP balances had increased\nabout $75 billion, and reserves had increased $150 billion. Key indicators continued to suggest that\nreserves, which stood at nearly $3.5 trillion, were well into the abundant range. Once the debt limit\nwas addressed, however, the TGA was likely to be rebuilt fairly quickly, which would drain liquidity from\nthe system and result in fast declines in both ON RRP and reserve balances. The manager also discussed the trajectory of the System Open Market Account (SOMA) portfolio. Since balance sheet runoff commenced in June 2022, SOMA securities holdings had fallen almost\n$2¼ trillion. As a percentage of GDP, the portfolio had declined to close to where it had been at the\nstart of the pandemic. The corresponding drain in Federal Reserve liabilities had largely come out of\nbalances at the ON RRP facility, while reserve levels had been relatively little changed over that period.\n\n4 June 17-18, 2025\nRespondents to the June Desk survey, on average, expected runoff to end in February of next year, a\nmonth later compared with the previous survey, with an expected size of the SOMA portfolio of\n$6.2 trillion, or about 20 percent of GDP. At that point, the respondents, on average, expected\nreserves to be at $2.9 trillion and the ON RRP balance to be low. The manager noted that, starting on June 26, the Desk will begin adding regular morning standing\nrepo facility (SRF) operations to the existing afternoon operations. The additional operations are\nintended to further enhance the effectiveness of the SRF in its ability to support monetary policy\nimplementation and smooth market functioning. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that consumer price inflation remained\nsomewhat elevated. The unemployment rate continued to be low, and labor market conditions were\nsolid. Available indicators suggested that real GDP was expanding at a solid pace in the second\nquarter. Total consumer price inflation—as measured by the 12-month change in the PCE price index—was\nestimated to have been 2.3 percent in May, based on the consumer and producer price indexes. Core\nPCE price inflation, which excludes changes in consumer energy prices and many consumer food\nprices, was 2.6 percent in May. Both total and core inflation were lower than at the beginning of the\nyear. Survey-based measures of short-term inflation expectations remained high, although the extent\nof increases in recent months had varied considerably and some measures had declined somewhat in\nMay and June. Most survey-based measures of longer-term inflation expectations had held steady. Recent data indicated that labor market conditions had remained solid. The unemployment rate was\n4.2 percent in May, the same as in the previous two months. The labor force participation rate and\nthe employment-to-population ratio moved down in May but remained near their levels since the\nbeginning of the year. Total nonfarm payrolls increased at a solid pace in May, a little above the\naverage monthly rate over the previous four months. The ratio of job vacancies to unemployed job\nseekers was unchanged at 1.0 in May. Average hourly earnings for all employees rose 3.9 percent\nover the 12 months ending in May, a little lower than a year earlier. Recent information suggested that real GDP was rising in the second quarter, after it had declined\nslightly in the previous quarter. Real private domestic final purchases—which comprises PCE and\nprivate fixed investment and which often provides a better signal than GDP of underlying economic\n\nMinutes of the Federal Open Market Committee 5\nmomentum—had increased solidly in the first quarter and appeared to be expanding further in the\nsecond quarter. Indicators for consumer spending, such as retail sales and motor vehicle purchases\nthrough May, pointed to solid PCE growth in the second quarter. Business fixed investment (BFI) rose\nmarkedly in the first quarter, apparently boosted by a pull-forward of imported capital goods in\nanticipation of tariff increases, and incoming data suggested that BFI was rising modestly in the\nsecond quarter. International trade flows continued to be volatile amid substantial shifts in U.S. tariffs. After surging in\nthe first quarter ahead of expected tariff hikes, U.S. imports—especially of consumer goods—declined\nsharply in April. That decline suggested that the front-loading of imports had stopped after the\nintroduction of broad-based tariffs in early April. By contrast, U.S. exports firmed in April. In mid-May,\nthe U.S. and China agreed to a 90-day reduction in bilateral tariffs, and recent indicators suggested\nthat this change led to a rebound in trade flows. Economic growth abroad picked up in the first quarter, lifted by the surge in shipments to the U.S.—\nespecially from Europe and Asia excluding China—in anticipation of tariff hikes. More recent indicators\npointed to a slowdown in foreign economic activity in the second quarter, partly reflecting lower\nexports to the U.S. and the effects of elevated uncertainty about the course of global trade policies. Inflation abroad remained near central bank targets in many foreign economies, although recent data\nshowed renewed inflationary pressures in some countries, notably in Mexico. By contrast, inflation in\nChina remained subdued. Many foreign central banks eased policy during the intermeeting period, citing concerns about\neconomic growth and, in some cases, further progress on restoring price stability. In their\ncommunications, foreign central banks continued to emphasize the need to maintain policy flexibility\namid substantial risks and uncertainty. Staff Review of the Financial Situation\nDespite a weakening of near-term inflation pressures, the market-implied path of the federal funds\nrate over the next year increased over the intermeeting period with improvements in the economic\noutlook amid a general easing in trade tensions. Near-term inflation compensation declined, while\nlonger-term inflation compensation was little changed. Nominal and real Treasury yields increased\nmoderately, on net, across the maturity spectrum. Consistent with improving risk sentiment from recent trade developments, broad equity price indexes\nincreased markedly, and credit spreads tightened. Credit spreads narrowed to very low levels relative\nto their historical distribution, except for the lowest-quality corporate bonds, which stood close to the\n\n6 June 17-18, 2025\nmedian of their distribution. The VIX—a forward-looking measure of near-term equity market volatility—\ndeclined moderately. The reduction in trade policy tensions between the U.S. and China led to an improvement in global\neconomic growth prospects and lifted investor risk sentiment. The military conflict between Israel and\nIran left only a limited imprint outside of energy markets. On net, equity indexes and market-based\npolicy rate expectations increased in most major foreign economies. The dollar depreciated a bit\nfurther. Conditions in U.S. short-term funding markets remained stable. After increasing over the previous\nintermeeting period because of incoming tax receipts, the TGA had resumed its decline in response to\nactions associated with the ongoing federal debt limit situation. Average usage of the ON RRP facility\nwas little changed. Rates in secured markets were, on average, slightly below the effective federal\nfunds rate, likely reflecting low Treasury bill supply. In domestic credit markets, borrowing costs for businesses, households, and municipalities mostly\nedged down but remained elevated. Yields on both corporate bonds and leveraged loans declined\nmodestly. Interest rates on small business loans decreased in May. Yields on higher-rated tranches\nof commercial mortgage-backed securities (CMBS) were little changed or increased slightly, whereas\nyields on lower-rated CMBS tranches declined, notably so for non-agency securities. Rates on 30-year\nfixed-rate conforming residential mortgages were little changed and remained elevated. Interest rates\non credit card offers ticked up in March and April, while rates on new auto loans were little changed in\nMay. Financing through capital markets and nonbank lenders was readily accessible for public corporations\nand large and middle-market private corporations. Issuance of nonfinancial corporate bonds and\nleveraged loans, which slowed in April, was solid in May and early June, and private credit continued to\nbe broadly available in April and May. Regarding bank credit, commercial and industrial loan growth\npicked up in April but moderated in May. Commercial real estate (CRE) loan growth was modest in\nApril and May. Credit remained available for most households. In the residential mortgage market, credit continued\nto be easily available for high-credit-score borrowers but was tighter for low-credit-score borrowers\ndespite easing slightly in May. Growth in consumer loan balances at banks was robust in April and\nMay. Credit quality remained solid for large-to-midsize firms, municipalities, and most categories of\nmortgages, but delinquency rates continued to be somewhat elevated in other sectors. The credit\nperformance of corporate bonds and leveraged loans remained stable in May. Delinquency rates on\n\nMinutes of the Federal Open Market Committee 7\nsmall business loans in March and April stayed above pre-pandemic levels. In the CRE market, CMBS\ndelinquency rates remained elevated in May. Regarding household credit quality, the rate of serious\ndelinquencies on Federal Housing Administration mortgages remained above pre-pandemic levels in\nApril. By contrast, delinquency rates on most other mortgage loan types continued to stay near\nhistorical lows. In the first quarter, credit card and auto loan delinquency rates remained at elevated\nlevels. Student loan delinquencies reported to credit bureaus shot up in the first quarter of the year\nafter the expiration of the on-ramp period for student loan payments and were expected to climb\nfurther over the next few quarters. While delinquent student loan borrowers have not shown greater\ndifficulty in meeting other debt payments so far, debt collections on defaulted student loans later this\nyear could boost delinquency rates on other debt. Staff Economic Outlook\nThe staff projection of real GDP growth for this year through 2027 was higher than the one prepared\nfor the May meeting, primarily because trade policy announcements led the staff to reduce their\nassumptions about effective tariff rates relative to those in their previous forecast. With that improved\neconomic outlook, labor market conditions were not expected to weaken as much as in the previous\nprojection, though the unemployment rate was still forecast to rise somewhat through next year and to\nrun a little above the staff’s estimate of its natural rate through 2027. The staff’s inflation projection was lower than the one prepared for the May meeting. Tariff increases\nwere expected to raise inflation this year and to provide a small boost in 2026. Inflation was projected\nto decline to 2 percent by 2027. The staff continued to view the uncertainty around their economic outlook as elevated, primarily\nreflecting the uncertainty surrounding changes to trade, fiscal, immigration, and regulatory policies\nand the associated economic effects. In addition to the baseline forecast, the staff had prepared a\nnumber of alternative economic scenarios. The staff judged the risks around the projections of real\nGDP growth and employment as still skewed to the downside, though they saw the risk of a recession\nas less than at the time of their previous forecast. The staff continued to view the risks around the\ninflation forecast as skewed to the upside, as the projected rise in inflation this year could be more\npersistent than assumed in the baseline projection. Participants’ Views on Current Conditions and the Economic Outlook\nIn conjunction with this FOMC meeting, participants submitted their projections of the most likely\noutcomes for real GDP growth, the unemployment rate, and inflation for each year from 2025 through\n2027 and over the longer run. The projections were based on participants’ individual assessments of\nappropriate monetary policy, including their projections of the federal funds rate. The longer-run\n\n8 June 17-18, 2025\nprojections represented each participant’s assessment of the rate to which each variable would tend\nto converge under appropriate monetary policy and in the absence of further shocks to the economy. Participants also provided their individual assessments of the level of uncertainty and the balance of\nrisks associated with their projections. The SEP was released to the public after the meeting. Participants noted that the available data showed that economic growth was solid and the\nunemployment rate was low. Participants observed that inflation had come down but remained\nsomewhat elevated. Growth in consumer spending and business investment had been solid, though\nmany participants observed that measures of household and business sentiment remained weak. Participants judged that uncertainty about the outlook was elevated amid evolving developments in\ntrade policy, other government policies, and geopolitical risks, but that overall uncertainty had\ndiminished since the previous meeting. Some participants commented that high uncertainty had the\npotential to restrain economic activity, including private-sector hiring, in the near term. Participants\njudged that there were downside risks to employment and economic activity and upside risks to\ninflation, but that these risks had decreased as expectations about effective tariff rates and their\neffects had declined from levels in April. Participants observed that inflation had eased significantly since its peak in 2022 but remained\nsomewhat elevated relative to the Committee’s 2 percent longer-run goal. Participants noted that the\nprogress in returning inflation to target had continued even though that progress had been uneven. Some participants observed that services price inflation had moved down recently, while goods price\ninflation had risen. A few participants noted that there had been limited progress recently in reducing\ncore inflation. Some participants noted that geopolitical developments in the Middle East posed an\nupside risk to energy prices. In discussing their outlooks for inflation, participants noted that increased tariffs were likely to put\nupward pressure on prices. There was considerable uncertainty, however, about the timing, size, and\nduration of these effects. Many observed that it might take some time for the effect of higher tariffs to\nbe reflected in the prices of final goods because firms might choose not to raise prices on affected\ngoods and services until they had run down inventories of products imported before the increase in\ntariffs or because it would take some time for tariffs on intermediate goods to work through the supply\nchain. Several participants commented that upward pressure on prices could be greater if tariffs\ndisrupted supply chains or acted as a drag on productivity. Many participants noted that the eventual\neffect of tariffs on inflation could be more limited if trade deals are reached soon, if firms are able to\nquickly adjust their supply chains, or if firms can use other margins of adjustment to reduce their\nexposure to the effects of tariffs. Several participants noted that firms not directly subject to tariffs\nmight take the opportunity to increase their prices if other prices rise, particularly those of\ncomplementary products. Participants relayed a range of assessments from their business contacts\n\nMinutes of the Federal Open Market Committee 9\nregarding the extent to which tariff-related cost increases would be passed on to consumers. Several\nparticipants observed that the pass-through of tariffs might be limited if households and businesses\nexhibit a low tolerance for price hikes or if firms seek to increase their market share as others raise\ntheir prices. A few participants noted that the pass-through of tariff-related costs likely would be\ngreater for smaller businesses or businesses with narrow profit margins. Participants noted that longer-term inflation expectations continued to be well anchored and that it\nwas important they remain so. Several participants commented that shorter-term inflation\nexpectations had been elevated and that this development had the potential to spill over into longerterm expectations or to affect price and wage setting in the near term. While a few participants noted\nthat tariffs would lead to a one-time increase in prices and would not affect longer-term inflation\nexpectations, most participants noted the risk that tariffs could have more persistent effects on\ninflation, and some highlighted the fact that such persistence could also affect inflation expectations. Some participants observed that because inflation has been elevated for some time, there was a\nheightened risk of longer-term inflation expectations becoming unanchored if there is a long-lasting\nrise in inflation. In their discussion of the labor market, participants judged that conditions remained solid and that the\nlabor market was at, or near, estimates of maximum employment. Several participants observed that\nthe recent stability of the labor market reflected a slowing in both hiring and layoffs, and several\nparticipants also mentioned that their contacts and business survey respondents reported pausing\nhiring decisions because of elevated uncertainty. Several participants noted that immigration policies\nwere reducing labor supply. In their outlook for the labor market, most participants suggested that\nhigher tariffs or heightened policy uncertainty would weigh on labor demand, and many participants\nexpected a gradual softening of conditions. A few participants noted that some indicators already\nprovided signs of softness and that they would be attentive to indications of further labor market\nweakening. Some participants observed that wage growth had continued to moderate and that it was\nnot expected to contribute to inflationary pressures. Participants judged that economic activity had continued to grow at a solid pace, although uncertainty\nremained elevated. The outlook was for continued economic growth, although a majority of\nparticipants expected that the pace of growth was likely to moderate going forward. Regarding the\nhousehold sector, several participants observed that some recent data indicated continued solid\nconsumer spending growth, whereas several other participants pointed to other data that suggested\nsoftening. Several participants noted that lower- and moderate-income households were switching to\nlower-cost items and brands or that these households could be disproportionately affected by tariffrelated price increases. Many participants observed that measures of household sentiment remained\n\n10 June 17-18, 2025\nlow, although these measures had risen a bit recently. A few participants noted that consumer\nsentiment had not been a good predictor of consumer spending in recent years. In their discussion of the business sector, participants noted that activity remained solid, although\nthere have been signs of softening, and many observed that indicators of business sentiment\nremained low. With respect to investment spending, several participants reported that business\ncontacts had indicated that their firms were proceeding with existing investment projects but that\nheightened uncertainty was making them cautious about beginning new projects, especially larger\nones; some smaller new investments or those with more certain payoffs were still being undertaken. Several participants noted that financing from both banks and financial markets was readily available\nfor larger investment projects. A couple of participants noted that business investment in artificial\nintelligence could boost productivity. Several participants commented that there had been signs of\nsoftening production activity in the manufacturing sector and pointed to reductions in orders and\nshipments in manufacturing surveys or in reports of business contacts. A couple of participants noted\nthat the agricultural sector faced strains from low crop prices and high input costs. In their consideration of monetary policy at this meeting, participants noted that inflation remained\nsomewhat elevated. Participants also observed that recent indicators suggested that economic\nactivity had continued to expand at a solid pace, although swings in net exports and inventories had\naffected the measurement and interpretation of the data. Participants further noted that the\nunemployment rate remained at a low level and that labor market conditions had remained solid. Participants observed that uncertainty about the economic outlook had diminished amid a reduction\nin announced and expected tariffs, which appeared to peak in April and had subsequently declined,\nbut that overall uncertainty continued to be elevated. All participants viewed it as appropriate to\nmaintain the target range for the federal funds rate at 4¼ to 4½ percent. Participants judged it\nappropriate to continue the process of reducing the Federal Reserve’s securities holdings. In considering the outlook for monetary policy, participants generally agreed that, with economic\ngrowth and the labor market still solid and current monetary policy moderately or modestly restrictive,\nthe Committee was well positioned to wait for more clarity on the outlook for inflation and economic\nactivity. Participants noted that monetary policy would be informed by a wide range of incoming data,\nthe economic outlook, and the balance of risks. Most participants assessed that some reduction in\nthe target range for the federal funds rate this year would likely be appropriate, noting that upward\npressure on inflation from tariffs may be temporary or modest, that medium- and longer-term inflation\nexpectations had remained well anchored, or that some weakening of economic activity and labor\nmarket conditions could occur. A couple of participants noted that, if the data evolve in line with their\nexpectations, they would be open to considering a reduction in the target range for the policy rate as\nsoon as at the next meeting. Some participants saw the most likely appropriate path of monetary\n\nMinutes of the Federal Open Market Committee 11\npolicy as involving no reductions in the target range for the federal funds rate this year, noting that\nrecent inflation readings had continued to exceed the Committee’s 2 percent goal, that upside risks to\ninflation remained meaningful in light of factors such as elevated short-term inflation expectations of\nbusinesses and households, or that they expected that the economy would remain resilient. Several\nparticipants commented that the current target range for the federal funds rate may not be far above\nits neutral level. Various participants discussed risks that, if realized, would have the potential to affect the appropriate\npath of monetary policy. Regarding upside risks to inflation, participants noted that, if the imposition\nof tariffs were to generate a larger-than-expected increase in inflation, if such an increase in inflation\nwere to be more persistent than anticipated, or if a notable increase in medium- or longer-term\ninflation expectations were to occur, then it would be appropriate to maintain a more restrictive stance\nof monetary policy than would otherwise be the case, especially if labor market conditions and\neconomic activity remained solid. By contrast, if labor market conditions or economic activity were to\nweaken materially, or if inflation were to continue to come down and inflation expectations remained\nwell anchored, then it would be appropriate to establish a less restrictive stance of monetary policy\nthan would otherwise be the case. Participants noted that the Committee might face difficult tradeoffs\nif elevated inflation proved to be more persistent while the outlook for employment weakened. If that\nwere to occur, participants agreed that they would consider how far the economy is from each goal\nand the potentially different time horizons over which those respective gaps would be anticipated to\nclose. In considering the likelihood of various scenarios, participants agreed that the risks of higher inflation\nand weaker labor market conditions had diminished but remained elevated, citing a lower expected\npath of tariffs, encouraging recent readings on inflation and inflation expectations, resilience in\nconsumer and business spending, or improvements in some measures of consumer or business\nsentiment. Some participants commented that they saw the risk of elevated inflation as remaining\nmore prominent, or as having diminished by less, than risks to employment. A few participants saw\nrisks to the labor market as having become predominant. They noted some recent signs of weakening\nin real activity or the labor market, or commented that conditions could weaken in the future,\nparticularly if policy were to remain restrictive. Participants agreed that although uncertainty about\ninflation and the economic outlook had decreased, it remained appropriate to take a careful approach\nin adjusting monetary policy. Participants emphasized the importance of ensuring that longer-term\ninflation expectations remained well anchored and agreed that the current stance of monetary policy\npositioned the Committee well to respond in a timely way to potential economic developments.\n\n12 June 17-18, 2025\nCommittee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that although swings in net\nexports had affected the data, recent indicators suggested that economic activity had continued to\nexpand at a solid pace. Members agreed that the unemployment rate had remained at a low level and\nthat labor market conditions had remained solid. Members concurred that inflation remained\nsomewhat elevated. Members agreed that it was appropriate to acknowledge in the postmeeting\nstatement that uncertainty about the economic outlook had diminished but remained elevated, and\nthe Committee was attentive to the risks to both sides of its dual mandate. The assessment that\nuncertainty had declined reflected, in part, a reduction in the expected level of tariffs, which appeared\nto peak in April and had subsequently declined. In support of its goals, the Committee agreed to maintain the target range for the federal funds rate at\n4¼ to 4½ percent. Members agreed that, in considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee would carefully assess\nincoming data, the evolving outlook, and the balance of risks. All members agreed that the\npostmeeting statement should affirm their strong commitment both to supporting maximum\nemployment and to returning inflation to the Committee’s 2 percent objective. Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would\ncontinue to monitor the implications of incoming information for the economic outlook. They would be\nprepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede\nthe attainment of the Committee’s goals. Members also agreed that their assessments would take\ninto account a wide range of information, including readings on labor market conditions, inflation\npressures and inflation expectations, and financial and international developments. At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the SOMA in accordance with the following\ndomestic policy directive, for release at 2:00 p.m.:\n“Effective June 20, 2025, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4¼ to 4½ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n4.5 percent and with an aggregate operation limit of $500 billion.\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.25 percent and with a per-counterparty limit of $160 billion per day.\n\nMinutes of the Federal Open Market Committee 13\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$5 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Although swings in net exports have affected the data, recent indicators suggest that\neconomic activity has continued to expand at a solid pace. The unemployment rate remains\nlow, and labor market conditions remain solid. Inflation remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. Uncertainty about the economic outlook has diminished but remains\nelevated. The Committee is attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to maintain the target range for the federal\nfunds rate at 4¼ to 4½ percent. In considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee will carefully assess\nincoming data, the evolving outlook, and the balance of risks. The Committee will continue\nreducing its holdings of Treasury securities and agency debt and agency mortgage backed\nsecurities. The Committee is strongly committed to supporting maximum employment and\n‑\nreturning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\n\n14 June 17-18, 2025\nVoting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman,\nSusan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Adriana D. Kugler, Alberto G. Musalem, Jeffrey R. Schmid, and Christopher J. Waller. Voting against this action: None. Consistent with the Committee’s decision to leave the target range for the federal funds rate\nunchanged, the Board of Governors of the Federal Reserve System voted unanimously to maintain the\ninterest rate paid on reserve balances at 4.4 percent, effective June 20, 2025. The Board of\nGovernors of the Federal Reserve System voted unanimously to approve the establishment of the\nprimary credit rate at the existing level of 4.5 percent. It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday, July 29–\n30, 2025. The meeting adjourned at 10:10 a.m. on June 18, 2025. Notation Vote\nBy notation vote completed on May 27, 2025, the Committee unanimously approved the minutes of\nthe Committee meeting held on May 6–7, 2025. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nMichael S. Barr\nMichelle W. Bowman\nSusan M. Collins\nLisa D. Cook\nAustan D. Goolsbee\nPhilip N. Jefferson\nAdriana D. Kugler\nAlberto G. Musalem\nJeffrey R. Schmid\nChristopher J. Waller\nBeth M. Hammack, Patrick Harker, Neel Kashkari, and Lorie K. Logan, Alternate Members of the\nCommittee\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of\nRichmond, Atlanta, and San Francisco, respectively\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\n\nMinutes of the Federal Open Market Committee 15\nShaghil Ahmed, Brian M. Doyle, Eric M. Engen, Joseph W. Gruber, Anna Paulson, and Egon Zakrajšek,\nAssociate Economists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nSriya Anbil, Group Manager, Division of Monetary Affairs, Board\nPhilippe Andrade,2 Vice President, Federal Reserve Bank of Boston\nRoc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia\nAlyssa Arute,3 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\nAyelen Banegas, Principal Economist, Division of Monetary Affairs, Board\nBecky C. Bareford, First Vice President, Federal Reserve Bank of Richmond\nLisa Barrow, Vice President, Federal Reserve Bank of Cleveland\nWilliam F. Bassett, Senior Associate Director, Division of Financial Stability, Board\nMichael Bauer,2 Senior Research Advisor, Federal Reserve Bank of San Francisco\nTravis J. Berge,2 Section Chief, Division of Research and Statistics, Board\nDario Caldara,2 Adviser, Division of International Finance, Board\nMark A. Carlson, Adviser, Division of Monetary Affairs, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nWendy E. Dunn, Adviser, Division of Research and Statistics, Board\nWilliam Dupor, Senior Economic Policy Advisor II, Federal Reserve Bank of St. Louis\nEric C. Engstrom, Associate Director, Division of Monetary Affairs, Board\nGiovanni Favara,2 Deputy Associate Director, Division of Monetary Affairs, Board\nLaura J. Feiveson, Special Adviser to the Board, Division of Board Members, Board\nGiuseppe Fiori,2 Principal Economist, Division of International Finance, Board\nJonas Fisher,2 Senior Vice President, Federal Reserve Bank of Chicago\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nEtienne Gagnon, Senior Associate Director, Division of International Finance, Board\nVaishali Garga,2 Principal Economist, Federal Reserve Bank of Boston\nMichael S. Gibson, Director, Division of Supervision and Regulation, Board\nJonathan E. Goldberg, Principal Economist, Division of Monetary Affairs, Board\nFrançois Gourio, Senior Economist and Economic Advisor, Federal Reserve Bank of Chicago\n2 Attended through the discussion of the review of the monetary policy framework.\n3 Attended through the discussion of developments in financial markets and open market operations.\n\n16 June 17-18, 2025\nChristopher J. Gust, Associate Director, Division of Monetary Affairs, Board\nFrançois Henriquez, First Vice President, Federal Reserve Bank of St. Louis\nEdward Herbst,2 Section Chief, Division of Monetary Affairs, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nSara J. Hogan,3 Senior Financial Institution Policy Analyst I, Division of Reserve Bank Operations and\nPayment Systems, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nBenjamin K. Johannsen,2 Assistant Director, Division of Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Monetary Affairs, Board\nDon H. Kim, Senior Adviser, Division of Monetary Affairs, Board\nElizabeth Klee, Deputy Director, Division of Monetary Affairs, Board\nScott R. Konzem, Senior Economic Modeler II, Division of Monetary Affairs, Board\nMichael Koslow,3 Associate Director, Federal Reserve Bank of New York\nSpencer D. Krane,2 Senior Vice President, Federal Reserve Bank of Chicago\nSylvain Leduc, Executive Vice President and Director of Economic Research, Federal Reserve Bank of\nSan Francisco\nAndreas Lehnert, Director, Division of Financial Stability, Board\nPaul Lengermann, Deputy Associate Director, Division of Research and Statistics, Board\nEric LeSueur,3 Policy and Market Analysis Advisor, Federal Reserve Bank of New York\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nLogan T. Lewis, Section Chief, Division of International Finance, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nFrancesca Loria,2 Principal Economist, Division of Monetary Affairs, Board\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nJonathan P. McCarthy, Economic Research Advisor, Federal Reserve Bank of New York\nBenjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board\nAlisdair G. McKay,2 Monetary Advisor, Federal Reserve Bank of Minneapolis\nYvette McKnight,2 Senior Agenda Assistant, Office of the Secretary, Board\nMark Meder, First Vice President, Federal Reserve Bank of Cleveland\nAnn E. Misback, Secretary, Office of the Secretary, Board\nDavid Na, Lead Financial Institution Policy Analyst, Division of Monetary Affairs, Board\nEdward Nelson, Senior Adviser, Division of Monetary Affairs, Board\nGiovanni Nicolò,2 Principal Economist, Division of Monetary Affairs, Board\nAnna Nordstrom, Head of Markets, Federal Reserve Bank of New York\n\nMinutes of the Federal Open Market Committee 17\nAlyssa T. O’Connor, Special Adviser to the Board, Division of Board Members, Board\nMichael G. Palumbo, Senior Associate Director, Division of Research and Statistics, Board\nMatthias Paustian,2 Assistant Director, Division of Research and Statistics, Board\nKaren M. Pence, Deputy Associate Director, Division of Research and Statistics, Board\nPaolo A. Pesenti,4 Director of Monetary Policy Research, Federal Reserve Bank of New York\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nSamuel Schulhofer-Wohl, Senior Vice President, Federal Reserve Bank of Dallas\nKirk Schwarzbach, Special Assistant to the Board, Division of Board Members, Board\nZeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board\nAndre F. Silva, Principal Economist, Division of Monetary Affairs, Board\nThiago Teixeira Ferreira, Special Adviser to the Board, Division of Board Members, Board\nJudit Temesvary, Principal Economist, Division of International Finance, Board\nPaula Tkac, Director of Research, Federal Reserve Bank of Atlanta\nRobert L. Triplett III, First Vice President, Federal Reserve Bank of Dallas\nDaniel J. Vine, Principal Economist, Division of Research and Statistics, Board\nDonielle A. Winford, Senior Information Manager, Division of Monetary Affairs, Board\nAlexander L. Wolman, Vice President, Federal Reserve Bank of Richmond\nRebecca Zarutskie,2 Senior Vice President, Federal Reserve Bank of Dallas\nMolin Zhong,2 Principal Economist, Division of Financial Stability, Board\n_______________________\nJoshua Gallin\nSecretary\n4 Attended through the discussion of economic developments and the outlook.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20250618.pdf",
+    "action": "Maintained",
+    "rate": "4.25%-4.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that future rate adjustments will depend on incoming data, the evolving economic outlook, and the balance of risks. While some policymakers see rate cuts as likely this year, others prefer to wait for more confidence that inflation is sustainably moving toward 2%, keeping the door open to cuts but emphasizing caution.",
+    "key_economic_factors": [
+      "Inflation remains above the 2% target but has cooled from recent peaks, with May PCE inflation at 2.3% and core PCE at 2.6%.",
+      "Solid economic growth and a strong labor market, with unemployment at 4.2% and solid job gains, though signs of softening are emerging.",
+      "Elevated uncertainty around trade policy, particularly tariffs, which are seen as a temporary upward pressure on inflation.",
+      "Business and consumer sentiment remain weak despite solid spending, with caution due to geopolitical and policy risks."
+    ],
+    "economic_outlook": "The Fed expects continued economic growth at a solid pace, though likely moderating, with a gradual softening in labor market conditions. Inflation is projected to decline toward 2% by 2027, supported by anchored long-term expectations. However, risks remain tilted to higher inflation due to tariffs and supply chain effects, while downside risks to growth persist from policy uncertainty.",
+    "market_impact": "Markets should expect a data-dependent path with potential rate cuts later in 2025, supporting modestly lower borrowing costs for businesses and consumers. Equity markets may remain supported by strong fundamentals, but volatility could persist if inflation or tariff-related risks re-emerge."
+  },
+  {
+    "date": "2025-05-07",
+    "title": "FOMC Meeting 2025-05-07",
+    "full_text": "FOMC\nMinutes of the\nFederal Open Market Committee\nMay 6–7, 2025\nFEDERAL RESERVE SYSTEM\n\nMinutes of the Federal Open Market\nCommittee\nMay 6–7, 2025\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Tuesday, May 6, 2025, at\n8:30 a.m. and continued on Wednesday, May 7, 2025, at 9:00 a.m.1\nReview of Monetary Policy Strategy, Tools, and Communications\nCommittee participants continued their discussions related to their review of the Federal Reserve’s\nmonetary policy framework, with a focus on the price-stability side of the dual mandate and the\nFOMC’s monetary policy strategy. The staff briefed policymakers on lessons drawn from the\nexperiences of the U.S. and other economies with inflation over the past five years and the possible\nimplications for monetary policy. The staff discussed the role of large and persistent demand and\nsupply shifts, the way production capacity constraints amplified supply–demand imbalances, and the\ndegree to which labor market tightness contributed to inflation both in the U.S. and abroad. The staff considered the role of stable longer-term inflation expectations in limiting the magnitude and\npersistence of the post-pandemic inflation surge and facilitating disinflation without significant\ndamage to the labor market. The staff also considered whether medium-term inflation risks have\nbecome more balanced around the 2 percent objective than they were during the pre-pandemic\nperiod, when the proximity of the policy rate to the effective lower bound (ELB) appeared to contribute\nto inflation running persistently below 2 percent. They presented model-based analysis of the costs\nand benefits of different inflation-targeting strategies in conditions of low levels of aggregate demand\nand inflation as well as in situations in which simultaneously high inflation and unemployment lead to\na tradeoff between the Committee’s inflation and employment objectives. In their discussions, participants strongly reaffirmed their commitment to the 2 percent longer-run\ninflation objective and to the importance of longer-term inflation expectations being firmly anchored at\nthat target rate. They emphasized that anchored inflation expectations help the Committee in\nachieving price stability, thereby enhancing the Committee’s ability to promote maximum employment. Some participants also noted that short-term inflation expectations matter for economic decisions and\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 May 6–7, 2025\ncan affect the persistence of inflation. Participants agreed that a commitment to its explicit 2 percent\ninflation objective, along with anchored longer-term inflation expectations at that level, enhances the\nCommittee’s transparency and accountability and bolsters the effectiveness of monetary policy. Participants discussed the advantages and disadvantages of flexible average inflation targeting, under\nwhich monetary policy seeks to make up for persistently below-objective inflation to achieve average\ninflation of 2 percent, and flexible inflation targeting, under which policy seeks to return inflation to\n2 percent without making up for previous deviations from target. Participants generally observed that\nwhen the risks of the policy rate hitting the ELB were more prominent and inflation was persistently\nrunning below the target, flexible average inflation targeting could have potentially limited the risk of\nlonger-run inflation expectations becoming unanchored to the downside. Participants noted, however,\nthat the strategy of flexible average inflation targeting has diminished benefits in an environment with\na substantial risk of large inflationary shocks or when ELB risks are less prominent. Participants\nindicated that they thought it would be appropriate to reconsider the average inflation--targeting\nlanguage in the Statement on Longer-Run Goals and Monetary Policy Strategy. Participants noted that\nan effective monetary policy strategy must be robust to a wide variety of economic environments. They viewed flexible inflation targeting as a more robust policy strategy capable of correcting\npersistent deviations of inflation from either side of the Committee’s 2 percent longer-run objective. Participants also noted that the Committee’s strategy should reflect its willingness to make forceful\nuse of all available tools as appropriate should the risks of hitting the ELB again materialize. Developments in Financial Markets and Open Market Operations\nThe manager turned first to a review of financial market developments. Amid significant market\nvolatility over the intermeeting period, longer-maturity Treasury yields rose, broad equity price indexes\nchanged little on net, credit spreads widened, and the dollar depreciated. The manager observed that\nmarket participants appeared to interpret recently announced trade policy changes as a negative\nsupply shock that could restrain domestic activity relative to foreign activity in the near term. The\nmanager noted that respondents to the Open Market Desk’s Survey of Market Expectations had\nmaterially lowered their gross domestic product (GDP) forecasts and raised their inflation forecasts for\nthis year while significantly increasing the probability they placed on a recession occurring within the\nnext six months. The dollar depreciated substantially against most major currencies, as the trade-weighted broad dollar\nindex declined over 2 percent. Market contacts attributed the decline to increased foreign exchange\nhedging prompted by heightened policy uncertainty and concerns that trade policy could pose greater\ndownside risks to the U.S. than to other economies. The manager noted that the dollar had\ndepreciated even though U.S. interest rates had risen more than foreign interest rates and prices of\n\nMinutes of the Federal Open Market Committee 3\nrisky assets had declined, which historically have been associated with dollar appreciation. Liquidity\nin foreign exchange markets deteriorated but was roughly in line with the historical relationship\nbetween liquidity and measures of market volatility. The Treasury yield curve steepened materially, as short-term Treasury yields declined about 20 basis\npoints over the intermeeting period while longer-term yields increased on net. Measures of Treasury\nmarket liquidity deteriorated immediately after the announcement of higher-than-expected tariffs on\nApril 2 and partially recovered later in the period. The deterioration in liquidity, however, was\ncommensurate with the historical relationship between measures of market volatility and liquidity, and\nthe Treasury market continued to function well. The manager noted that an unwinding of positions\nthat had sought to profit on spreads between Treasury yields and interest rate swaps appeared to\nhave been a factor in the deterioration of liquidity and the associated rise in longer-term yields. By\ncontrast, positions held in order to arbitrage the basis between Treasury cash and futures prices had\nappeared to remain largely stable. Inflation expectations increased modestly at short horizons but\nremained stable at longer horizons. While equity prices declined sharply early in the period, these movements subsequently retraced, and\nbroad equity indexes were essentially unchanged on net. However, equity prices remained below their\npeak levels in mid-February, and options prices indicated greater investor demand for protection\nagainst further equity price declines. Corporate bond and leveraged loan spreads widened on net. Primary issuance had briefly paused at the height of market volatility but subsequently resumed. Market contacts suggested that, rather than disinvesting away from U.S. assets, global investors had\ninstead sought to increase their hedging against the risk of further dollar depreciation. The manager\nnoted that no evidence indicated that foreign investors had sold material amounts of U.S. assets. Available data pointed to modest outflows from fixed-income securities that were largely offset by\ninflows into equity securities. The manager, however, observed that large global investors tend to\nchange their investment strategies only slowly and that potential future geographic asset reallocations will depend on the evolution of the global economic outlook. The modal implied policy path based on options prices, which is a proxy for market baseline policy\nexpectations, moved down some over the period and was consistent with either one or two 25 basis\npoint rate cuts by the end of the year—only slightly more than at the time of the March FOMC meeting. The option-implied distribution of rate outcomes around year-end shifted to the left and became more\nskewed to the downside. The market perception that risks to the policy rate tilted more to the\ndownside accounts for the fact that the futures-based expected policy path shifted down more over\nthe period and was consistent with around three rate cuts by year-end. The median modal path for\nthe federal funds rate from the Survey of Market Expectations was not much changed and indicated\n\n4 May 6–7, 2025\neither two or three rate cuts this year. However, the survey pointed to increased disagreement across\nrespondents as to the most likely path of policy. Despite the volatility in broader markets over the intermeeting period, money market functioning had\nremained orderly. Rates on Treasury repurchase agreements (repo) were somewhat higher, on\naverage, over the period, but there had been no significant strains in that market. A range of core\nindicators continued to suggest that reserves remained abundant. The manager noted some\nmovement in one of the Desk’s indicators arising from a modest increase in federal funds borrowing\nby some domestic banks in the second half of April; however, that development appeared related to\ntax flows and was not indicative of tighter reserves conditions. The manager observed that reserves\nstood above $3.2 trillion and were expected to increase as the Treasury General Account (TGA)\ndeclined until resolution of the debt limit situation. Take-up at the overnight reverse repurchase\nagreement (ON RRP) facility had increased but remained low in absolute terms. Following the FOMC’s\ndecision to slow the pace of balance sheet runoff at its March meeting, respondents to the Survey of\nMarket Expectations moved their expected date for the end of balance sheet runoff back, on average,\nto January 2026 and slightly lowered their estimates for the size of the Federal Reserve’s balance\nsheet at the time that runoff stopped. The manager reported that the Desk’s technical exercises offering early settlement of the standing\nrepo facility (SRF) conducted around the March quarter-end had gone smoothly and were well\nreceived. Market outreach indicated that dealers had a higher willingness to use the facility when\nearly settlement was offered, and the Desk planned to make the addition of an option for early\nsettlement a regular part of the SRF schedule starting in late June. The Committee voted unanimously to renew the dollar and foreign currency liquidity swap\narrangements with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central\nBank, and the Swiss National Bank. In addition, the Committee voted unanimously to renew the\nreciprocal currency arrangements with the Bank of Canada and the Bank of Mexico; these\narrangements are associated with the Federal Reserve’s participation in the North American\nFramework Agreement of 1994. The votes to renew the Federal Reserve’s participation in these\nstanding arrangements occur annually at the April or May FOMC meeting. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period.\n\nMinutes of the Federal Open Market Committee 5\nStaff Review of the Economic Situation\nThe information available at the time of the meeting indicated that consumer price inflation remained\nsomewhat elevated. The unemployment rate had stabilized at a relatively low level since the middle of\nlast year, but reported real GDP growth stepped down markedly in the first quarter of 2025. Total consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—was 2.3 percent in March. Core PCE price inflation, which excludes\nchanges in consumer energy prices and many consumer food prices, was 2.6 percent in March. Both\ntotal and core inflation were lower than their year-earlier levels. Recent data indicated that labor market conditions had remained solid. The unemployment rate was\n4.2 percent in March and April, equal to its average over the second half of 2024. The participation\nrate had risen 0.2 percentage point since February, and the employment-to-population ratio had\nedged up 0.1 percentage point over the same period. Average monthly gains for total nonfarm\npayrolls over March and April were solid and roughly in line with the average pace seen over\n2024. The ratio of job vacancies to unemployed workers was 1.0 in April, slightly below its average\nover 2019. The employment cost index for total hourly compensation of private industry workers rose\n3.4 percent over the 12 months ending in March, well below its year-earlier level. Average hourly\nearnings for all employees rose 3.8 percent over the 12 months ending in April, little changed from a\nyear ago. According to the advance estimate, real GDP declined slightly in the first quarter. However, this firstquarter estimate was likely affected by measurement issues. Real imports of goods and services\nsoared in the first quarter, likely driven by front-loading of imports—especially consumer goods—ahead\nof anticipated tariff hikes. Given relatively tepid export growth, the net exports category made a large\nnegative contribution to measured GDP growth in the first quarter. Based on available data, the\noutsized increase in imports did not seem to be fully matched by corresponding increases in other\ncategories of spending, including inventory investment, resulting in a small decline in estimated real\nGDP. By contrast, real private domestic final purchases (PDFP)—which comprises PCE and private\nfixed investment and which often provides a better signal than GDP of underlying economic\nmomentum—posted a solid gain in the first quarter that was similar to its average rate of increase over\n2024. Indicators of foreign economic activity pointed to a moderate pace of expansion in the first quarter,\nlikely supported in part by front-loaded demand from U.S. importers in anticipation of tariff hikes. However, more recent indicators suggested weakening momentum, notably in Canada and Mexico,\namid elevated uncertainty about global trade policies. Inflation abroad was near central bank targets\n\n6 May 6–7, 2025\nin most foreign economies, in part reflecting lower energy prices. By contrast, Chinese inflation\nremained quite subdued. The European Central Bank, the Bank of Mexico, and several central banks in emerging Asia eased\nmonetary policy, citing in part the prospective drag on domestic growth from U.S. tariffs. In their\ncommunications, foreign central banks also emphasized the need to maintain policy flexibility amid\nheightened uncertainty. Staff Review of the Financial Situation\nOver the intermeeting period, the market-implied path of the federal funds rate over the next few\nmeetings edged up, on net, but declined somewhat toward the end of the year, as the announcements\non new U.S. tariffs left investors more concerned about the near-term outlooks for both inflation and\ngrowth. Near-term inflation compensation rose notably, while longer-term inflation compensation\nappeared to remain well anchored. Against the backdrop of heightened volatility, yields on shorterand medium-term nominal Treasury securities declined, but longer-term rates rose somewhat. The\nincrease in longer-term yields appeared to be partly attributable to higher term premiums. Prices of risky assets were extremely volatile over the intermeeting period amid multiple tariff-related\ndevelopments. On net, broad equity prices ended the period little changed, and the VIX—a forwardlooking measure of near-term equity market volatility—rose notably before partially retracing and\nending the period at a modestly elevated level. Credit spreads widened, on net, especially for\nspeculative-grade bonds, consistent with increased concerns about economic growth. Spreads,\nhowever, remained at low levels. Tariff announcements led to a significant deterioration in global risk sentiment, which largely reversed\nfollowing a subsequent pause of some of the tariffs and growing investor optimism about easing of\ntrade tensions. On net, foreign equity prices moved down somewhat, while corporate bond spreads\nwidened moderately. Market-based policy expectations and near-term inflation compensation\ndeclined notably in Europe. The dollar depreciated against many advanced foreign economy (AFE)\ncurrencies despite widening U.S.–AFE yield differentials. Market participants generally attributed\ndollar weakness to concerns about potential adverse effects of trade policy on the U.S. growth outlook. Conditions in U.S. short-term funding markets remained orderly. While the TGA increased in the latter\npart of the period because of incoming tax receipts, it was expected to resume its decline. This\ndynamic, if realized, will boost the sum of ON RRP take-up and reserve balances until the resolution of\nthe federal debt limit situation and will tend to put downward pressure on short-term market rates. In domestic credit markets, most borrowing costs for businesses, households, and municipalities\nincreased notably in response to the tariff news. Yields increased from already elevated levels for an\n\nMinutes of the Federal Open Market Committee 7\narray of fixed-income securities, including investment-grade corporate bonds and senior commercial\nmortgage-backed securities (CMBS) tranches, largely as a result of higher credit spreads. Rates on\n30-year fixed-rate conforming residential mortgages edged down. Interest rates for credit card offers\ninched up in February, while those on new auto loans were little changed over the intermeeting period\non net. Meanwhile, interest rates on commercial and industrial (C&I) loans and small business loans\nremained elevated in the first quarter. Financing through capital markets and nonbank lenders was generally less available in the latter part\nof the intermeeting period than earlier in the period, especially for speculative-grade bonds. Issuance\nof corporate bonds and leveraged loans stopped during peak market turmoil in early April but resumed\nas market sentiment recovered. Issuance of investment-grade corporate bonds returned at a strong\npace, particularly in the first week of May, while that of speculative-grade bonds and leveraged loans\nremained subdued. Regarding bank credit, banks in the April Senior Loan Officer Opinion Survey on\nBank Lending Practices (SLOOS) reported unchanged loan standards across all loan categories, on\nnet, over the first quarter.2 C&I loan balances edged down in the first quarter. Large banks reported\neasing lending standards or leaving them unchanged for all commercial real estate (CRE) loan\ncategories, while smaller banks tightened standards or left them unchanged. Consumer credit continued to be generally available for most households. Growth in consumer credit\non banks’ books stepped up in the first quarter, and responses to the April SLOOS showed a net\neasing of consumer lending standards in the first quarter. Credit continued to be easily available for\nhigh-credit-score mortgage borrowers but was not easily available for lower-credit-score borrowers. Credit quality remained stable for large and midsize firms, most categories of mortgages, and\nconsumer loans, but it continued to deteriorate in other sectors. The credit performance of corporate\nbonds, leveraged loans, and private credit loans was generally stable in the first quarter. Credit quality\nconcerns in the CRE market broadened beyond office properties. Even so, average CMBS delinquency\nrates were little changed in March, as declining office and multifamily delinquencies offset a rise in\nthe retail and hotel sectors. Regarding household credit quality, the rate of serious delinquencies on\nFederal Housing Administration mortgages continued to rise in February to above pre-pandemic levels. By contrast, delinquency rates on most other mortgage loan types remained at historical lows. In the\nfourth quarter of last year, credit card delinquency rates edged down, and auto delinquency rates were\nabout unchanged, but both remained at elevated levels.\n2 The SLOOS results reported are based on banks’ responses, weighted by each bank’s outstanding loans in the respective loan\ncategory, and might therefore differ from the results reported in the published SLOOS, which are based on banks’ unweighted\nresponses.\n\n8 May 6–7, 2025\nThe staff provided an updated assessment of the stability of the U.S. financial system and, on balance,\ncontinued to characterize the system’s financial vulnerabilities as notable. The staff judged that asset\nvaluation pressures were notable. Equity valuations declined but still stood at the upper end of their\nhistorical distribution, spreads on high-yield corporate bonds widened and stood around the middle of\ntheir historical distribution, and housing valuations remained quite high amid increased risks to the\neconomic outlook and the appearance of ebbing risk appetite. Vulnerabilities associated with business and household debt were characterized as moderate. The\nability of publicly traded firms to service their debt had improved slightly, partly reflecting stable\nearnings. That said, riskier firms continued to face high debt service costs relative to historical ranges. Household balance sheets remained solid overall, though delinquency rates on auto and credit card\nloans were elevated. Vulnerabilities associated with leverage in the financial sector were characterized as notable. Regulatory capital ratios in the banking sector remained high. Banks, however, were still seen as\nexposed to some interest rate risk. In the nonbank sector, leverage at hedge funds stayed high. Vulnerabilities associated with funding risks were characterized as moderate. The liquidity mismatch\nof assets and liabilities at mutual funds was evident amid substantial outflows in the first week of\nApril. Nevertheless, the outflows were not sustained and did not ultimately strain overall liquidity in\nthe markets in which the mutual funds invest. Banks reduced their reliance on uninsured deposits\nnotably since the end of 2021. Staff Economic Outlook\nThe staff projection for real GDP growth in 2025 and 2026 was weaker than the one prepared for the\nMarch meeting, as announced trade policies implied a larger drag on real activity relative to the\npolicies that the staff had assumed in their previous forecast. Trade policies were also expected to\nlead to slower productivity growth and therefore to reduce potential GDP growth over the next few\nyears. With the drag on demand expected to start earlier and to be larger than the supply response,\nthe output gap was projected to widen significantly over the forecast period. The labor market was\nexpected to weaken substantially, with the unemployment rate forecast moving above the staff’s\nestimate of its natural rate by the end of this year and remaining above the natural rate through\n2027. The staff’s inflation projection was higher than the one prepared for the March meeting. Tariffs were\nexpected to boost inflation markedly this year and to provide a smaller boost in 2026; after that,\ninflation was projected to decline to 2 percent by 2027.\n\nMinutes of the Federal Open Market Committee 9\nThe staff continued to note the large amount of uncertainty surrounding trade policy and other\neconomic policies and now viewed the uncertainty around the projection as elevated relative to the\naverage over the past 20 years. Risks to real activity were seen as skewed to the downside, and the\nstaff viewed the possibility that the economy would enter a recession to be almost as likely as the\nbaseline forecast. The substantial upward revision to the inflation forecast in 2025 was judged to\nleave the risks around the inflation projection balanced in that year. Thereafter, the staff continued to\nview the risks around the inflation forecast as skewed to the upside, with recent increases in some\nmeasures of inflation expectations raising the possibility that inflation would prove to be more\npersistent than the baseline projection assumed. Participants’ Views on Current Conditions and the Economic Outlook\nParticipants observed that, even though swings in net exports had affected the data, the available\ndata indicated that economic activity had continued to expand at a solid pace and labor market\nconditions continued to be solid, but inflation remained somewhat elevated. Participants assessed\nthat the tariff increases announced so far had been significantly larger and broader than they had\nanticipated. Participants observed that there was considerable uncertainty surrounding the evolution\nof trade policy as well as about the scale, scope, timing, and persistence of associated economic\neffects. Significant uncertainties also surrounded changes in fiscal, regulatory, and immigration\npolicies and their economic effects. Taken together, participants saw the uncertainty about their\neconomic outlooks as unusually elevated. Overall, participants judged that downside risks to\nemployment and economic activity and upside risks to inflation had risen, primarily reflecting the\npotential effects of tariff increases. Participants observed that inflation had eased significantly since its peak in 2022 but remained\nsomewhat elevated relative to the Committee’s 2 percent longer-run goal. Participants noted that\nprogress on disinflation had been uneven recently, with elevated monthly readings in January and\nFebruary having been followed by a relatively low reading in March. With regard to the outlook for\ninflation, participants judged that it was likely to be boosted by the effects of higher tariffs, although\nsignificant uncertainty surrounded those effects. Many participants remarked that reports from their\nbusiness contacts or surveys indicated that firms generally were planning to either partially or fully\npass on tariff-related cost increases to consumers. Several participants noted that firms not directly\nsubject to tariffs might take the opportunity to increase their prices if other prices rise. Some\nparticipants assessed that the recent increase in short-term inflation expectations, as indicated by\nvarious survey- and market-based measures, or the fact that the economy had gone through a period\nof high inflation recently could make firms more willing to raise prices. While most indicators had\nsuggested that longer-term inflation expectations remained well anchored, some participants saw the\nrisk that they could drift upward, which could put additional upward pressure on inflation. Some\n\n10 May 6–7, 2025\nparticipants assessed that tariffs on intermediate goods could contribute to a more persistent\nincrease in inflation. A few participants noted that supply chain disruptions caused by tariffs also\ncould have persistent effects on inflation, reminiscent of such effects during the pandemic. Several\nparticipants highlighted factors that might help mitigate the magnitude and persistence of potential\nincreases in inflation, such as reductions of tariff increases from ongoing trade negotiations, less\ntolerance for price increases by households, a weakening of the economy, reduced housing inflation\npressures from lower immigration, or a desire by some firms to increase market share rather than\nraise prices on items not affected by tariffs. Participants judged that labor market conditions remained broadly in balance. The unemployment\nrate remained low and had stayed in a narrow range over the past year. Payroll employment gains\nwere solid in April and at levels consistent with the unemployment rate being stable given a flat\nparticipation rate and low immigration. Layoffs remained low. Some participants noted, however, that\ntheir contacts and business survey respondents reported limiting or pausing hiring because of\nelevated uncertainty. Participants assessed that there was a risk that the labor market would weaken\nin coming months, that considerable uncertainty surrounded the outlook for the labor market, and that\noutcomes would depend importantly on the evolution of trade policy as well as other government\npolicies. Nominal wage growth continued to moderate. Several participants commented that labor\nmarket conditions were unlikely to be a source of inflationary pressure. Participants observed that the available data suggested that the economy had continued to grow at a\nsolid pace. Real GDP edged down in the first quarter, but several participants observed that the\ndecline may be the result of measurement issues, as a surge of imports ahead of expected tariff\nincreases likely was not fully reflected in the data for inventories and spending. PDFP, which is often a\nbetter indicator than GDP of underlying economic momentum, rose at a solid pace in the first quarter. Participants observed that consumer spending grew solidly in March. Several participants commented\nthat, other than apparent front-running effects seen in some spending categories, effects of tariffrelated developments were not widely evident in the aggregate consumer spending data. However,\nparticipants noted that various surveys indicated a sharp deterioration in consumer sentiment, though\nseveral also commented that consumer sentiment had not been a good predictor of consumer\nspending in recent years. Several participants noted that factors such as elevated economic\nuncertainty and a possible decline in real disposable income due to tariff-related increases in prices\ncould lead to increased precautionary saving and reduced consumer demand. A couple of\nparticipants noted that a deterioration in financial market sentiment could also weigh on consumer\ndemand. Regarding factors that might mitigate negative effects of tariffs on consumer spending, a\nfew participants observed that the strength in the balance sheets of many households could help\nthem absorb a tariff-induced reduction in their purchasing power; lower energy prices might help\n\nMinutes of the Federal Open Market Committee 11\nlessen strains on households’ budgets; and households might shift spending from goods to services,\nwhich are likely to be less affected by tariffs. With regard to the business sector, participants observed that the growth in business fixed investment\nwas solid in the first quarter. However, participants also noted that their contacts or surveys reported\nsharp declines in business sentiment, and many participants remarked that those reports also\nrevealed that many firms were pausing or delaying their capital expenditure plans amid increased\nuncertainty. Several participants noted that sentiment was generally downbeat among manufacturers\nbecause of a rise or prospective rise in input costs as well as concerns about potential supply chain\ndisruptions. A few participants commented that retailers were downbeat because the breadth of\ntariffs made cost increases unavoidable for them. Several participants commented that small\nbusinesses could be especially vulnerable to the effects of tariffs, as they had less capacity to absorb\nmargin reductions and were likely less able to diversify away from imported items. Several\nparticipants highlighted the strains faced by the agricultural sector, as tariffs threatened to further\ncompress farm profit margins by lowering farm export prices and raising input costs. A couple of\nparticipants noted that their contacts in the energy sector expected growth in the sector to be limited,\nas energy prices had declined to near the level at which expanding capacity is no longer profitable for\nmany domestic producers. Several participants noted that some hospital systems, universities, and\nnonprofit organizations were under strains due to government funding cuts and restrictions on\nimmigration. Some participants discussed various considerations that could help alleviate anticipated\npressures on the business sector, including less restrictive regulations and lower business taxes;\nrelatively strong firm balance sheets, which could help firms absorb a tariff-related hit to profit\nmargins; ongoing trade negotiations to lower tariffs; and increased demand directed to firms that are\nless affected by tariffs. In their discussion of financial stability, participants who commented noted vulnerabilities to the\nfinancial system that they assessed warranted monitoring. Some participants discussed the\nheightened volatility seen across a range of asset markets over the first half of April, noting that\nmarkets had continued to function and were able to accommodate a surge in trading volumes despite\nlower measures of liquidity. Several participants observed that resilience in the Treasury market was\nof special importance and had been a focus of attention for a number of years. Some participants\ncommented on a change from the typical pattern of correlations across asset prices during the first\nhalf of April, with longer-term Treasury yields rising and the dollar depreciating despite the decline in\nthe prices of equities and other risky assets. These participants noted that a durable shift in such\ncorrelations or a diminution of the perceived safe-haven status of U.S. assets could have long-lasting\nimplications for the economy. While noting that asset prices had declined somewhat, several\nparticipants observed that downside risks to the outlook had increased, leading them to question\n\n12 May 6–7, 2025\nwhether asset prices had actually gotten closer to fundamental valuations. Some participants\nmentioned high levels of leverage at hedge funds or potential concerns about private credit and\nequity. While judging that balance sheet conditions for households, nonfinancial businesses, and\nbanks appeared to be solid, several participants noted that an economic downturn or higher interest\nrates could lead to a deterioration in those conditions. A few participants commented that central\nclearing of the SRF could encourage its use during times of market stress, which would help alleviate\nsuch stresses. In their consideration of monetary policy at this meeting, participants noted that inflation remained\nsomewhat elevated. Participants also observed that recent indicators suggested that economic\nactivity had continued to expand at a solid pace. They noted that swings in net exports appeared to\nhave not been fully reflected in inventory and spending data, which complicated the interpretation of\nthe recent data on economic activity. Participants further noted that the unemployment rate had\nstabilized at a low level and that labor market conditions had remained solid in recent months. In this\ncontext, and amid a further increase in uncertainty about the economic outlook and a rise in the risks\nof both higher unemployment and higher inflation, all participants viewed it as appropriate to maintain\nthe target range for the federal funds rate at 4¼ to 4½ percent. Participants judged it appropriate to\ncontinue the process of reducing the Federal Reserve’s securities holdings. In considering the outlook for monetary policy, participants agreed that with economic growth and the\nlabor market still solid and current monetary policy moderately restrictive, the Committee was well\npositioned to wait for more clarity on the outlooks for inflation and economic activity. Participants\nagreed that uncertainty about the economic outlook had increased further, making it appropriate to\ntake a cautious approach until the net economic effects of the array of changes to government\npolicies become clearer. Participants noted that monetary policy would be informed by a wide range\nof incoming data, the economic outlook, and the balance of risks. In discussing risk-management considerations that could bear on the outlook for monetary policy,\nparticipants agreed that the risks of higher inflation and higher unemployment had risen. Almost all\nparticipants commented on the risk that inflation could prove to be more persistent than expected. Participants emphasized the importance of ensuring that longer-term inflation expectations remained\nwell anchored, with some noting that expectations might be particularly sensitive because inflation\nhad been above the Committee’s target for an extended period. Participants noted that the\nCommittee might face difficult tradeoffs if inflation proves to be more persistent while the outlooks for\ngrowth and employment weaken. Participants observed, however, that the ultimate extent of changes\nto government policy and their effects on the economy was highly uncertain. A few participants\nadditionally noted that higher uncertainty could restrain business and consumer demand and that\n\nMinutes of the Federal Open Market Committee 13\ninflationary pressures could be damped if downside risks to economic activity or the labor market\nmaterialized. Committee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that recent indicators\nsuggested that economic activity had continued to expand at a solid pace. Recognizing the\nmeasurement difficulties induced by the unusual movements in net exports in the first quarter, as\nbusinesses apparently brought in imports ahead of expected tariff increases, members agreed to\nacknowledge that swings in net exports had affected the data. Members agreed that the\nunemployment rate had stabilized at a low level in recent months, and labor market conditions had\nremained solid. Members concurred that inflation remained somewhat elevated. Members assessed\nthat uncertainty about the economic outlook had increased further and agreed that they were\nattentive to the risks to both sides of the Committee’s dual mandate while judging that the risks of\nhigher unemployment and higher inflation had risen. In support of its goals, the Committee agreed to maintain the target range for the federal funds rate at\n4¼ to 4½ percent. Members agreed that in considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee would carefully assess\nincoming data, the evolving outlook, and the balance of risks. All members agreed that the\npostmeeting statement should affirm their strong commitment both to supporting maximum\nemployment and to returning inflation to the Committee’s 2 percent objective. Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would\ncontinue to monitor the implications of incoming information for the economic outlook. They would be\nprepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede\nthe attainment of the Committee’s goals. Members also agreed that their assessments would take\ninto account a wide range of information, including readings on labor market conditions, inflation\npressures and inflation expectations, and financial and international developments. At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the System Open Market Account in\naccordance with the following domestic policy directive, for release at 2:00 p.m.:\n“Effective May 8, 2025, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4¼ to 4½ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n4.5 percent and with an aggregate operation limit of $500 billion.\n\n14 May 6–7, 2025\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.25 percent and with a per-counterparty limit of $160 billion per day.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$5 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Although swings in net exports have affected the data, recent indicators suggest that\neconomic activity has continued to expand at a solid pace. The unemployment rate has\nstabilized at a low level in recent months, and labor market conditions remain solid. Inflation\nremains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. Uncertainty about the economic outlook has increased further. The\nCommittee is attentive to the risks to both sides of its dual mandate and judges that the risks\nof higher unemployment and higher inflation have risen. In support of its goals, the Committee decided to maintain the target range for the federal\nfunds rate at 4¼ to 4½ percent. In considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee will carefully assess\nincoming data, the evolving outlook, and the balance of risks. The Committee will continue\nreducing its holdings of Treasury securities and agency debt and agency mortgage-backed\nsecurities. The Committee is strongly committed to supporting maximum employment and\nreturning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\n\nMinutes of the Federal Open Market Committee 15\nVoting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman,\nSusan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Neel Kashkari, Adriana D. Kugler, Alberto G. Musalem, and Christopher J. Waller\nVoting against this action: None. Neel Kashkari voted as an alternate member at this meeting. Consistent with the Committee’s decision to leave the target range for the federal funds rate\nunchanged, the Board of Governors of the Federal Reserve System voted unanimously to maintain the\ninterest rate paid on reserve balances at 4.4 percent, effective May 8, 2025. The Board of Governors\nof the Federal Reserve System voted unanimously to approve the establishment of the primary credit\nrate at the existing level of 4.5 percent. It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday,\nJune 17–18, 2025. The meeting adjourned at 10:00 a.m. on May 7, 2025. Notation Vote\nBy notation vote completed on April 8, 2025, the Committee unanimously approved the minutes of the\nCommittee meeting held on March 18–19, 2025. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nMichael S. Barr\nMichelle W. Bowman\nSusan M. Collins\nLisa D. Cook\nAustan D. Goolsbee\nPhilip N. Jefferson\nAdriana D. Kugler\nAlberto G. Musalem\nChristopher J. Waller\nBeth M. Hammack, Patrick Harker, Neel Kashkari, Lorie K. Logan, and Sushmita Shukla, Alternate\nMembers of the Committee\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of\nRichmond, Atlanta, and San Francisco, respectively\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\n\n16 May 6–7, 2025\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nJames A. Clouse,3 Brian M. Doyle, Carlos Garriga, Joseph W, Gruber, Anna Paulson,4 and William\nWascher, Associate Economists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nDavid Altig, Executive Vice President, Federal Reserve Bank of Atlanta\nPhilippe Andrade, Vice President, Federal Reserve Bank of Boston\nAlyssa Arute,5 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\nDavid Bowman, Senior Associate Director, Division of Monetary Affairs, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nHess T. Chung,6 Section Chief, Division of Research and Statistics, Board\nJuan Carlos Climent, Special Adviser to the Board, Division of Board Members, Board\nAndrew Cohen, Special Adviser to the Board, Division of Board Members, Board\nEdmund S. Crawley, Principal Economist, Division of Monetary Affairs, Board\nStephanie E. Curcuru, Deputy Director, Division of International Finance, Board\nStefania D’Amico,4 Financial Research Advisor, Federal Reserve Bank of New York\nMarco Del Negro,6 Economic Research Advisor, Federal Reserve Bank of New York\nSarah Devany, First Vice President, Federal Reserve Bank of San Francisco\nBora Durdu, Deputy Associate Director, Division of Financial Stability, Board\nErin E. Ferris, Principal Economist, Division of Monetary Affairs, Board\nAndrew Figura, Associate Director, Division of Research and Statistics, Board\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nMichael S. Gibson, Director, Division of Supervision and Regulation, Board\nChristopher J. Gust, Associate Director, Division of Monetary Affairs, Board\nKinda Hachem, Financial Research Advisor, Federal Reserve Bank of New York\nIna Hajdini, Research Economist II, Federal Reserve Bank of Cleveland\nDiana Hancock, Senior Associate Director, Division of Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\n3 Attended opening remarks for Tuesday’s session only.\n4 Attended through the discussion of economic developments and the outlook.\n5 Attended through the discussion of developments in financial markets and open market operations.\n6 Attended through the discussion of the review of the monetary policy framework.\n\nMinutes of the Federal Open Market Committee 17\nJasper J. Hoek,6 Deputy Associate Director, Division of International Finance, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nBenjamin K. Johannsen,6 Assistant Director, Division of Monetary Affairs, Board\nCallum Jones,6 Principal Economist, Division of Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nDon H. Kim, Senior Adviser, Division of Monetary Affairs, Board\nElizabeth K. Kiser, Senior Associate Director, Division of Research and Statistics, Board\nElizabeth Klee, Senior Associate Director, Division of Financial Stability, Board\nEdward S. Knotek II,6 Senior Vice President, Federal Reserve Bank of Cleveland\nScott R. Konzem, Senior Economic Modeler II, Division of Monetary Affairs, Board\nAnna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond\nSpencer D. Krane, Senior Vice President, Federal Reserve Bank of Chicago\nSylvain Leduc, Executive Vice President and Director of Economic Research, Federal Reserve Bank of\nSan Francisco\nAndreas Lehnert, Director, Division of Financial Stability, Board\nAntoine Lepetit,6 Principal Economist, Division of Research and Statistics, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nLogan T. Lewis, Section Chief, Division of International Finance, Board\nMatthew Lieber,4 Director, Federal Reserve Bank of New York\nAnna Lipinska,6 Group Manager, Division of International Finance, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nByron Lutz, Deputy Associate Director, Division of Research and Statistics, Board\nFernando M. Martin,6 Senior Economic Policy Advisor II, Federal Reserve Bank of St. Louis\nEnrique Martínez García,6 Assistant Vice President, Federal Reserve Bank of Dallas\nBenjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board\nKarel Mertens, Senior Vice President, Federal Reserve Bank of Dallas\nThomas M. Mertens,6 Vice President, Federal Reserve Bank of San Francisco\nAnn E. Misback, Secretary, Office of the Secretary, Board\nMakoto Nakajima, Vice President, Federal Reserve Bank of Philadelphia\nAnna Nordstrom, Head of Markets, Federal Reserve Bank of New York\nMatthias Paustian,7 Assistant Director, Division of Research and Statistics, Board\n7 Attended Tuesday’s session only.\n\n18 May 6–7, 2025\nKaren A. Pennell, First Vice President, Federal Reserve Bank of Boston\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nOdelle Quisumbing,6 Assistant to the Secretary, Office of the Secretary, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nKimberly N. Robbins, First Vice President, Federal Reserve Bank of Kansas City\nFelipe F. Schwartzman,6 Senior Economist, Federal Reserve Bank of Richmond\nZeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board\nAdam H. Shapiro,6 Vice President, Federal Reserve Bank of San Francisco\nA. Lee Smith,6 Senior Vice President, Federal Reserve Bank of Kansas City\nJenny Tang,6 Vice President, Federal Reserve Bank of Boston\nThiago Teixeira Ferreira, Special Adviser to the Board, Division of Board Members, Board\nFrancisco Vazquez-Grande, Group Manager, Division of Monetary Affairs, Board\nClara Vega, Senior Adviser, Division of Research and Statistics, Board\nCheryl L. Venable, First Vice President, Federal Reserve Bank of Atlanta\nDaniel Villar,6 Principal Economist, Division of Research and Statistics, Board\nAnnette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board\nJeffrey D. Walker,5 Senior Associate Director, Division of Reserve Bank Operations and Payment\nSystems, Board\nDonielle A. Winford, Senior Information Manager, Division of Monetary Affairs, Board\nPaul R. Wood, Special Adviser to the Board, Division of Board Members, Board\n_______________________\nJoshua Gallin\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20250507.pdf",
+    "action": "Maintained",
+    "rate": "4.25%-4.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled it will wait for greater clarity on the economic outlook before making any further rate moves, emphasizing it will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee remains prepared to adjust policy if risks emerge that could impede its goals of maximum employment and 2% inflation.",
+    "key_economic_factors": [
+      "Elevated but moderating inflation (PCE at 2.3%, core PCE at 2.6%)",
+      "Solid labor market with unemployment stable at 4.2% and steady payroll gains",
+      "Significant uncertainty from new trade policies and tariffs affecting growth and inflation outlooks",
+      "First-quarter GDP dip due to front-loaded imports, though underlying domestic demand (PDFP) remained strong"
+    ],
+    "economic_outlook": "The Fed sees economic activity expanding at a solid pace despite a slight first-quarter GDP decline, which was distorted by a surge in imports ahead of expected tariffs. The labor market remains strong, with stable unemployment and solid job growth. However, inflation is still above the 2% target, and the outlook is clouded by rising uncertainty—particularly from trade policy—leading to increased risks of both higher unemployment and higher inflation.",
+    "market_impact": "Markets should expect a prolonged pause in rate changes, increasing emphasis on data dependency. Businesses and consumers can anticipate sustained borrowing costs, while investors may see continued volatility as trade policy and inflation risks evolve. A cautious Fed stance supports stability but delays potential rate cuts that could ease financial conditions."
+  },
+  {
+    "date": "2025-03-19",
+    "title": "FOMC Meeting 2025-03-19",
+    "full_text": "FOMC\nMinutes of the\nFederal Open Market Committee\nMarch 18–19, 2025\nFEDERAL RESERVE SYSTEM\n\nMinutes of the Federal Open Market\nCommittee\nMarch 18–19, 2025\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Tuesday, March 18, 2025, at\n9:00 a.m. and continued on Wednesday, March 19, 2025, at 9:00 a.m.1\nReview of Monetary Policy Strategy, Tools, and Communications\nCommittee participants continued their discussions related to their review of the Federal Reserve’s\nmonetary policy framework, with a focus on labor market dynamics and the FOMC’s maximum\nemployment goal. The staff briefed policymakers on the concept of maximum employment and\nrelated labor market indicators. They discussed conceptual benchmarks used in evaluating the\nposition of the labor market relative to maximum employment and in ascertaining the interaction of\nmaximum employment and price stability. They discussed a set of core labor market indicators used\nto help assess maximum employment, including the unemployment rate, job vacancies, the\nemployment-to-population (EPOP) ratio, and the labor force participation rate (LFPR), and described\nthe use of these indicators in assessing maximum employment during the pandemic-related recession\nand subsequent economic recovery. The staff also presented model-based analysis of simple\nmonetary policy rules that respond to deviations of inflation from 2 percent but differ on whether they\nrespond to shortfalls or deviations from maximum employment. Participants generally supported the current description of maximum employment in the Statement on\nLonger-Run Goals and Monetary Policy Strategy as being not directly measurable and changing over\ntime for reasons owing largely to nonmonetary factors. Participants acknowledged that it is difficult to\nassess maximum employment and that they have been well served by monitoring a wide range of\nindicators that can vary depending on labor market and economic conditions. They also reflected on\nhow both the Committee and the public have interpreted the current description of maximum\nemployment as a broad-based and inclusive goal. Participants reviewed the relationship between the dual-mandate goals and noted that those goals are\nnot necessarily in conflict when both unemployment and inflation are low. Participants also discussed\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 March 18–19, 2025\nthe implications of pursuing a strategy that seeks to mitigate shortfalls of employment from its\nmaximum level, as described in the statement, and the ways the public has interpreted that approach\nsince it was introduced into the statement. Participants indicated that they thought it would be\nappropriate to reconsider the shortfalls language. They judged that any strategy conveyed in the\nstatement should be robust to a wide range of economic circumstances. They also considered the\nextent to which the current statement had effectively communicated the Committee’s approach to\nachieving its longer-run goals, including the Committee’s assessment of the appropriate policy\nresponses in a period of a tight labor market. Developments in Financial Markets and Open Market Operations\nThe manager turned first to a review of financial market developments. Over the intermeeting period,\nTreasury yields declined, equity prices fell, credit spreads widened, and the dollar depreciated. These\nmoves appeared to reflect increased perceived risks—rather than a base case—of a significant\ndeterioration of the U.S. outlook, as investors responded to both weaker-than-expected consumer\nspending and sentiment data as well as to developments in trade policy that had raised uncertainty. The manager observed that the implied average federal funds rate path from futures had shifted\nnoticeably lower over the intermeeting period for horizons beyond the middle of this year. By contrast,\nthe implied modal federal funds rate path from options was little changed, consistent with the\ninterpretation that the baseline outlook had not changed materially. The Open Market Desk’s Survey\nof Market Expectations told a similar story, as the median respondent’s modal path for the federal\nfunds rate in 2025 was little changed. The expected timing of rate cuts in 2026 and 2027 was\nbrought forward about a quarter, but the expected terminal rate was unchanged. Survey respondents,\nhowever, attached noticeably higher probabilities to both lower gross domestic product (GDP) growth\noutcomes and higher inflation outcomes for 2025 compared with the January survey, consistent with\na higher perceived risk of a negative supply shock this year. Nominal Treasury yields declined about 25 basis points, on net, over the period, led by decreases in\nreal yields that reflected lower expected real rates and lower real term premiums. Near-term\nmeasures of inflation compensation rose amid trade-related developments, while at horizons beyond\na year, forward measures of inflation compensation fell. Overall, both market- and survey-based\nmeasures suggested that inflation expectations remained well anchored. U.S. equity prices decreased notably, on net, over the intermeeting period, with particularly\npronounced declines in the technology and cyclical sectors. While trade-related news had been the\nmost prominent driver of equity price movements, the manager also noted that risk-management\nconsiderations may have led some levered investors to reduce long equity positions that were\ngenerating increasing losses, amplifying price movements. Option-implied volatility of broad equity\n\nMinutes of the Federal Open Market Committee 3\nprices increased over the intermeeting period to a level somewhat above its long-run average, and\ncredit spreads widened, albeit to levels below historical averages. Asset price dynamics abroad were opposite to those in the U.S. Major foreign equity indexes,\nincluding those of the euro area and China, appreciated notably over the intermeeting period, while\nsovereign yields increased in many jurisdictions. The dollar depreciated against most major\ncurrencies, although currencies perceived as more sensitive to higher U.S. tariff rates, such as the\nCanadian dollar and those in emerging Asia, were relatively little changed. Overall, market\nparticipants characterized price action across global equities, global rates, and foreign exchange (FX)\nas consistent with some re-allocation away from trades that had been based on expectations for\ncontinued U.S. economic outperformance relative to global peers. The manager turned next to money market developments. Unsecured overnight rates remained stable\nover the intermeeting period, while rates in the repurchase agreement (repo) market varied notably,\nand some indicators suggested that conditions in that market had continued to tighten. The passthrough to repo rates of the 5 basis point technical adjustment to the overnight reverse repurchase\nagreement (ON RRP) rate made in December appeared to have dissipated in February, even though\nrepo rates had declined in mid-March as a result of a drop in bill issuance associated with the debt\nlimit situation. Furthermore, the sensitivity of repo rates in the client-to-dealer segment to changes in\ntransaction volumes had diminished relative to the spike observed at year-end but remained at levels\nabove those that prevailed in late 2024. The sensitivity of repo rates to Treasury bill issuance had\nalso increased in recent months. The manager interpreted these developments more as signs of\ncontinued normalization of the repo market than as a concern, but he also noted that, in the past, a\ntightening of the repo market had been a precursor to tighter reserve conditions. The manager observed that the ON RRP facility had reached a post-2021 low of under $59 billion in\nmid-February. Abstracting from the debt limit situation, with the ON RRP facility nearly depleted,\nportfolio runoff was likely to translate to lower reserves in the future. Several indicators of reserve\nconditions continued to point to reserves remaining abundant, but the reliability of the signals\nprovided by those indicators was starting to be impaired by the debt limit situation, which was already\naffecting the Federal Reserve’s liabilities. The Treasury General Account (TGA) had declined nearly\n$300 billion since the debt issuance suspension period was declared in January. As a result, reserves\nwere about $180 billion higher; ON RRP balances had also increased somewhat. Reserves were likely\nto continue to grow, except for periods around tax dates, until a resolution of the debt limit situation\nand then drop quickly as the TGA is rebuilt. In that scenario, reserves could potentially reach levels\nbelow those viewed by the Committee as appropriate without market indicators being able to provide\nmuch advance warning. The manager noted that either pausing or sufficiently slowing runoff would\nprovide meaningful insurance against that possibility.\n\n4 March 18–19, 2025\nMore generally, the manager also noted that slowing runoff would also be an effective way—consistent\nwith the Committee’s plans—of addressing the risks posed by a continued tightening of repo market\nconditions and a nearly depleted ON RRP facility. Desk survey results indicated that more than half of\nthe respondents expected the Committee to either pause or slow runoff as its next move, with a\nmajority of those leaning toward a slowdown. Many respondents also expected the System Open\nMarket Account (SOMA) portfolio to consist, in the long run, of Treasury securities only and to match\nthe maturity composition of Treasury debt outstanding. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that real GDP was expanding at a solid\npace. The unemployment rate had stabilized at a relatively low level since the middle of last year. Consumer price inflation remained somewhat elevated. Total consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—was estimated by the staff to have been 2.5 percent in February,\nbased on the consumer and producer price indexes. Core PCE price inflation, which excludes changes\nin consumer energy prices and many consumer food prices, was estimated to have been 2.8 percent\nin February. Both total and core inflation were little changed relative to their year-earlier levels. Recent data indicated that labor market conditions remained solid and had stabilized. The\nunemployment rate was 4.1 percent in February, the same as in December. The EPOP ratio and the\nLFPR edged down, on balance, over January and February. Average monthly gains for total nonfarm\npayrolls over January and February were solid but somewhat lower than their pace in the second half\nof last year. The ratio of job vacancies to unemployed workers was 1.1 in February, a bit below its\naverage over 2019, and the quits rate edged up to 2.1 percent in January but was still well below its\n2019 average. The total employment cost index for private-sector workers rose 3.6 percent over the\n12 months ending in December, well below its year-earlier level. Average hourly earnings for all\nemployees rose 4.0 percent over the 12 months ending in February, little changed from a year ago. Real GDP growth was estimated to have been 2.3 percent in the fourth quarter, and available data\nsuggested that real GDP was still rising at a solid, though somewhat slower, pace in the first quarter. Real PCE declined in January, but retail sales and sales of light motor vehicles bounced back in\nFebruary. In contrast to most of the data in hand used to estimate real GDP growth, many indicators\nof consumer and business sentiment had turned more downbeat over the past two months. Export\n\nMinutes of the Federal Open Market Committee 5\ngrowth was modest in January. Import growth was strong relative to its fourth-quarter pace, consistent\nwith reports that some U.S. importers were stocking up ahead of prospective tariff increases. Economic growth abroad slowed to a subdued pace in the fourth quarter, in part because of weak\nmanufacturing activity in Europe and Mexico. Recent export data from abroad and some other\nindicators suggested that foreign economic growth recovered modestly at the start of this year. Other\nindicators, however, pointed to weak momentum in manufacturing production, especially in Canada\nand Mexico. In China, the authorities announced a target of around 5 percent for GDP growth in\n2025, supported by new fiscal policy measures. Inflation abroad continued to remain near central bank targets in most foreign economies. In\nadvanced foreign economies (AFEs), total inflation ticked up, in part because of a short-lived spike in\noil prices early in the year, but core inflation continued to cool as wage growth slowed. In China,\nJanuary and February inflation data suggested continued weak underlying price pressures. By\ncontrast, in some Latin American countries, most notably Brazil, inflation picked up further, in part\ndriven by past currency depreciation. Many foreign central banks eased policy during the intermeeting period, including the Bank of Canada,\nthe Bank of England, and the European Central Bank in the AFEs, and the Bank of Korea and the Bank\nof Mexico in the emerging market economies. By contrast, the Central Bank of Brazil increased its\npolicy rate amid continued inflation concerns. Foreign central banks were increasingly noting that\nelevated uncertainty about trade policies was clouding their economic outlooks. Staff Review of the Financial Situation\nOver the intermeeting period, the market-implied path of the federal funds rate over the next few\nmeetings edged higher but moved down at horizons beyond September, as ongoing trade policy\nuncertainty, indicators of weakening consumer and business sentiment, and some softer-thanexpected economic data releases prompted investors to become more concerned about higher nearterm inflation and downside risks to economic growth. Near-term inflation compensation rose notably,\nalthough longer-term inflation compensation appeared to remain well anchored. Nominal and real\nTreasury yields fell notably across the maturity spectrum. Broad equity price indexes declined notably on net. The VIX—a forward-looking measure of near-term\nequity market volatility—rose, on net, following disappointing economic data releases and a number of\ntariff-related developments, and ended the period somewhat above its median over the past few\ndecades. Credit spreads on investment- and speculative-grade bonds widened, on net, consistent\nwith emerging concerns about economic growth, although both spreads remained narrow by historical\nstandards.\n\n6 March 18–19, 2025\nForeign financial markets were affected by investor concerns about global economic growth, in part\nrelated to higher tariffs, while expectations for greater fiscal spending in some economies provided an\noffsetting effect. On balance, longer-term yields and equity indexes increased in most major foreign\neconomies. Tariff-related developments led to significant volatility in FX markets, and the exchange\nvalue of the dollar declined, on net, as investor optimism regarding the relative strength of the U.S.\neconomy seemed to have diminished. Conditions in U.S. short-term funding markets remained orderly. Secured market rates increased early\nin the period, retracing the decline following the technical adjustment in the ON RRP rate in\nDecember, before declining later in the period. Treasury bill supply began contracting in late February\nand was expected to decline further until the resolution of the federal debt limit situation. The\naccompanying drawdown in the TGA was expected to boost ON RRP take-up and reserves, putting\ndownward pressure on secured market rates; early signs of these dynamics were evident over the\nlatter half of the period. Borrowing costs for households, businesses, and municipalities declined. Rates on 30-year fixed-rate\nconforming residential mortgages declined in line with the 10-year Treasury yield. Interest rates for\nnewly originated commercial and industrial (C&I) loans moved down a bit in the fourth quarter but\nremained elevated relative to their historical distribution. Yields on newly issued agency and nonagency commercial mortgage-backed securities (CMBS) decreased but stayed somewhat above\nhistorical standards. While interest rates on existing credit card accounts remained elevated, they fell\nnoticeably in the fourth quarter, reflecting the declines in the prime rate since the September FOMC\nmeeting. Auto loan rates also fell last quarter but retraced some of those declines early this year. Financing from capital markets continued to be broadly available for large-to-midsize businesses and\nmunicipalities. Following subdued corporate bond issuance in December, gross issuance was solid in\nJanuary and February. Bank credit appeared to have become somewhat more available to large\nbusinesses. C&I loan balances at large domestic banks continued to grow modestly through midFebruary. By contrast, credit conditions for small businesses remained moderately tight. Multiple\nrecent surveys, including the Senior Loan Officer Opinion Survey on Bank Lending Practices and the\nKansas City Fed’s Small Business Lending Survey, suggested that lending standards had remained\nrelatively tight for small businesses through December. Commercial real estate (CRE) loan growth\naccelerated through mid-February after remaining subdued in the second half of last year, as growth\nin nonfarm nonresidential loans was strong. Credit continued to be easily available for high-credit-score mortgage borrowers. Mortgage credit\navailability for lower-credit-score borrowers continued to tighten slightly. Consumer credit remained\ngenerally available.\n\nMinutes of the Federal Open Market Committee 7\nCredit quality remained solid for large-to-midsize firms, municipalities, and most home mortgage\nborrowers, but it continued to deteriorate in other sectors. The credit performance of corporate bonds\nhad been generally stable recently, and the performance of leveraged loans deteriorated slightly but\nremained solid overall. At banks, delinquency rates on C&I loans edged up in the fourth quarter but\nstayed just above the middle of the range observed over the past decade. Meanwhile, delinquency\nrates for short- and long-term small business loans and for small business credit cards ticked down in\nDecember but remained above pre-pandemic levels. Credit quality in the CRE market deteriorated in\nthe fourth quarter, partly driven by multifamily loans. More recently, however, CMBS delinquency rates\ndeclined in January and February, particularly among office building loans. The short-term\ndelinquency rate on Federal Housing Administration mortgages inched down in January but remained\nelevated relative to the past few years. Delinquency rates on most other types of home mortgages\nstayed low. Delinquency rates on credit cards fell substantially in the fourth quarter, their largest\ndecline since the second quarter of 2021, but they remained at elevated levels. Staff Economic Outlook\nThe staff projection for real GDP growth was weaker than the one prepared for the January meeting,\nas incoming data for aggregate spending were below expectations and the support from financial\nconditions had lessened. The unemployment rate was forecast to edge up but remain close to the\nstaff’s estimate of its natural rate. The staff made no material changes to the placeholder\nassumptions for potential policies that were used for the previous baseline forecast and continued to\nnote elevated uncertainty regarding the scope, timing, and potential economic effects of possible\nchanges to trade, immigration, fiscal, and regulatory policies. The staff continued to highlight the\ndifficulty of assessing the importance of such factors for the baseline projection and had prepared a\nnumber of alternative scenarios. The staff’s inflation projection was a little higher for this year than the one prepared for the previous\nmeeting, primarily reflecting higher-than-expected incoming data. Inflation in 2025 was forecast to be\nsomewhat above the rate posted last year, mostly because the expected effects of the staff’s\nplaceholder assumption for trade policy put upward pressure on inflation this year. After that, inflation\nwas projected to decline to 2 percent by 2027. The staff assessed that the uncertainty around their baseline projection had increased but continued\nto view the uncertainty around the forecast as similar to the average over the past 20 years, a period\nthat saw a number of episodes during which uncertainty about the economy and federal policy\nchanges was elevated. The staff judged that the risks around the baseline projections for economic\nactivity and employment had tilted to the downside, as data on aggregate spending and financial\nconditions had come in somewhat weaker than expected and a number of indicators of household,\n\n8 March 18–19, 2025\nbusiness, and financial market participant sentiment had turned downbeat. The risks around the\nbaseline projection for inflation were still seen as skewed to the upside because core inflation had not\ncome down as much as expected last year and because changes to trade policy could put more\nupward pressure on inflation than the staff had assumed. Participants’ Views on Current Conditions and the Economic Outlook\nIn conjunction with this FOMC meeting, participants submitted their projections of the most likely\noutcomes for real GDP growth, the unemployment rate, and inflation for each year from 2025 through\n2027 and over the longer run. The projections were based on participants’ individual assessments of\nappropriate monetary policy, including their projections of the federal funds rate. The longer-run\nprojections represented each participant’s assessment of the rate to which each variable would tend\nto converge under appropriate monetary policy and in the absence of further shocks to the economy. Participants also provided their individual assessments of the level of uncertainty and the balance of\nrisks associated with their projections. The Summary of Economic Projections was released to the\npublic after the meeting. Participants observed that available data pointed to an economy that continued to grow at a solid\npace and labor market conditions that remained broadly balanced, but that inflation stayed somewhat\nelevated. Participants generally noted the high degree of uncertainty facing the economy. Information\nfrom participants’ business contacts and from many surveys indicated some deterioration in\nhousehold and business sentiment amid heightened uncertainty about government policies. Various\nparticipants commented that high uncertainty had the potential to damp consumer spending as well\nas business hiring and investment activities or that inflation was likely to be boosted by increased\ntariffs. As a result, participants generally saw increased downside risks to employment and economic\ngrowth and upside risks to inflation while indicating that high uncertainty surrounded their economic\noutlooks. In their discussion of inflation developments, participants noted that inflation had eased significantly\nover the past two years but remained somewhat elevated relative to the Committee’s 2 percent\nlonger-run goal. Some participants observed that inflation data over the first two months of this year\nwere higher than they had expected. Among the major subcategories of prices, housing services\ninflation had continued to moderate, consistent with the past slowing in market rents, but inflation in\ncore nonhousing services remained high, especially in nonmarket services. Some participants\nhighlighted that core goods inflation had increased, and most of them noted that these increases\nmight reflect the effects of the anticipation of higher tariffs. With regard to the outlook for inflation, participants judged that inflation was likely to be boosted this\nyear by the effects of higher tariffs, although significant uncertainty surrounded the magnitude and\n\nMinutes of the Federal Open Market Committee 9\npersistence of such effects. Several participants noted that the announced or planned tariff increases\nwere larger and broader than many of their business contacts had expected. Several participants also\nnoted that their contacts were already reporting increases in costs, possibly in anticipation of rising\ntariffs, or that their contacts had indicated willingness to pass on to consumers higher input costs that\nwould arise from potential tariff increases. A couple of participants highlighted factors that might limit\nthe inflationary effects of tariffs, noting that many households had depleted the excess savings they\nhad accumulated during the pandemic and were less likely to accept additional price increases, or\nthat stricter immigration policies might reduce demand for rental and affordable housing and alleviate\nupward pressures on housing inflation. A couple of participants noted that the continued balance in\nthe labor market suggested that labor market conditions were unlikely to be a source of inflationary\npressure. A couple of participants noted that, in the period ahead, it could be especially difficult to\ndistinguish between relatively persistent changes in inflation and more temporary changes that might\nbe associated with the introduction of tariffs. Participants commented on a range of factors that could\ninfluence the persistence of tariff effects, including the extent to which tariffs are imposed on\nintermediate goods and thus affect input costs at various stages of production, the extent to which\ncomplex supply chains need to be restructured, the actions of trading partners in responding with\nretaliatory increases in tariffs, and the stability of longer-term inflation expectations. Almost all participants pointed out that many market- or survey-based measures of near-term\nexpected inflation had increased recently. Participants generally noted that most measures of longerterm expected inflation remained well anchored, a factor likely to put downward pressure on inflation. Several participants emphasized that ensuring that longer-term inflation expectations remained\nanchored would enhance the Committee’s ability to achieve its price-stability goal. Participants judged that labor market conditions remained broadly in balance. The unemployment\nrate had stabilized at a relatively low level, and nominal wage growth continued to moderate. Average\npayroll employment growth, while slowing some recently, remained solid. Several participants\nhighlighted recent increases in businesses’ layoff announcements and in people working part time for\neconomic reasons. A majority of participants commented that the recent cuts in federal government\njobs and to federal funding had begun to affect employment at federal contractors, universities,\nhospitals, municipalities, and nonprofit organizations, with many organizations that rely on\ngovernment contracts having reported layoffs or pauses in their hiring plans. In addition, many\nparticipants noted that their contacts and business survey respondents reported pausing hiring\ndecisions because of elevated policy uncertainty. Several participants relayed reports from contacts\nwho were concerned that restrictive immigration policies would reduce labor supply and put upward\npressure on wages in certain sectors.\n\n10 March 18–19, 2025\nParticipants observed that the available data suggested that the economy had continued to grow at a\nsolid pace but that there were some indications that consumer spending growth might be moderating\nfrom its rapid pace over the previous two quarters. Several participants commented that the mixed\nretail sales data in January and February were consistent with consumption continuing to grow at a\npositive yet slower pace. Several participants noted that the recent downgrade in earnings forecasts\nfrom retailers and airline companies pointed to weaker consumer demand from both lower- and\nhigher-income households. Participants commented on a number of factors that could restrain\nconsumption, including weaker consumer sentiment and deteriorations in expected household\nfinancial situations, as indicated by a number of household surveys, and anticipation that the robust\nlabor income growth and significant increases in asset prices over the previous several years might\nnot continue. By contrast, a few participants noted that consumption spending could continue to be\nsupported by solid growth in real personal disposable income or by a rebound in equity prices. With regard to the business sector, most participants commented that contacts or surveys reported\nincreased uncertainty about potential changes in federal government policies and a deterioration in\nbusiness sentiment, which had led many firms to pause their capital spending plans. Several\nparticipants highlighted that the auto industry faced significant risks associated with tariffs because of\nits interconnected and cross-border supply chains. By contrast, several participants noted that their\ncontacts expressed optimism about future firm profitability driven by more business-friendly regulatory\nor fiscal policy changes or expected productivity gains from artificial intelligence and related\ntechnologies. A few participants highlighted the strains faced by the agricultural sector, as tariffs\nthreatened to further compress its profit margins by lowering farm export prices and raising input\ncosts. Some participants noted that financial conditions had tightened since the January meeting, reflecting\nlower equity prices and higher risk spreads on corporate bonds, but most of them commented that\nrisk premiums in bond and equity markets remained low by historical standards or that businesses\nand consumers with higher credit scores continued to be able to obtain financing. A few participants\ncautioned that an abrupt repricing of risk in financial markets could exacerbate the effects of any\nnegative shocks to the economy. In their consideration of monetary policy at this meeting, participants noted that inflation remained\nsomewhat elevated. Participants also observed that recent indicators suggested that economic\nactivity had continued to expand at a solid pace, that the unemployment rate had stabilized at a low\nlevel, and that labor market conditions had remained solid in recent months. In this context, and amid\nelevated uncertainty around the economic outlook, all participants viewed it as appropriate to\nmaintain the target range for the federal funds rate at 4¼ to 4½ percent.\n\nMinutes of the Federal Open Market Committee 11\nIn discussing the outlook for monetary policy, participants remarked that uncertainty about the net\neffect of an array of government policies on the economic outlook was high, making it appropriate to\ntake a cautious approach. Emphasizing that uncertainty, a majority of participants noted the potential\nfor inflationary effects arising from various factors to be more persistent than they projected. With\neconomic growth and the labor market still solid and current monetary policy restrictive, participants\nassessed that the Committee was well positioned to wait for more clarity on the outlook for inflation\nand economic activity. Participants noted that policy decisions were not on a preset course and would\nbe informed by the evolution of the economy, the economic outlook, and the balance of risks. In discussing risk-management considerations that could bear on the outlook for monetary policy,\nparticipants assessed that uncertainty around the economic outlook had increased, with almost all\nparticipants viewing risks to inflation as tilted to the upside and risks to employment as tilted to the\ndownside. Participants remarked that monetary policy was well positioned to address future\ndevelopments; a restrictive policy could be maintained for longer if inflation were to remain elevated,\nand policy could be eased if labor market conditions were to deteriorate or economic activity were to\nweaken. Some participants observed, however, that the Committee may face difficult tradeoffs if\ninflation proved to be more persistent while the outlook for growth and employment weakened. Several participants emphasized that elevated inflation could prove to be more persistent than\nexpected. Participants assessed that balance sheet reduction had gone well thus far. All participants judged it\nappropriate to continue the process of reducing the Federal Reserve’s securities holdings. Almost all\nparticipants supported a slowing of the pace of runoff at this meeting. Most participants noted the\nimportance of clearly communicating that slowing the runoff pace had no implications for the stance\nof monetary policy, would not affect the long-term path of the balance sheet, was a natural\nprogression of the slowing decided at the May 2024 meeting, and was in line with the Committee’s\nprinciples and plans for balance sheet reduction announced in 2022. Some participants noted that a\nslower pace of runoff would also help guard against reserve scarcity emerging with little advance\nnotice during a period of potentially rapid increase in the TGA. Several participants did not see a\ncompelling case for slowing the pace of runoff at this meeting. A number of participants commented\nthat the Committee’s existing tools could also be used to help address potential disruptions to the\nmarket for reserves. Some participants highlighted the importance of the Federal Reserve’s ceiling\ntools and encouraged the ongoing efforts of the Desk to improve the efficacy of the standing repo\nfacility. Several participants observed that the Federal Reserve’s traditional tool of open market\noperations could also be used should signs of reserve scarcity unexpectedly emerge. Many\nparticipants expressed interest in continued discussion of technical aspects of balance sheet policy\nand tools after the framework review is completed.\n\n12 March 18–19, 2025\nCommittee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that recent indicators\nsuggested that economic activity had continued to expand at a solid pace. The unemployment rate\nhad stabilized at a low level in recent months, and labor market conditions had remained solid. Members concurred that inflation remained somewhat elevated. Members assessed that uncertainty\naround the economic outlook had increased and agreed that they were attentive to the risks to both\nsides of the Committee’s dual mandate. In support of its goals, the Committee agreed to maintain the target range for the federal funds rate at\n4¼ to 4½ percent. Members agreed that in considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee would carefully assess\nincoming data, the evolving outlook, and the balance of risks. Almost all members agreed to reducing\nthe Committee’s securities holdings at a slower pace, with the monthly redemption cap on Treasury\nsecurities reduced from $25 billion to $5 billion and the monthly redemption cap on agency debt and\nagency mortgage-backed securities maintained at $35 billion. One member agreed with the\nCommittee’s decision to maintain the target range for the federal funds rate at 4¼ to 4½ percent but\nvoted against the overall decision because he preferred to continue the pace of decline in securities\nholdings in place at the time of the vote. All members agreed that the postmeeting statement should\naffirm their strong commitment both to supporting maximum employment and to returning inflation to\nthe Committee’s 2 percent objective. Members agreed that in assessing the appropriate stance of monetary policy, the Committee would\ncontinue to monitor the implications of incoming information for the economic outlook. They would be\nprepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede\nthe attainment of the Committee’s goals. Members also agreed that their assessments would take\ninto account a wide range of information, including readings on labor market conditions, inflation\npressures and inflation expectations, and financial and international developments. At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the SOMA in accordance with the following\ndomestic policy directive, for release at 2:00 p.m.:\n“Effective March 20, 2025, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4¼ to 4½ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n4.5 percent and with an aggregate operation limit of $500 billion.\n\nMinutes of the Federal Open Market Committee 13\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.25 percent and with a per-counterparty limit of $160 billion per day.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in March that exceeds a cap of $25 billion per\nmonth. Beginning on April 1, roll over at auction the amount of principal payments from\nthe Federal Reserve’s holdings of Treasury securities maturing in each calendar month\nthat exceeds a cap of $5 billion per month. Redeem Treasury coupon securities up to\nthese monthly caps and Treasury bills to the extent that coupon principal payments are\nless than the monthly caps.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market\nconditions remain solid. Inflation remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. Uncertainty around the economic outlook has increased. The Committee\nis attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to maintain the target range for the federal\nfunds rate at 4¼ to 4½ percent. In considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee will carefully assess\nincoming data, the evolving outlook, and the balance of risks. The Committee will continue\nreducing its holdings of Treasury securities and agency debt and agency mortgage backed\nsecurities. Beginning in April, the Committee will slow the pace of decline of its securities\n‑\nholdings by reducing the monthly redemption cap on Treasury securities from $25 billion to\n$5 billion. The Committee will maintain the monthly redemption cap on agency debt and\nagency mortgage-backed securities at $35 billion. The Committee is strongly committed to\nsupporting maximum employment and returning inflation to its 2 percent objective.\n\n14 March 18–19, 2025\nIn assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman,\nSusan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Adriana D. Kugler, Alberto G. Musalem, and Jeffrey R. Schmid. Voting against this action: Christopher J. Waller. Governor Waller preferred no change in the federal funds target range and continuing the pace of\ndecline in securities holdings in place at the time of the vote. This view was based on reserve\nbalances being over $3 trillion as well as no evidence from money market indicators or his outreach\nconversations that the banking system is getting close to an ample level of reserves. In addition,\nrather than changing the pace of balance sheet reduction, he thought the Federal Reserve should rely\non its existing tools and develop a plan for how to respond to short-run strains if they emerge. Consistent with the Committee’s decision to leave the target range for the federal funds rate\nunchanged, the Board of Governors of the Federal Reserve System voted unanimously to maintain the\ninterest rate paid on reserve balances at 4.4 percent, effective March 20, 2025. The Board of\nGovernors of the Federal Reserve System voted unanimously to approve the establishment of the\nprimary credit rate at the existing level of 4.5 percent, effective March 20, 2025. It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday, May 6–\n7, 2025. The meeting adjourned at 10:25 a.m. on March 19, 2025. Notation Vote\nBy notation vote completed on February 18, 2025, the Committee unanimously approved the minutes\nof the Committee meeting held on January 28–29, 2025. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nMichael S. Barr\nMichelle W. Bowman\nSusan M. Collins\nLisa D. Cook\nAustan D. Goolsbee\n\nMinutes of the Federal Open Market Committee 15\nPhilip N. Jefferson\nAdriana D. Kugler\nAlberto G. Musalem\nJeffrey R. Schmid\nChristopher J. Waller\nBeth M. Hammack, Patrick Harker, Neel Kashkari, and Lorie K. Logan, Alternate Members of the\nCommittee\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of\nRichmond, Atlanta, and San Francisco, respectively\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson,2 Economist\nShaghil Ahmed, James A. Clouse, Eric M. Engen, Anna Paulson, and William Wascher, Associate\nEconomists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nStephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nAlyssa Arute,3 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\nAlessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board\nDavid Bowman, Senior Associate Director, Division of Monetary Affairs, Board\nBrent Bundick,4 Vice President, Federal Reserve Bank of Kansas City\nChristian Cabanilla,3 Policy and Market Analysis Advisor, Federal Reserve Bank of New York\nIsabel Cairó,4 Group Manager, Division of Monetary Affairs, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nDaniel Cooper, Vice President, Federal Reserve Bank of Boston\nStephanie E. Curcuru, Deputy Director, Division of International Finance, Board\nKeshav Dogra, Research Advisor, Federal Reserve Bank of New York\nBurcu Duygan-Bump, Associate Director, Division of Research and Statistics, Board\nEric C. Engstrom, Associate Director, Division of Monetary Affairs, Board\n2 Attended Tuesday’s session only.\n3 Attended through the discussion of developments in financial markets and open market operations.\n4 Attended through the discussion of the review of the monetary policy framework.\n\n16 March 18–19, 2025\nRon Feldman, First Vice President, Federal Reserve Bank of Minneapolis\nAndrew Figura, Associate Director, Division of Research and Statistics, Board\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nChristopher L. Foote,4 Principal Economist and Policy Advisor, Federal Reserve Bank of Boston\nShigeru Fujita, Senior Economic Advisor and Economist I, Federal Reserve Bank of Philadelphia\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nMichael S. Gibson, Director, Division of Supervision and Regulation, Board\nJonathan E. Goldberg,2 Principal Economist, Division of Monetary Affairs, Board\nBrian Greene,3 Associate Director, Federal Reserve Bank of New York\nLuca Guerrieri, Senior Associate Director, Division of International Finance, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nBenjamin K. Johannsen,4 Assistant Director, Division of Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nDon H. Kim,3 Senior Adviser, Division of Monetary Affairs, Board\nDavid E. Lebow,5 Senior Associate Director, Division of Research and Statistics, Board\nSylvain Leduc, Executive Vice President and Director of Economic Research, Federal Reserve Bank of\nSan Francisco\nAndreas Lehnert, Director, Division of Financial Stability, Board\nPaul Lengermann, Deputy Associate Director, Division of Research and Statistics, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nKurt Lunsford, Vice President, Federal Reserve Bank of Cleveland\nFernando M. Martin, Senior Economic Policy Advisor II, Federal Reserve Bank of St. Louis\nBenjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board\nRyan Michaels,4 Economist and Economic Advisor, Federal Reserve Bank of Philadelphia\nAmanda M. Michaud,4 Senior Research Economist, Federal Reserve Bank of Minneapolis\nAnn E. Misback, Secretary, Office of the Secretary, Board\nJoshua K. Montes,4 Principal Economist, Division of Research and Statistics, Board\nNorman J. Morin, Associate Director, Division of Research and Statistics, Board\n5 Attended opening remarks for the Tuesday session only.\n\nMinutes of the Federal Open Market Committee 17\nEdward Nelson, Senior Adviser, Division of Monetary Affairs, Board\nAnna Nordstrom, Interim Head of Markets, Federal Reserve Bank of New York\nAlyssa T. O’Connor, Special Adviser to the Board, Division of Board Members, Board\nAnder Perez-Orive, Principal Economist, Division of Monetary Affairs, Board\nNicolas Petrosky-Nadeau,4 Vice President, Federal Reserve Bank of San Francisco\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nOdelle Quisumbing,3 Assistant to the Secretary, Office of the Secretary, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nZack Saravay, Senior Financial Institution Policy Analyst I, Division of Monetary Affairs, Board\nFelipe F. Schwartzman, Senior Economist, Federal Reserve Bank of Richmond\nZeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board\nA. Lee Smith, Senior Vice President, Federal Reserve Bank of Kansas City\nDaniel G. Sullivan,4 Executive Vice President, Federal Reserve Bank of Chicago\nThiago Teixeira Ferreira, Special Adviser to the Board, Division of Board Members, Board\nRobert J. Tetlow, Senior Adviser, Division of Monetary Affairs, Board\nGiorgio Topa,4 Research Advisor, Federal Reserve Bank of New York\nFrancisco Vazquez-Grande, Group Manager, Division of Monetary Affairs, Board\nAnnette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board\nJeffrey D. Walker,3 Senior Associate Director, Division of Reserve Bank Operations and Payment\nSystems, Board\nMin Wei, Senior Associate Director, Division of Monetary Affairs, Board\nLauren E. Wiese, Information Services Senior Analyst, Division of Monetary Affairs, Board, and Federal\nReserve Bank of Chicago\nRandall A. Williams, Group Manager, Division of Monetary Affairs, Board\nJonathan Willis, Vice President, Federal Reserve Bank of Atlanta\nPaul R. Wood, Special Adviser to the Board, Division of Board Members, Board\nEmre Yoldas,6 Deputy Associate Director, Division of International Finance, Board\nRebecca Zarutskie, Senior Vice President, Federal Reserve Bank of Dallas\n_______________________\nJoshua Gallin\nSecretary\n6 Attended Wednesday’s session only.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20250319.pdf",
+    "action": "Maintained",
+    "rate": "4.25%-4.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled it will carefully assess incoming data, the evolving economic outlook, and the balance of risks before making any future rate moves. While no rate cuts are imminent, the Committee remains prepared to adjust policy if risks emerge that could impede its goals of maximum employment and 2% inflation.",
+    "key_economic_factors": [
+      "Inflation remains somewhat elevated, with core PCE at 2.8% and upside risks from trade policy",
+      "Labor market conditions remain solid, with unemployment stable at 4.1%",
+      "Economic growth is solid but slowing, with weaker consumer spending and sentiment",
+      "Heightened uncertainty around trade, fiscal, and regulatory policies is weighing on business and household behavior"
+    ],
+    "economic_outlook": "The Fed sees the economy expanding at a solid pace, though momentum has moderated. Employment remains strong with the unemployment rate at 4.1%, but risks to job growth are tilted downward due to policy uncertainty. Inflation is expected to remain above 2% in 2025, driven partly by tariff-related pressures, before gradually returning to target by 2027.",
+    "market_impact": "Markets should expect a prolonged pause in rate changes, supporting stability in borrowing costs for consumers and businesses. However, continued policy uncertainty and sticky inflation could keep financial conditions tighter for longer, potentially weighing on risk assets and capital spending."
+  },
+  {
+    "date": "2025-01-29",
+    "title": "FOMC Meeting 2025-01-29",
+    "full_text": "FOMC\nMinutes of the\nFederal Open Market Committee\nJanuary 28–29, 2025\nFEDERAL RESERVE SYSTEM\n\nMinutes of the Federal Open Market\nCommittee\nJanuary 28–29, 2025\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on January 28, 2025, at 8:30 a.m.\nand continued on Wednesday, January 29, 2025, at 9:00 a.m.1\nAnnual Organizational Matters2\nThe agenda for this meeting reported that advices of the election of the following members and\nalternate members of the Federal Open Market Committee for a term beginning January 28, 2025,\nwere received and that these individuals executed their oaths of office. The elected members and alternate members were as follows:\nJohn C. Williams, President of the Federal Reserve Bank of New York, with Sushmita Shukla, First Vice\nPresident of the Federal Reserve Bank of New York, as alternate;\nSusan M. Collins, President of the Federal Reserve Bank of Boston, with Patrick Harker, President of\nthe Federal Reserve Bank of Philadelphia, as alternate;\nAustan D. Goolsbee, President of the Federal Reserve Bank of Chicago, with Beth M. Hammack,\nPresident of the Federal Reserve Bank of Cleveland, as alternate;\nAlberto G. Musalem, President of the Federal Reserve Bank of St. Louis, with Lorie K. Logan, President\nof the Federal Reserve Bank of Dallas, as alternate;\nJeffrey R. Schmid, President of the Federal Reserve Bank of Kansas City, with Neel Kashkari, President\nof the Federal Reserve Bank of Minneapolis, as alternate;\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n2 Committee organizational documents are available at www.federalreserve.gov/monetarypolicy/rules_authorizations.htm.\n\n2 January 28–29, 2025\nBy unanimous vote, the following officers of the Committee were selected to serve until the selection\nof their successors at the first regularly scheduled meeting of the Committee in 2026:\nJerome H. Powell Chair\nJohn C. Williams Vice Chair\nJoshua Gallin Secretary\nMatthew M. Luecke Deputy Secretary\nBrian J. Bonis Assistant Secretary\nMichelle A. Smith Assistant Secretary\nMark E. Van Der Weide General Counsel\nRichard Ostrander Deputy General Counsel\nReena Sahni Assistant General Counsel\nTrevor A. Reeve Economist\nStacey Tevlin Economist\nBeth Anne Wilson Economist\nShaghil Ahmed\nKartik B. Athreya\nJames A. Clouse\nBrian M. Doyle\nEric M. Engen\nCarlos Garriga\nJoseph W. Gruber\nAnna Paulson\nWilliam Wascher\nEgon Zakrajšek Associate Economists\nBy unanimous vote, the Committee selected the Federal Reserve Bank of New York to execute\ntransactions for the System Open Market Account (SOMA). By unanimous vote, the Committee selected Roberto Perli and Julie Ann Remache to serve at the\npleasure of the Committee as manager and deputy manager of the SOMA, respectively, on the\nunderstanding that these selections were subject to being satisfactory to the Federal Reserve Bank of\nNew York. Secretary’s note: The Federal Reserve Bank of New York subsequently sent advice\nthat the selections indicated previously were satisfactory.\n\nMinutes of the Federal Open Market Committee 3\nBy unanimous vote, the Committee voted to reaffirm without revision the FOMC Authorizations and\nContinuing Directives for Open Market Operations. All participants indicated support for, and agreed to abide by, the FOMC Policy on Investment and\nTrading for Committee Participants and Federal Reserve System Staff, the Program for Security of\nFOMC Information, the FOMC Policy on External Communications of Committee Participants, and the\nFOMC Policy on External Communications of Federal Reserve System Staff. The Committee voted\nunanimously to approve those four policies.2\nReview of Monetary Policy Strategy, Tools, and Communications\nCommittee participants began discussions related to their review of the Federal Reserve’s monetary\npolicy framework. This review is focused on two specific areas: the Committee’s Statement on\nLonger-Run Goals and Monetary Policy Strategy, which presents the Committee’s approach to the\nconduct of monetary policy, and the Committee’s policy communication practices. The Committee’s\n2 percent longer-run inflation goal will be retained and is not a focus of the review. In support of these discussions, staff briefings provided a retrospective on the Committee’s 2019–20\nframework review and summarized the experience abroad in conducting reviews of monetary policy\nframeworks. The staff presentation began by recapping the creation and evolution of the Committee’s\nStatement on Longer-Run Goals and Monetary Policy Strategy and the context of the Committee’s\n2019–20 review. The adoption of the statement in 2012 introduced the Committee’s 2 percent\ninflation target and codified long-standing practices followed by the Committee and, as such, was an\nimportant step in improving the transparency, accountability, and predictability of U.S. monetary\npolicymaking. The launch of the 2019–20 review was motivated in part by a desire to evaluate the\nexperience of the Global Financial Crisis and its aftermath. During this period, inflation had run\npersistently below the Committee’s 2 percent objective, even as the unemployment rate and interest\nrates remained low. These developments indicated a greater risk that the federal funds rate would be\nconstrained by its effective lower bound (ELB) more often in the future, posing challenges to the\nachievement of the Committee’s dual-mandate goals over the medium term. The staff summarized\nthe scope and components of the 2019–20 review, including its outreach to a broad range of\nindividuals and groups, and the rationale behind the changes made to the statement at the end of the\nreview. In summarizing the international experience, the staff noted that occasional reviews of monetary\npolicy frameworks were seen as useful in adapting to evolving economic environments, promoting\ntransparency, and fostering public understanding and, therefore, were becoming the norm in\nadvanced economies. Reviews abroad had covered various aspects related to monetary policy goals,\n\n4 January 28–29, 2025\nstrategies, tools, communications, forecasting, and governance, with some of the recent reviews giving\nparticular attention to topics such as the experience of the COVID–19 pandemic, the ensuing global\ninflation episode, and the conduct and communication of monetary policy in times of unusual\nuncertainty. Participants viewed the statement as having played an important role in building a common\nunderstanding among policymakers of the congressionally mandated monetary policy goals and of\ntheir monetary policy strategy. The statement and other means of policy communication also figured\nimportantly in conveying that understanding to the public and helping to anchor inflation expectations,\nthereby supporting the effective transmission of monetary policy. Participants indicated that they were\nlooking forward to their discussions at upcoming meetings and to hearing a range of perspectives at\nvarious Fed Listens events as well as at a planned research conference, and that they were\napproaching the review with open minds. Participants noted that the economic consequences of the COVID–19 pandemic were largely\nunforeseen at the time of the 2019–20 review and that the current economic environment differed\ngreatly from the period leading up to that review, which was characterized in part by persistently low\ninflation and interest rates. In light of the experience of the past five years, participants assessed that\nit was important to consider potential revisions to the statement, with particular attention to some of\nthe elements introduced in 2020. Participants highlighted as areas of consideration the statement’s\nfocus on the risks to the economy posed by the ELB, the approach of mitigating shortfalls from\nmaximum employment, and the approach of aiming to achieve inflation moderately above 2 percent\nfollowing periods of persistently below-target inflation. Participants emphasized the need for the\nFOMC’s monetary policy framework to be robust to a wide range of economic circumstances. They\nnoted that economic uncertainty—including about the values of the longer-run neutral policy rate, the\neconomy’s potential growth rate, and the level of maximum employment—would remain an important\nfactor affecting their decisionmaking. Participants also mentioned aspects of the statement that they\nthought should continue to be emphasized—including the Committee’s firm commitment to achieving\nmaximum employment and 2 percent inflation, as well as the importance of keeping longer-term\ninflation expectations well anchored. Participants expected that their discussions related to the framework review would continue at\nupcoming meetings. They expected the review to wrap up by late summer and intended to report the\noutcomes of the review to the public. Developments in Financial Markets and Open Market Operations\nThe manager turned first to a review of developments in financial markets. Over the intermeeting\nperiod, broad equity price indexes had declined moderately, credit spreads had remained very tight,\n\nMinutes of the Federal Open Market Committee 5\nand the trade-weighted value of the dollar had risen slightly. In considering the expected path of the\nfederal funds rate, the manager noted that the modal policy rate path implied by options prices had\nnot changed appreciably on net over the intermeeting period and was broadly consistent with a single\nquarter-point lowering of the target range for the federal funds rate taking place during 2025. The\naverage rate path implied by futures prices was also little changed and was above the corresponding\nmedian rates in the December 2024 Summary of Economic Projections. The modal path implied by\nthe Open Market Desk’s Survey of Market Expectations shifted up somewhat over the intermeeting\nperiod, with respondents generally judging that policy rate reductions would occur later than previously\nassessed, and was broadly consistent with market-implied paths at horizons up to early 2026. Beyond that period, however, the survey-based path was notably below the market-implied path. This\ndiscrepancy likely partly reflected positive market risk premiums as well as survey biases. In their\nexpectations of Federal Reserve balance sheet policy, survey respondents on average saw the process\nof runoff concluding by mid-2025, slightly later than they had previously expected. The manager next considered the recent behavior of Treasury yields. Longer-term nominal Treasury\nyields had risen sharply following the Committee’s December meeting and the release of the\nunexpectedly strong December payrolls report. Subsequently, a partial retracing of this increase took\nplace after consumer price index (CPI) data indicated that prices rose more slowly than expected in\nDecember. Over the intermeeting period, longer-dated Treasury yields rose 15 to 20 basis points,\nwhile shorter-dated yields were little changed. The manager discussed staff analysis that had aimed\nat decomposing the increase of nearly 100 basis points in longer-term Treasury yields that had taken\nplace since mid-September 2024. That analysis suggested an upward revision in financial markets’\nevaluation of the path of the real policy rate required to achieve the Committee’s goals, especially at\nlonger horizons. Nevertheless, much of the increase in real yields was in real term premiums, likely\nreflecting uncertainty about the policy rate trajectory as well as a number of other factors. The\nmanager noted that measures of inflation compensation had generally risen slightly. However, both\nsurvey measures of inflation expectations and pricing in the Treasury Inflation-Protected Securities\nmarket remained broadly consistent with the anticipation that inflation would return to the\nCommittee’s 2 percent inflation objective. With respect to money markets, the manager noted that December’s quarter-point lowering of the\ntarget range for the federal funds rate had been fully passed through to other short-term interest\nrates. In addition, the 5 basis point technical adjustment to the overnight reverse repurchase\nagreement (ON RRP) offering rate implemented in December appeared to have been transmitted\nnearly in full to repurchase agreement (repo) rates. Money market conditions had been orderly over\nyear-end, with the technical adjustment to the ON RRP offering rate directly contributing to a lower\nrate environment by keeping repo rates below the values that would have otherwise prevailed.\n\n6 January 28–29, 2025\nThroughout the week of year-end, the Desk conducted standing repo facility (SRF) auctions each\nmorning, in addition to the regular afternoon auctions. Although there was no take-up, market\ncontacts suggested that the morning auctions may also have helped contain year-end pressures. The\nmanager noted that morning SRF auctions may be conducted again in the future. On December 26, a\nconsiderable volume of activity had taken place in the noncentrally cleared segment of the repo\nmarket, in which the SRF operates, at rates above the SRF rate. The manager stated that, in the\nfuture, the Desk may consider possible ways to improve the efficacy of the facility in that market\nsegment. The manager observed that usage of the ON RRP facility increased as expected at year-end but had\ndeclined on net over the intermeeting period. The manager also noted that a range of indicators\ncontinued to suggest that reserves had remained abundant over the intermeeting period. However,\nthe manager cautioned that the debt limit situation may cloud the signals provided by the indicators. In addition, reserves might decline quickly upon resolution of the debt limit and, at the current pace of\nbalance sheet runoff, might potentially reach levels below those viewed by the Committee as\nappropriate. Next, the deputy manager briefed policymakers on possible alternative strategies that the Committee\nmight follow with regard to purchases of Treasury securities in the secondary market after the\neventual conclusion of the process of balance sheet runoff. These strategies would further implement\nthe policy laid out in the Committee’s Principles and Plans for Reducing the Size of the Federal\nReserve’s Balance Sheet. The briefing outlined a few illustrative scenarios; under each scenario,\nprincipal payments received from agency debt and agency mortgage‑backed securities (MBS) holdings\nwould be directed toward Treasury securities via secondary-market purchases. The scenarios\npresented corresponded to different trajectories of the holdings of Treasury securities in the SOMA. Under all scenarios considered, the maturity composition of Treasury holdings in the SOMA portfolio\nmoved into closer alignment with the maturity composition of the outstanding stock of Treasury\nsecurities. The scenarios differed on how quickly this alignment would be achieved and,\ncorrespondingly, on the assumed increase over coming years in the share of Treasury bills held in the\nSOMA portfolio. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that real gross domestic product (GDP)\nrose at a solid pace in 2024. After a period of considerable rebalancing, labor market conditions had\n\nMinutes of the Federal Open Market Committee 7\nstabilized, and the unemployment rate remained low. Consumer price inflation remained somewhat\nelevated. Total consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—was 2.4 percent in November, down from its year-earlier pace of\n2.7 percent. Core PCE price inflation, which excludes changes in consumer energy prices and many\nconsumer food prices, was 2.8 percent in November, down from 3.2 percent a year ago. In December,\nthe 12-month change in the CPI was 2.9 percent and core CPI inflation was 3.2 percent; both were\nbelow their year-earlier rates. Based on the CPI and the producer price index, the staff estimated that\ntotal PCE price inflation would be reported as 2.6 percent over the 12 months ending in December\nand that core PCE price inflation would be 2.8 percent. Recent data suggested that labor market conditions remained solid and that the labor market was not\nespecially tight. Average monthly gains for nonfarm payrolls over the fourth quarter were slightly\nhigher than their third-quarter pace. The unemployment rate edged down to 4.1 percent in December,\nwhile the labor force participation rate was unchanged and the employment-to-population ratio moved\nup slightly. The unemployment rates for African Americans and for Hispanics moved down but\nremained higher than the rates for Asians and for Whites. The ratio of job vacancies to unemployed\nworkers edged up to 1.2 in December, its average over 2019, and the quits rate fell back to\n1.9 percent and remained well below its 2019 average. Average hourly earnings for all employees\nrose 3.9 percent over the 12 months ending in December, down from 4.3 percent a year ago. Available data indicated that real GDP rose at a solid pace in the fourth quarter. Real private domestic\nfinal purchases, which comprises PCE and private fixed investment and which often provides a better\nsignal than GDP of underlying economic momentum, appeared to have risen faster than real GDP in\nthe fourth quarter, led by continued strength in consumer spending. By contrast, monthly trade data\nwere volatile but overall pointed to a step-down in both export and import growth relative to the third\nquarter. The pace of foreign economic activity appeared to have moderated at the end of last year. Indicators\nsuggested that in both the euro area and Mexico, economic growth had slowed notably in the fourth\nquarter amid lackluster manufacturing activity and subdued private consumption. By contrast,\nChinese growth had picked up, in large part because of policy stimulus, and elsewhere in emerging\nAsia the pace of activity looked to have remained solid, supported by strong global demand for hightech manufacturing goods. Inflation abroad continued to ease. In most advanced foreign economies (AFEs), headline inflation\nhovered near target levels, mainly reflecting the rapid pass-through of lower energy prices in the\nsecond half of 2024. Even so, services price inflation remained elevated in some of these economies,\n\n8 January 28–29, 2025\nsuch as Germany. In China, inflation remained close to zero, partly reflecting lower food prices. By\ncontrast, in some Latin American countries, most notably Brazil, inflation continued to increase, in part\nspurred by currency depreciation. Many foreign central banks eased policy during the intermeeting period, including the Bank of Canada,\nthe European Central Bank, and the Swiss National Bank among the AFEs, and the central banks of\nColombia, Indonesia, and Mexico among the emerging market economies (EMEs). In contrast, amid\nimproving economic conditions, the Bank of Japan increased its policy rate, taking a further step in\ngradually removing policy accommodation. Staff Review of the Financial Situation\nThe market-implied path of the federal funds rate over the next year was little changed on net over the\nintermeeting period. Yields on shorter-term nominal Treasury securities edged down, but longer-term\nrates rose moderately. The increase in longer-term yields appeared to be partly attributable to higher\nterm premiums. Measures of inflation compensation over the near term moved up, but measures of\nlonger-term inflation compensation remained at levels consistent with inflation returning over time to\nthe Committee’s 2 percent objective. Broad equity price indexes were little changed on net, while measures of the equity risk premium\nremained low, and corporate bond spreads remained compressed by historical standards. The VIX—a\nforward-looking measure of near-term equity market volatility—was also roughly unchanged on net and\nremained at a moderate level by historical standards. Foreign financial market moves over the intermeeting period mainly reflected developments in the\nU.S., including trade policy news and the relative strength of the U.S. economic data releases during\nthe period. The broad dollar index increased slightly on net. Longer-term AFE yields edged higher,\nreflecting in part spillovers from higher U.S. yields. Stock price indexes increased in most foreign\ncountries, with the notable exception of China, in which equity prices declined moderately, in part\nreflecting weaker-than-expected forward-looking manufacturing indicators. Capital outflows from\nemerging markets continued, and several EME central banks drew down their foreign exchange\nreserves, including their holdings of U.S. Treasury securities, to resist currency depreciation pressures. Conditions in U.S. short-term funding markets remained generally stable over the intermeeting period,\nwith the lowering of the target range for the federal funds rate in December fully passing through to\nboth secured and unsecured reference rates. Rates in secured markets exhibited temporary, and\ntypical, upward pressure around year-end. Excluding the year-end period, rates in secured markets\ndeclined somewhat relative to the effective federal funds rate, likely reflecting the effects of the nearly\nfull pass-through of December’s technical adjustment to the ON RRP offering rate and of declining bill\n\nMinutes of the Federal Open Market Committee 9\nissuance. ON RRP usage increased around year-end but declined slightly on net over the intermeeting\nperiod. In domestic credit markets, borrowing costs for households and most businesses remained elevated. Rates on 30-year fixed-rate conforming residential mortgages rose. Interest rates for credit cards and\nnew auto loans declined but remained elevated relative to their historical ranges. Meanwhile, interest\nrates on commercial and industrial (C&I) loans and small business loans remained elevated. Yields\nrose for an array of fixed-income securities, including investment-grade corporate bonds and senior\ncommercial MBS tranches, consistent with movements in long-term Treasury yields. Financing through capital markets and nonbank lenders remained broadly available for public\ncorporations and for large and midsize private corporations. With respect to smaller firms, however,\ncredit availability remained relatively tight. Issuance of corporate bonds and leveraged loans\nmoderated toward year-end, likely reflecting seasonal factors. Regarding bank credit, banks in the\nJanuary Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) reported leaving their\nC&I loan standards basically unchanged on net over the fourth quarter.3 Meanwhile, growth in C&I\nloan balances picked up from modest levels. Banks in the January SLOOS reported tighter lending\nstandards for all commercial real estate (CRE) loan categories. Consistent with tight standards,\ngrowth in CRE loans on banks’ books remained subdued in the fourth quarter. Credit remained available for most households, though standards appear to have tightened somewhat\nfor lower-credit-score borrowers. Growth in credit card loan balances at banks picked up in the fourth\nquarter, but issuance of new credit cards to nonprime borrowers continued to decline. In the\nresidential mortgage market, credit remained easily available for high-credit-score borrowers but\ntightened slightly in November and December for lower-score borrowers. In the January SLOOS,\nrespondents on net indicated that standards tightened for credit cards, eased for auto loans, and\nwere about unchanged for most residential mortgages. Credit quality remained solid for large and midsize firms, most home mortgage borrowers, and\nmunicipalities but continued to deteriorate in other sectors. The credit performance of corporate\nbonds and leveraged loans showed some signs of deterioration but remained generally stable. Delinquency rates on loans to small businesses ticked down but remained elevated. Credit quality in\nthe CRE market deteriorated further, driven largely by office and multifamily loans. Regarding\nhousehold credit quality, the delinquency rate on Federal Housing Administration mortgages edged up\nin November and remained elevated relative to the past few years. In contrast, delinquency rates on\n3 The SLOOS results reported are based on banks’ responses, weighted by each bank’s outstanding loans in the respective loan\ncategory, and might therefore differ from the results reported in the published SLOOS, which are based on banks’ unweighted\nresponses.\n\n10 January 28–29, 2025\nmost other mortgage loan types remained low. Delinquency rates for credit cards increased a bit\nfurther in the third quarter, while those for auto loans stayed about flat. The staff provided an update on its assessment of the stability of the U.S. financial system and, on\nbalance, continued to characterize the system’s financial vulnerabilities as notable. The staff judged\nthat asset valuation pressures were elevated. In contrast to valuations in equity, corporate debt, and\nresidential real estate markets, CRE property prices have declined notably in recent years, though\nprice indexes were about flat in the third quarter. Vulnerabilities associated with business and household debt were characterized as moderate. Nonfinancial business leverage was elevated by historical standards, but the ability of publicly traded\nfirms to service their debt remained strong, supported by robust earnings and the low interest rates\nthat firms continued to enjoy on the portion of fixed-rate debt issued early in the pandemic. That said,\nthe fraction of private firm debt having very low interest coverage ratios continued to increase,\npointing to further deterioration in the balance sheets of riskier firms. Household balance sheets\nremained solid overall, as aggregate home equity remained high and delinquencies on mortgage loans\ncontinued to be low. Vulnerabilities associated with leverage in the financial sector were characterized as notable. Regulatory capital ratios in the banking sector remained high; however, banks continued to hold large\nquantities of long-duration assets, leaving them more exposed than usual to an unexpected rise in\nlonger-term interest rates. In the nonbank sector, leverage at hedge funds remained high. Vulnerabilities associated with funding risks were characterized as moderate. Large nonglobal\nsystemically important banks and regional banks reduced their reliance on uninsured deposits notably\nsince the end of 2021. Though assets in prime money market funds had been growing recently, their\nsize relative to GDP remained well below levels seen before 2016. Staff Economic Outlook\nThe staff projection for economic activity was similar to the one prepared for the December meeting,\nwith the output gap expected to narrow further until early next year and to remain roughly flat\nthereafter, and with the unemployment rate expected to remain close to the staff’s estimate of its\nnatural rate. For this projection, the staff had used the same preliminary placeholder assumptions for\npotential policy changes that were used for the previous baseline forecast, and continued to note\nelevated uncertainty regarding the scope, timing, and potential economic effects of possible changes\nto trade, immigration, fiscal, and regulatory policies. The staff highlighted the difficulty of assessing\nthe importance of such factors for the baseline projection and had prepared a number of alternative\nscenarios.\n\nMinutes of the Federal Open Market Committee 11\nThe staff’s inflation projection was also essentially unchanged from the one prepared for the previous\nmeeting. Inflation in 2025 was expected to be similar to 2024’s rate, as the effects of the staff’s\nplaceholder assumption for trade policy put upward pressure on inflation this year. After that, inflation\nwas projected to decline to 2 percent by 2027. The staff continued to view the uncertainty around the baseline projection as similar to the average\nover the past 20 years, a period that saw a number of episodes during which uncertainty about the\neconomy and federal policy changes was elevated. The staff judged that the risks around the baseline\nprojections for economic activity and employment were roughly balanced. The risks around the\nbaseline projection for inflation were seen as skewed to the upside because core inflation had not\ncome down as much as expected in 2024 and because changes to trade policy could put more\nupward pressure on inflation than the staff had assumed. Participants’ Views on Current Conditions and the Economic Outlook\nIn their discussion of inflation developments, participants observed that inflation had eased\nsignificantly over the past two years. Inflation remained somewhat elevated, however, relative to the\nCommittee’s 2 percent longer-run goal, and progress toward that goal had slowed over the past year. Available data suggested that total PCE prices had risen about 2.6 percent over the 12 months ending\nin December and that, excluding the volatile consumer food and energy categories, core PCE prices\nrose 2.8 percent. A number of participants remarked that current readings of 12-month inflation were\nboosted by relatively high inflation readings in the first quarter of last year, and several participants\nnoted that cumulative inflation over the past 3, 6, or 9 months showed greater progress than\n12-month measures. Most participants commented that month-over-month inflation readings in\nNovember and December had exhibited notable progress toward the Committee’s goal of price\nstability, including in some key subcategories. Many participants, however, emphasized that\nadditional evidence of continued disinflation would be needed to support the view that inflation was\nreturning sustainably to 2 percent. Regarding the subcategories, housing services inflation, which had\nremained elevated for much of the previous year, had shown a decline, as had market-based\nmeasures of core nonhousing services inflation. Several participants noted that some nonmarketbased services price categories, such as financial and insurance services, had shown less\nimprovement, but a few also observed that price movements in such categories typically have not\nprovided reliable signals about resource pressures or the future trajectory of inflation. Several\nparticipants observed that core goods prices had not declined as much on net in recent months\ncompared with earlier in 2024. With regard to the outlook for inflation, participants expected that, under appropriate monetary policy,\ninflation would continue to move toward 2 percent, although progress could remain uneven.\n\n12 January 28–29, 2025\nParticipants cited various factors as likely to put continuing downward pressure on inflation, including\nan easing in nominal wage growth, well-anchored longer-term inflation expectations, waning business\npricing power, and the Committee’s still-restrictive monetary policy stance. A few noted, however, that\nthe current target range for the federal funds rate may not be far above its neutral level. Furthermore,\nsome participants commented that with supply and demand in the labor market roughly in balance\nand in light of recent productivity gains, labor market conditions were unlikely to be a source of\ninflationary pressure in the near future. However, other factors were cited as having the potential to\nhinder the disinflation process, including the effects of potential changes in trade and immigration\npolicy as well as strong consumer demand. Business contacts in a number of Districts had indicated\nthat firms would attempt to pass on to consumers higher input costs arising from potential tariffs. In\naddition, some participants noted that some market- or survey-based measures of expected inflation\nhad increased recently, although many participants emphasized that longer-term measures of\nexpected inflation had remained well anchored. Some participants remarked that reported inflation at\nthe beginning of the year was harder than usual to interpret because of the difficulties in fully\nremoving seasonal effects, and a couple of participants commented that any increase in reported\ninflation in the first quarter due to such difficulties would imply a corresponding decrease in reported\ninflation in other quarters of the year. Participants judged that labor market conditions had remained solid and that those conditions were\nbroadly consistent with the Committee’s goal of maximum employment. Payroll gains had averaged\n170,000 per month over the last three months of 2024 and the unemployment rate had stabilized at\na relatively low level. Participants also noted that recent readings of indicators such as job vacancies,\nthe quits rate, and labor turnover were generally consistent with stable labor market conditions. Participants anticipated that under appropriate monetary policy, conditions in the labor market would\nlikely remain solid. Nonetheless, participants generally noted that labor market indicators merited\nclose monitoring. Business contacts in a few Districts noted that they were expecting stable\nemployment levels and moderate wage growth at their firms. A couple of participants noted that the\nupcoming benchmark revision to the payroll growth estimates by the Bureau of Labor Statistics could\nprovide more clarity regarding labor market conditions. Participants observed that the economy had continued to expand at a solid pace and that recent data\non economic activity, and consumer spending in particular were, on balance, stronger than\nanticipated. Participants remarked that consumption had been supported by a solid labor market,\nelevated household net worth, and rising real wages, which had been associated in part with\nproductivity gains. Several participants cautioned that low- and moderate-income households\ncontinued to experience financial strains, which could damp their spending. A few participants cited\n\nMinutes of the Federal Open Market Committee 13\ncontinued increases in rates of delinquencies on credit card borrowing and automobile loans as signs\nof such strains. With regard to the business sector, participants observed that investment in equipment and\nintangibles was strong over the past year, though it appeared to have slowed in the fourth quarter. Some participants noted that favorable aggregate supply developments—including increases in labor\nsupply, business investment, and productivity—continued to support a solid expansion of business\nactivity. Many participants remarked that District contacts or surveys of businesses reported\nsubstantial optimism about the economic outlook, stemming in part from an expectation of an easing\nin government regulations or changes in tax policies. In contrast, some participants noted that\ncontacts reported increased uncertainty regarding potential changes in federal government policies. A\ncouple of participants remarked that the agricultural sector continued to face significant strains\nstemming from low crop prices and high input costs. A number of participants commented on the financial conditions bearing on spending by households\nand businesses. Participants generally saw it as important to continue to keep a close watch on such\nconditions and their potential effects on economic activity and inflation. Many participants noted that\ncertain financial conditions had tightened over the past several months. For example, longer-term\nTreasury and corporate bond yields and mortgage rates had risen notably. A couple of participants\ncommented that high equity valuations or low credit spreads were providing some support to\neconomic activity. In their evaluation of the risks and uncertainties associated with the economic outlook, the vast\nmajority of participants judged that the risks to the achievement of the Committee’s dual-mandate\nobjectives of maximum employment and price stability were roughly in balance, though a couple\ncommented that the risks to achieving the price stability mandate currently appeared to be greater\nthan the risks to achieving the maximum employment mandate. Participants generally pointed to\nupside risks to the inflation outlook. In particular, participants cited the possible effects of potential\nchanges in trade and immigration policy, the potential for geopolitical developments to disrupt supply\nchains, or stronger-than-expected household spending. A couple of participants remarked that, in the\nperiod ahead, it might be especially difficult to distinguish between relatively persistent changes in\ninflation and more temporary changes that might be associated with the introduction of new\ngovernment policies. Participants pointed to various risks to economic activity and employment,\nincluding downside risks associated with an unexpected weakening of the labor market, a weakening\nof consumers’ financial positions, or a tightening of financial conditions, as well as upside risks\nassociated with a potentially more favorable regulatory environment for businesses and continued\nstrength in domestic spending.\n\n14 January 28–29, 2025\nIn their discussion of financial stability, participants who commented noted a range of factors that\nwarranted monitoring. Several participants mentioned issues related to the banking system. A few\ncommented that bank funding risks had lessened and that many banks had improved their ability to\naccess the discount window; however, a couple observed that some banks had increased their\nreliance on reciprocal deposits, and that the stability of these deposits had not been tested in a time\nof stress. Several participants noted that some banks remained vulnerable to a rise in longer-term\nyields and the associated unrealized losses on bank assets. Several participants also mentioned\npotential vulnerabilities at nonbank financial institutions or nonfinancial corporations to a rise in\nlonger-term yields or to leverage in these sectors. A few participants noted concerns about asset\nvaluation pressures in equity and corporate debt markets. A few participants discussed vulnerabilities\nassociated with CRE exposures, noting that risks remained, although there were some signs that the\ndeterioration of conditions in the CRE sector was lessening. Several participants commented on cyber\nrisks that could impair the operation of financial institutions, financial infrastructure, and, potentially,\nthe overall economy. Several participants commented on vulnerabilities in the Treasury market,\nincluding concerns about dealer intermediation capacity and the degree of leveraged positions in the\nmarket. The migration to central clearing was noted by a few as an important development to track in\nthis regard. In their consideration of monetary policy at this meeting, participants noted that inflation remained\nsomewhat elevated. Participants also observed that recent indicators suggested that economic\nactivity had continued to expand at a solid pace, that the unemployment rate had stabilized at a low\nlevel, and that labor market conditions had remained solid in recent months. With the stance of policy\nsignificantly less restrictive than it had been before the Committee’s policy easing over its previous\nthree meetings, all participants viewed it as appropriate to maintain the target range for the federal\nfunds rate at 4¼ to 4½ percent. Participants judged that it was appropriate to continue the process\nof reducing the Federal Reserve’s securities holdings. In discussing the outlook for monetary policy, participants observed that the Committee was well\npositioned to take time to assess the evolving outlook for economic activity, the labor market, and\ninflation, with the vast majority pointing to a still-restrictive policy stance. Participants indicated that,\nprovided the economy remained near maximum employment, they would want to see further progress\non inflation before making additional adjustments to the target range for the federal funds rate. Participants noted that policy decisions were not on a preset course and were conditional on the\nevolution of the economy, the economic outlook, and the balance of risks. In discussing risk-management considerations that could bear on the outlook for monetary policy, a\nmajority of participants observed that the current high degree of uncertainty made it appropriate for\nthe Committee to take a careful approach in considering additional adjustments to the stance of\n\nMinutes of the Federal Open Market Committee 15\nmonetary policy. Factors mentioned by participants as supporting such an approach included the\nreduced downside risks to the outlook for the labor market and economic activity, increased upside\nrisks to the outlook for inflation, and uncertainties concerning the neutral rate of interest, the degree\nof restraint from higher longer-term interest rates, or the economic effects of potential government\npolicies. Many participants noted that the Committee could hold the policy rate at a restrictive level if\nthe economy remained strong and inflation remained elevated, while several remarked that policy\ncould be eased if labor market conditions deteriorated, economic activity faltered, or inflation returned\nto 2 percent more quickly than anticipated. A number of participants also discussed some issues related to the balance sheet. Regarding the\ncomposition of secondary-market purchases of Treasury securities that would occur once the process\nof reducing the size of the Federal Reserve’s holdings of securities had come to an end, many\nparticipants expressed the view that it would be appropriate to structure purchases in a way that\nmoved the maturity composition of the SOMA portfolio closer to that of the outstanding stock of\nTreasury debt while also minimizing the risk of disruptions to the market. Regarding the potential for\nsignificant swings in reserves over coming months related to debt ceiling dynamics, various\nparticipants noted that it may be appropriate to consider pausing or slowing balance sheet runoff until\nthe resolution of this event. Several participants also expressed support for the Desk’s future\nconsideration of possible ways to improve the efficacy of the SRF. Committee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that recent indicators\nsuggested that economic activity had continued to expand at a solid pace. The unemployment rate\nhad stabilized at a low level in recent months and labor market conditions had remained solid. Members concurred that inflation remained somewhat elevated. Almost all members agreed that the\nrisks to achieving the Committee’s employment and inflation goals were roughly in balance. Members\nviewed the economic outlook as uncertain and agreed that they were attentive to the risks to both\nsides of the Committee’s dual mandate. In support of its goals, the Committee agreed to maintain the target range for the federal funds rate at\n4¼ to 4½ percent. Members agreed that in considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee would carefully assess\nincoming data, the evolving outlook, and the balance of risks. Members agreed to continue to reduce\nthe Federal Reserve’s holdings of Treasury securities and agency debt and agency MBS. All members\nagreed that the postmeeting statement should affirm their strong commitment both to supporting\nmaximum employment and to returning inflation to the Committee’s 2 percent objective.\n\n16 January 28–29, 2025\nMembers agreed that in assessing the appropriate stance of monetary policy, the Committee would\ncontinue to monitor the implications of incoming information for the economic outlook. They would be\nprepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede\nthe attainment of the Committee’s goals. Members also agreed that their assessments would take\ninto account a wide range of information, including readings on labor market conditions, inflation\npressures and inflation expectations, and financial and international developments. At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the SOMA in accordance with the following\ndomestic policy directive, for release at 2:00 p.m.:\n“Effective January 30, 2025, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4¼ to 4½ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n4.5 percent and with an aggregate operation limit of $500 billion.\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.25 percent and with a per‑counterparty limit of $160 billion per day.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$25 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage‑backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.\n• Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement\nof the Federal Reserve’s agency MBS transactions.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n\nMinutes of the Federal Open Market Committee 17\n“Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market\nconditions remain solid. Inflation remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. The Committee judges that the risks to achieving its employment and\ninflation goals are roughly in balance. The economic outlook is uncertain, and the Committee\nis attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to maintain the target range for the federal\nfunds rate at 4¼ to 4½ percent. In considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee will carefully assess\nincoming data, the evolving outlook, and the balance of risks. The Committee will continue\nreducing its holdings of Treasury securities and agency debt and agency mortgage‑backed\nsecurities. The Committee is strongly committed to supporting maximum employment and\nreturning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman,\nSusan M. Collins, Lisa D. Cook, Austan D. Goolsbee, Philip N. Jefferson, Adriana D. Kugler, Alberto G. Musalem, Jeffrey R. Schmid, and Christopher J. Waller. Voting against this action: None. Consistent with the Committee’s decision to leave the target range for the federal funds rate\nunchanged, the Board of Governors of the Federal Reserve System voted unanimously to maintain the\ninterest rate paid on reserve balances at 4.4 percent, effective January 30, 2025. The Board of\nGovernors of the Federal Reserve System voted unanimously to approve the establishment of the\nprimary credit rate at the existing level of 4.5 percent, effective January 30, 2025. It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday,\nMarch 18–19, 2025. The meeting adjourned at 10:10 a.m. on January 29, 2025.\n\n18 January 28–29, 2025\nNotation Vote\nBy notation vote completed on January 8, 2025, the Committee unanimously approved the minutes of\nthe Committee meeting held on December 17–18, 2024. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nMichael S. Barr\nMichelle W. Bowman\nSusan M. Collins\nLisa D. Cook\nAustan D. Goolsbee\nPhilip N. Jefferson\nAdriana D. Kugler\nAlberto G. Musalem\nJeffrey R. Schmid\nChristopher J. Waller\nBeth M. Hammack, Patrick Harker, Neel Kashkari, Lorie K. Logan, and Sushmita Shukla, Alternate\nMembers of the Committee\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of\nRichmond, Atlanta, and San Francisco, respectively\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nShaghil Ahmed, Kartik B. Athreya, James A. Clouse, Brian M. Doyle, Carlos Garriga, Joseph W. Gruber,\nAnna Paulson, William Wascher, and Egon Zakrajšek, Associate Economists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nStephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nIsaiah C. Ahn, Information Management Analyst, Division of Monetary Affairs, Board\nDavid Altig,4 Executive Vice President, Federal Reserve Bank of Atlanta\nRoc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia\nAlyssa Arute, Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\n4 Attended through the discussion of the review of the monetary policy framework.\n\nMinutes of the Federal Open Market Committee 19\nAlessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board\nDavid Bowman, Senior Associate Director, Division of Monetary Affairs, Board\nJennifer J. Burns, Deputy Director, Division of Supervision and Regulation, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nKathryn B. Chen,5 Director of Cross Portfolio Policy and Analysis, Federal Reserve Bank of New York\nAndrew Cohen,6 Special Adviser to the Board, Division of Board Members, Board\nWendy E. Dunn, Adviser, Division of Research and Statistics, Board\nEric C. Engstrom, Associate Director, Division of Monetary Affairs, Board\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nEtienne Gagnon,4 Senior Associate Director, Division of International Finance, Board\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nDavid P. Glancy, Principal Economist, Division of Monetary Affairs, Board\nGrey Gordon,4 Senior Economist, Federal Reserve Bank of Richmond\nFrançois Gourio,4 Senior Economist and Economic Advisor, Federal Reserve Bank of Chicago\nLuca Guerrieri, Senior Associate Director, Division of International Finance, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nBenjamin K. Johannsen,4 Assistant Director, Division of Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nEdward S. Knotek II, Senior Vice President, Federal Reserve Bank of Cleveland\nAnna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond\nDavid E. Lebow, Senior Associate Director, Division of Research and Statistics, Board\nSylvain Leduc, Director of Research, Federal Reserve Bank of San Francisco\nAndreas Lehnert, Director, Division of Financial Stability, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nCanlin Li, Senior Economic Project Manager, Division of International Finance, Board\nDan Li, Deputy Associate Director, Division of Monetary Affairs, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nBenjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board\nKarel Mertens, Senior Vice President, Federal Reserve Bank of Dallas\n5 Attended through the discussion of developments in financial markets and open market operations.\n6 Attended the discussion of economic developments and the outlook.\n\n20 January 28–29, 2025\nAnn E. Misback, Secretary, Office of the Secretary, Board\nRaven Molloy, Deputy Associate Director, Division of Research and Statistics, Board\nFernanda Nechio,4 Vice President, Federal Reserve Bank of San Francisco\nEdward Nelson, Senior Adviser, Division of Monetary Affairs, Board\nAnna Nordstrom, Interim Head of Markets, Federal Reserve Bank of New York\nJulio L. Ortiz,4 Senior Economist, Division of International Finance, Board\nMichael G. Palumbo, Senior Associate Director, Division of Research and Statistics, Board\nLubomir Petrasek,7 Section Chief, Division of Monetary Affairs, Board\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nAndrea Prestipino, Principal Economist, Division of Monetary Affairs, Board\nOdelle Quisumbing,5 Assistant to the Secretary, Office of the Secretary, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nNellisha D. Ramdass,4 Deputy Director, Division of Monetary Affairs, Board\nBrett Rose,5 Treasury and Mortgage Markets Director, Federal Reserve Bank of New York\nZack Saravay, Senior Financial Institution Policy Analyst I, Division of Monetary Affairs, Board\nZeynep Senyuz, Special Adviser to the Board, Division of Board Members, Board\nBenjamin Silk,4 Lead Financial Analyst, Division of International Finance, Board\nYannick Timmer, Principal Economist, Division of Monetary Affairs, Board\nPaula Tkac, Director of Research, Federal Reserve Bank of Atlanta\nClara Vega, Special Adviser to the Board, Division of Board Members, Board\nAnnette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board\nJeffrey D. Walker, Senior Associate Director, Division of Reserve Bank Operations and Payment\nSystems, Board\nMin Wei, Senior Associate Director, Division of Monetary Affairs, Board\nPaul R. Wood,8 Special Adviser to the Board, Division of Board Members, Board\n_______________________\nJoshua Gallin\nSecretary\n7 Attended Tuesday’s session only.\n8 Attended through the discussion of developments in financial markets and open market operations, and from the discussion\nof current monetary policy through the end of the meeting.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20250129.pdf",
+    "action": "Maintained",
+    "rate": "4.25%-4.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled it will maintain a restrictive policy stance and emphasized that future rate decisions will depend on incoming data, the evolving economic outlook, and the balance of risks. Additional rate adjustments will only be considered with further evidence of sustained progress toward 2% inflation.",
+    "key_economic_factors": [
+      "Inflation remains above the 2% target, with core PCE at 2.8% and total PCE at 2.6%, showing only gradual disinflation",
+      "Solid economic growth and a stable labor market, with unemployment at 4.1% and monthly job gains averaging 170,000",
+      "Elevated uncertainty around potential trade and immigration policy changes that could pressure inflation",
+      "Tight financial conditions, including higher long-term Treasury yields and mortgage rates, are providing additional monetary restraint"
+    ],
+    "economic_outlook": "The Fed expects economic activity to continue expanding at a solid pace, with labor market conditions remaining strong and near maximum employment. Inflation is projected to gradually decline toward 2% over the medium term, though progress may be uneven. Risks to inflation are skewed to the upside, primarily due to potential policy changes and persistent core price pressures.",
+    "market_impact": "Markets should expect a prolonged pause in rate cuts, supporting higher yields on bonds and sustained borrowing costs for consumers and businesses. Equities may face volatility as investors adjust to the likelihood of higher-for-longer interest rates, particularly if inflation data remains sticky."
+  },
+  {
+    "date": "2024-12-18",
+    "title": "FOMC Meeting 2024-12-18",
+    "full_text": "FOMC\nMinutes of the\nFederal Open Market Committee\nDecember 17–18, 2024\nFEDERAL RESERVE SYSTEM\n\nMinutes of the Federal Open Market\nCommittee\nDecember 17–18, 2024\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Tuesday, December 17, 2024, at\n10:30 a.m. and continued on Wednesday, December 18, 2024, at 9:00 a.m.1\nDevelopments in Financial Markets and Open Market Operations\nThe manager turned first to a review of developments in financial markets. Nominal Treasury yields\nfluctuated over the intermeeting period and were slightly higher, on net, than in early November. Treasury yields had risen notably since their trough in mid-September, with the rise in the 10-year\nnominal yield driven largely by increases in real yields. Liquidity in Treasury markets deteriorated\nsomewhat following the U.S. election but remained well within the ranges observed over the past three\nyears. With near-term measures of inflation compensation a little higher over the intermeeting period\nand longer-term measures little changed, the manager noted that there were few signs of concern\nabout persistent inflationary pressures in market prices. Equity prices largely sustained the gains that\nthey had experienced in anticipation of, and immediately following, the U.S. election. The manager noted that market expectations for the path of the federal funds rate were little changed\nover the intermeeting period. Markets had almost fully priced in a 25 basis point cut in the target\nrange for the federal funds rate at this meeting, and all respondents from the Open Market Desk’s\nSurvey of Primary Dealers and Survey of Market Participants expected the same. Survey respondents\nanticipated that the pace of rate cuts would slow considerably in 2025, with the median respondent\nexpecting 75 basis points of cuts for the full year; options and futures prices suggested a somewhat\nlower level of expected policy easing in 2025. However, in discussing both survey and market\nexpectations, the manager noted that there was considerable uncertainty among market participants\nabout the path of the federal funds rate in the year ahead. The manager also discussed balance sheet policy expectations. The average estimate of survey\nrespondents for the timing of the end of balance sheet runoff shifted a bit later, to June 2025. This\nshift mainly reflected revisions to estimates by respondents who had expected balance sheet runoff to\nend in the last quarter of 2024 or in early 2025.\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 December 17–18, 2024\nRegarding international developments, the manager noted that market participants expected central\nbanks in nearly all advanced foreign economies (AFEs) to continue to reduce their policy rates in\n2025. In contrast to the U.S., market expectations for policy rates at the end of 2025 in most AFEs\nhad shifted lower over the intermeeting period. The manager noted that this widening between U.S.\nand foreign interest rates appeared to be a major contributor to the increase in the trade-weighted\nU.S. dollar index observed over the intermeeting period. The manager then turned to money markets and Desk operations. Unsecured overnight rates had\nremained stable over the intermeeting period, and with the exception of temporary pressures around\nmonth-end and Treasury auction settlement dates, rates on overnight repurchase agreements (repo)\nwere little changed. The manager noted that, on average, market participants appeared to be\nexpecting upward pressure in repo markets around year-end comparable with that seen at the\nSeptember quarter-end. Based on term and forward-settling repo volumes, market participants\nappeared to have been more proactive than in recent years in preparing for the year-end, which the\nmanager judged could help mitigate somewhat the extent of upward pressure on repo rates during\nthat time. Pricing in the federal funds market continued to be insensitive to day-to-day changes in the supply of\nreserves over the intermeeting period. The manager noted that this outcome was consistent with\nreserves remaining abundant and that various other indicators, as well as responses about banks’\ndesired reserve levels from the Federal Reserve’s Senior Financial Officer Survey, pointed to the same\nconclusion. Looking ahead, the manager raised the possibility that the potential reinstatement of the\ndebt limit in 2025 could result in substantial shifts in Federal Reserve liabilities that could pose\nchallenges in assessing reserve conditions. Usage of the overnight reverse repurchase agreement (ON RRP) facility continued its decline over the\nintermeeting period. The recent decrease in ON RRP usage was attributable in part to increases in net\nTreasury bill issuance, which made Treasury bill rates more attractive. In the near term, the manager\njudged that ON RRP volumes were likely to rise because of an expected decline in net Treasury bill\nissuance and typical year-end dynamics. The manager also noted that the potential reinstatement of\nthe debt limit could keep ON RRP balances elevated for some time in 2025. The manager discussed market expectations regarding a technical adjustment that would lower the\nON RRP offering rate to the bottom of the target range for the federal funds rate. Based on the Desk\nsurveys and market outreach, most market participants expected such an adjustment at this meeting. Market participants’ views varied on how much downward pressure this adjustment would put on\nmoney market rates, but repo rates were generally expected to fall more than the federal funds rate.\n\nMinutes of the Federal Open Market Committee 3\nThe manager concluded by noting that the Desk was planning to add a second standing repo facility\n(SRF) auction on each day of the week spanning year-end. The manager viewed these additional\nauctions as technical exercises that could improve the Federal Reserve’s understanding of how SRF\nauction times can support effective policy implementation and market functioning during periods of\nexpected money market pressures. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that real gross domestic product (GDP)\nhad continued to expand at a solid pace in 2024. Labor market conditions had eased since early\n2024, but the unemployment rate remained low. Consumer price inflation was below its year-earlier\nrate but was still somewhat elevated. Total consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—was 2.3 percent in October, below the 3.0 percent rate seen a year\nearlier. Core PCE price inflation—which excludes changes in consumer energy prices and many\nconsumer food prices—was 2.8 percent in October, lower than its 3.4 percent rate a year earlier. In\nNovember, the 12-month change in the consumer price index (CPI) was 2.7 percent, and core CPI\ninflation was 3.3 percent; both were below their year-earlier rates. Given both the CPI and producer\nprice index data, the staff estimated that total PCE price inflation would be reported as 2.5 percent\nover the 12 months ending in November and that core PCE price inflation would be 2.8 percent. Recent data suggested that labor market conditions had eased slightly further but remained solid. Average monthly nonfarm payroll gains over October and November were a little below their pace in\nthe third quarter. The staff estimated that job gains were held down by the effects of labor strikes and\nhurricanes in October and were boosted by a similar amount in November after those effects\nunwound. The unemployment rate ticked up to 4.2 percent in November, and both the labor force\nparticipation rate and the employment-to-population ratio moved down a bit further. The\nunemployment rates for African Americans and for Hispanics also moved up, and both rates were\nabove those for Asians and for Whites. The ratio of job vacancies to unemployment held steady at 1.1\nin November, slightly lower than its level just before the pandemic. Average hourly earnings for all\nemployees rose 4 percent over the 12 months ending in November—the same rate as in the previous\nmonth. Real GDP posted a solid gain in the third quarter that was similar to its second-quarter pace. Real\nprivate domestic final purchases (PDFP)—which comprises PCE and private fixed investment and\n\n4 December 17–18, 2024\nwhich often provides a better signal than GDP of underlying economic momentum—rose faster than\nreal GDP in the third quarter. Exports rose briskly in the third quarter; import growth was even faster. In the fourth quarter, available economic indicators suggested that real GDP growth remained solid,\nwith growth of real PDFP still outpacing that of real GDP. Imports fell more than exports in October,\nwith real imports of capital goods dropping back after brisk growth earlier in the year. Foreign economic growth picked up in the third quarter, notably in the euro area and in Mexico. Recent economic indicators, however, suggested much weaker momentum in foreign economies in\nthe fourth quarter, with lackluster manufacturing activity and subdued private consumption spending. In China, growth in retail sales slowed, suggesting that domestic demand remained weak. Strength in\nhigh-tech goods production continued abroad, mainly in Asia excluding China, supported by buoyant\nU.S. demand. Inflation in foreign economies continued to ease. In most AFEs, headline inflation slowed to near or\nbelow target levels, mainly reflecting the pass-through of lower energy prices earlier in the year. Services inflation, however, remained high in some of those economies. In China, inflation remained\nclose to zero, in part due to falling food prices. By contrast, in some Latin American countries, most\nnotably Brazil, inflation continued to increase, partly because of currency depreciation. Staff Review of the Financial Situation\nThe market-implied path of the federal funds rate over the next year edged higher, on net, since the\nU.S. election, as investors assessed the implications of incoming inflation data and potential economic\npolicy changes for the near-term economic outlook. Communications by Federal Reserve officials\ncontributed to investors’ perceptions of a slower timeline for policy rate reductions. Nominal Treasury\nyields across the maturity spectrum initially increased but then reversed those increases, ending the\nintermeeting period little changed. Measures of near-term inflation compensation moved up, while\nthose of longer-term inflation compensation were little changed. Broad equity prices rose, with more pronounced increases in stock prices in cyclical sectors amid\nincreased investor optimism for corporate profits, and high-yield bond spreads narrowed. The VIX—a\nforward-looking measure of near-term equity market volatility—fell notably and remained well below\npre-election levels. Foreign financial market pricing reflected weaker-than-expected foreign data releases, expectations of\nfurther policy easing by foreign central banks, and potential changes in U.S. trade policy. Accordingly,\nforeign bond yields generally declined relative to their U.S. counterparts, contributing to dollar\nappreciation against most foreign currencies. Foreign equities generally underperformed U.S.\nequities, in part reflecting investors’ expectations of economic growth diverging further between the\nU.S. and the rest of the world.\n\nMinutes of the Federal Open Market Committee 5\nMany foreign central banks eased their policy rates during the intermeeting period, including the Bank\nof Canada, the European Central Bank, and the Swiss National Bank, among the AFEs, and the central\nbanks of Hong Kong, India, Korea, and Mexico, among the emerging market economies. An exception\nwas the Central Bank of Brazil, which increased its policy rate 100 basis points and signaled further\nhikes in the face of inflationary pressures. Conditions in U.S. short-term funding markets remained generally stable over the intermeeting period,\nwith the lowering of the target range for the federal funds rate in November fully passing through to\nboth secured and unsecured reference rates. Money market funds’ (MMFs) usage of the ON RRP\nfacility was lower, on average, than in the previous intermeeting period, reflecting increased holdings\nof Treasury bills amid sizable net bill issuance. Overall, MMF assets under management stayed near\nrecord highs. Spreads of unsecured commercial paper maturing over year-end remained within typical\nranges, and global offshore dollar funding markets continued to be stable. In domestic markets, borrowing costs for households, businesses, and municipalities remained\nelevated despite small declines in most credit segments. Rates on 30-year fixed-rate conforming\nresidential mortgages declined but stayed elevated. Interest rates on credit cards and new auto loans\ncontinued to be at historical highs, although interest rates on new auto loans decreased further. Borrowing costs for leveraged loan borrowers declined slightly. Interest rates on newly originated\ncommercial and industrial (C&I) loans ticked down in the third quarter, and interest rates on shortterm loans to small businesses remained unchanged. Yields on an array of fixed-income securities,\nincluding investment- and speculative-grade corporate bonds and commercial mortgage-backed\nsecurities (CMBS), decreased slightly but remained elevated. Financing in capital markets continued to be broadly available for large-to-midsize businesses and\nmunicipalities. For small businesses, however, credit availability remained relatively tight, and loan\noriginations stayed subdued in October. C&I loans by banks increased moderately in October and\nwere flat through November after modest growth in the third quarter. After stalling in the third quarter,\ncommercial real estate (CRE) loan growth picked up moderately in October and remained subdued\nthrough late November. Meanwhile, agency CMBS issuance continued to be weak in October, while\nnon-agency CMBS issuance was strong in October and in the first three weeks of November, reflecting\na high volume of refinancing activity. Credit continued to be generally available for most households. Even so, auto loans were little\nchanged in the third quarter, and growth of revolving credit was weak into November. Credit in the\nresidential mortgage market continued to be readily available for high-credit-score borrowers, while\ncredit availability for low-credit-score borrowers improved, on net, over the six months through\nOctober.\n\n6 December 17–18, 2024\nCredit quality remained solid for large-to-midsize firms, municipalities, and most home mortgage\nborrowers. The credit performance of corporate bonds and leveraged loans was generally stable. At\nbanks, delinquency rates on C&I loans were stable and remained within the range observed over the\npast decade. Delinquency rates on small business loans continued to increase through October, as\ndid delinquencies on small business credit cards through September. In CRE markets, credit\nperformance deteriorated further as aggregate CMBS delinquency rates rose through October, driven\nby delinquencies on office loans. At banks, delinquency rates on CRE loans ticked up through\nSeptember from already elevated levels. Regarding household credit quality, delinquency rates on\nmost residential mortgages were largely unchanged and stood near historical lows. However, the\ndelinquency rate on Federal Housing Administration mortgages, which are disproportionately used by\nborrowers with lower credit scores and smaller down payments, remained above pre-pandemic levels. Delinquency rates on credit cards continued to increase, albeit at a slower pace than earlier in the\nyear, while delinquency rates on auto loans were unchanged. Staff Economic Outlook\nThe staff projection at the December meeting was for economic conditions to stay solid. Given the\nelevated uncertainty regarding specifics about the scope and timing of potential changes to trade,\nimmigration, fiscal, and regulatory policies and their potential effects on the economy, the staff\nhighlighted the difficulty of selecting and assessing the importance of such factors for the baseline\nprojection and featured a number of alternative scenarios. After incorporating the recent data and\npreliminary placeholder assumptions about potential policy changes, real GDP growth was projected to\nbe slightly slower than in the previous baseline forecast, and the unemployment rate was expected to\nbe a bit higher but to remain near the staff’s estimate of its natural rate. In the staff’s baseline projection, the inflation forecast for 2024 was slightly higher than the one\nprepared for the previous meeting, reflecting upside surprises in some recent data. Inflation in 2025\nwas expected to remain at about the same rate as in 2024, as the effects of the staff’s placeholder\ntrade policy assumptions held inflation up. Thereafter, inflation was forecast to decline to 2 percent\nby 2027, the same as in the projection at the November meeting. The staff continued to view the uncertainty around the baseline projection as within the range seen\nover the past 20 years, a period that encompassed a number of episodes during which uncertainty\nabout the economy and federal policy changes was elevated. The staff judged that the risks around\nthe baseline forecasts for employment and real GDP growth were balanced, as concerns about\ndownside risks from a marked cooling in labor market conditions had eased in recent months. The\nrisks around the inflation forecast were seen as tilted to the upside, as core inflation had not come\n\nMinutes of the Federal Open Market Committee 7\ndown as much as expected in 2024 and the effects of trade policy changes could be larger than the\nstaff had assumed. Participants’ Views on Current Conditions and the Economic Outlook\nIn conjunction with this FOMC meeting, participants submitted their projections of the most likely\noutcomes for real GDP growth, the unemployment rate, and inflation for each year from 2024 through\n2027 and over the longer run. These projections were based on participants’ individual assessments\nof appropriate monetary policy, including their projections of the federal funds rate. The longer-run\nprojections represented each participant’s assessment of the rate to which each variable would tend\nto converge under appropriate monetary policy and in the absence of further shocks to the economy. The Summary of Economic Projections was released to the public after the meeting. In their discussion of inflation developments, participants noted that although inflation had eased\nsubstantially from its peak in 2022, it remained somewhat elevated. Participants commented that the\noverall pace of disinflation had slowed over 2024 and that some recent monthly price readings had\nbeen higher than anticipated. Nevertheless, most remarked that disinflationary progress continued to\nbe apparent across a broad range of core goods and services prices. Notably, some participants\nobserved that in the core goods and market-based core services categories, excluding housing, prices\nwere increasing at rates close to those seen during earlier periods of price stability. Many participants\nnoted that the slowing in these components of inflation corroborated reports received from their\nbusiness contacts that firms were more reluctant to increase prices, as consumers appeared to be\nmore price sensitive and were increasingly seeking discounts. With respect to core services prices, a\nmajority of participants remarked that increases in some components had exceeded expectations over\nrecent months; many noted, however, that the increases were concentrated largely in non-marketbased price categories and that price movements in such categories typically have not provided\nreliable signals about resource pressures or the future trajectory of inflation. Most participants also\nremarked that increases in housing services prices remained somewhat elevated, though they\ncontinued to slow gradually, as the pace of rent increases for new tenants continued to moderate and\nwould eventually be reflected further in housing services prices. With regard to the outlook for inflation, participants expected that inflation would continue to move\ntoward 2 percent, although they noted that recent higher-than-expected readings on inflation, and the\neffects of potential changes in trade and immigration policy, suggested that the process could take\nlonger than previously anticipated. Several observed that the disinflationary process may have stalled\ntemporarily or noted the risk that it could. A couple of participants judged that positive sentiment in\nfinancial markets and momentum in economic activity could continue to put upward pressure on\ninflation. All participants judged that uncertainty about the scope, timing, and economic effects of\n\n8 December 17–18, 2024\npotential changes in policies affecting foreign trade and immigration was elevated. Reflecting that\nuncertainty, participants took varied approaches in accounting for these effects. A number of\nparticipants indicated that they incorporated placeholder assumptions to one degree or another into\ntheir projections. Other participants indicated that they did not incorporate such assumptions, and a\nfew participants did not indicate whether they incorporated such assumptions. Several participants remarked that insofar as recent solid increases in real GDP reflected favorable\nsupply developments, the strength of economic activity was unlikely to be a source of upward inflation\npressures. Participants cited various factors as being likely to put continuing downward pressure on\ninflation, including waning business pricing power, the Committee’s still-restrictive monetary policy\nstance, and well-anchored longer-term inflation expectations. Some participants noted that nominal\nwage growth had continued to move down. Further, several observed that, with supply and demand in\nthe labor market being roughly in balance and in light of recent productivity gains, labor market\nconditions were unlikely to be a source of inflationary pressure in the near future. However, several\nremarked that nominal wage growth remained slightly above the pace likely to be consistent over time\nwith 2 percent inflation. In discussing labor market developments, participants viewed recent readings on a range of indicators\nas consistent with an ongoing gradual easing in labor market conditions even as the unemployment\nrate remained low. Participants cited declines in job vacancies, the quits rate, the rate at which the\nunemployed were obtaining jobs, and turnover as consistent with a gradual easing in labor demand. Participants generally noted, however, that there were no signs of rapid deterioration in labor market\nconditions, as layoffs remained low. Participants generally judged that current labor market\nconditions were broadly consistent with the Committee’s longer-run goal of maximum employment. With regard to the outlook for the labor market, participants anticipated that under appropriate\nmonetary policy, conditions in the labor market would likely remain solid. Participants generally noted\nthat labor market indicators merited close monitoring. Several participants observed that the\nevaluation of underlying trends in labor market developments had continued to be challenging and\nthat assessments of the outlook for the labor market were associated with considerable uncertainty. Some participants noted that the labor market could soften further, as the recent pace of payroll\ngrowth had been below the rate that would likely keep the unemployment rate constant, given a stable\nlabor force participation rate. Participants observed that economic activity had continued to expand at a solid pace and that recent\ndata on economic activity and consumer spending in particular were, on balance, stronger than\nanticipated. Participants remarked that consumption had been supported by a solid labor market,\nrising real wages, and elevated household net worth. Several participants cautioned that low- and\nmoderate-income households continued to experience financial strains, which could damp their\n\nMinutes of the Federal Open Market Committee 9\nspending. A couple of participants cited continued increases in rates of delinquencies on credit card\nborrowing and automobile loans as signs of such strains. With regard to the business sector, several participants noted that favorable aggregate supply\ndevelopments—including increases in labor supply, business investment, and productivity—continued\nto support a solid expansion of business activity. A majority of participants remarked that the behavior\nof equity markets reflected positive sentiment on the part of investors. Many participants also\nremarked that District contacts generally reported greater optimism about the economic outlook,\nstemming in part from an expectation of an easing in government regulations and changes in tax\npolicies. In contrast, some participants noted that contacts reported increased uncertainty regarding\npotential changes in federal government policies. A couple of participants remarked that the\nagricultural sector continued to face significant strains stemming from low crop prices and high input\ncosts. In their evaluation of the risks and uncertainties associated with the economic outlook, the vast\nmajority of participants judged the risks to the attainment of the Committee’s dual-mandate objectives\nof maximum employment and price stability to be roughly in balance. In particular, participants saw\ntwo-sided risks to achieving those goals. Almost all participants judged that upside risks to the\ninflation outlook had increased. As reasons for this judgment, participants cited recent stronger-thanexpected readings on inflation and the likely effects of potential changes in trade and immigration\npolicy. Other reasons mentioned included possible disruptions in global supply chains due to\ngeopolitical developments, a larger-than-anticipated easing in financial conditions, stronger-thanexpected household spending, and more persistent shelter price increases. A few participants\nremarked that, in the period ahead, it might be difficult to distinguish more persistent influences on\ninflation from potentially temporary ones, such as those stemming from changes in trade policy that\ncould lead to shifts in the level of prices. Most participants noted that risks to the achievement of the\nCommittee’s maximum-employment goal appeared to be roughly balanced, though some saw risks to\nthe labor market as tilted to the downside. Participants pointed to various risks to economic activity\nand employment, including downside risks associated with weaker output growth abroad, increased\nfinancial vulnerabilities stemming from overvaluation of risky assets, or an unexpected weakening of\nthe labor market, and upside risks associated with increased optimism and continued strength in\ndomestic spending as upside factors. In their consideration of monetary policy at this meeting, participants generally noted that inflation had\nmade progress toward the Committee’s objective but remained somewhat elevated. Participants also\nobserved that recent indicators suggested that economic activity had continued to expand at a solid\npace, labor market conditions had generally eased since earlier in the year, and the unemployment\nrate had moved up but remained low. The vast majority of participants viewed it as appropriate to\n\n10 December 17–18, 2024\nlower the target range for the federal funds rate by 25 basis points to 4¼ to 4½ percent. They\nassessed that such a further lowering of the target range for the policy rate would help maintain the\nstrength in the economy and the labor market while continuing to enable further progress on inflation. A majority of participants noted that their judgments about this meeting’s appropriate policy action\nhad been finely balanced. Some participants stated that there was merit in keeping the target range\nfor the federal funds rate unchanged. These participants suggested that the risk of persistently\nelevated inflation had increased in recent months, and several of these participants stressed the need\nfor monetary policy to help foster financial conditions that would be consistent with inflation returning\nsustainably to 2 percent. Participants judged that it was appropriate to continue the process of\nreducing the Federal Reserve’s securities holdings. In discussing the outlook for monetary policy, participants indicated that the Committee was at or near\nthe point at which it would be appropriate to slow the pace of policy easing. They also indicated that if\nthe data came in about as expected, with inflation continuing to move down sustainably to 2 percent\nand the economy remaining near maximum employment, it would be appropriate to continue to move\ngradually toward a more neutral stance of policy over time. Some participants observed that, with the\ntarget range for the federal funds rate having been lowered a total of 100 basis points with this\nmeeting’s decision, the policy rate was now significantly closer to its neutral value than when the\nCommittee commenced policy easing in September. In addition, many participants suggested that a\nvariety of factors underlined the need for a careful approach to monetary policy decisions over coming\nquarters. These factors included recent elevated inflation readings, the continuing strength of\nspending, reduced downside risks to the outlook for the labor market and economic activity, and\nincreased upside risks to the outlook for inflation. A substantial majority of participants observed that,\nat the current juncture, with its policy stance still meaningfully restrictive, the Committee was well\npositioned to take time to assess the evolving outlook for economic activity and inflation, including the\neconomy’s responses to the Committee’s earlier policy actions. Participants noted that monetary\npolicy decisions were not on a preset course and were conditional on the evolution of the economy,\nthe economic outlook, and the balance of risks. In discussing risk-management considerations that could bear on the outlook for monetary policy, the\nvast majority of participants agreed that risks to achieving the Committee’s employment and inflation\ngoals remained roughly in balance. Many participants observed that the current high degree of\nuncertainty made it appropriate for the Committee to take a gradual approach as it moved toward a\nneutral policy stance. Participants noted that although inflation was on course to return sustainably to\n2 percent over the next few years and the Committee was determined to restore and maintain price\nstability, the likelihood that elevated inflation could be more persistent had increased. Most\nparticipants remarked that, with the stance of monetary policy now significantly less restrictive, the\nCommittee could take a careful approach in considering adjustments to the stance of monetary policy.\n\nMinutes of the Federal Open Market Committee 11\nMany participants noted that the Committee could hold the policy rate at a restrictive level, or ease\npolicy more slowly, if inflation remained elevated, and several remarked that policy easing could take\nplace more rapidly if labor market conditions deteriorated, economic activity faltered, or inflation\nreturned to 2 percent more quickly than anticipated. Committee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that recent indicators\nsuggested that economic activity had continued to expand at a solid pace. Labor market conditions\nhad generally eased since earlier in the year, and the unemployment rate had moved up but remained\nlow. Members concurred that inflation had made progress toward the Committee’s 2 percent\nobjective but remained somewhat elevated. Almost all members agreed that the risks to achieving the\nCommittee’s employment and inflation goals were roughly in balance. Members viewed the economic\noutlook as uncertain and agreed that they were attentive to the risks to both sides of the Committee’s\ndual mandate. In support of its goals, the Committee agreed to lower the target range for the federal funds rate by\n25 basis points to 4¼ to 4½ percent. One member voted against that decision, preferring to maintain\nthe target range for the federal funds rate at 4½ to 4¾ percent. In light of their judgment that, after\nthis meeting, the Committee would likely slow the pace of further adjustments to the stance of\nmonetary policy, members agreed to indicate that, in considering the extent and timing of additional\nadjustments to the target range for the federal funds rate, the Committee would carefully assess\nincoming data, the evolving outlook, and the balance of risks. Members agreed to continue to reduce\nthe Federal Reserve’s holdings of Treasury securities and agency debt and agency mortgage-backed\nsecurities. Members also judged that it was appropriate to make a technical adjustment to the rate\noffered at the ON RRP facility by setting it equal to the bottom of the target range for the federal funds\nrate, thereby bringing the rate back into an alignment that had existed when the facility was\nestablished as a monetary policy tool. All members agreed that the postmeeting statement should\naffirm their strong commitment both to supporting maximum employment and to returning inflation to\nthe Committee’s 2 percent objective. Members agreed that, in assessing the appropriate stance of monetary policy, the Committee would\ncontinue to monitor the implications of incoming information for the economic outlook. They would be\nprepared to adjust the stance of monetary policy as appropriate if risks emerged that could impede\nthe attainment of the Committee’s goals. Members also agreed that their assessments would take\ninto account a wide range of information, including readings on labor market conditions, inflation\npressures and inflation expectations, and financial and international developments.\n\n12 December 17–18, 2024\nAt the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the System Open Market Account in\naccordance with the following domestic policy directive, for release at 2:00 p.m.:\n“Effective December 19, 2024, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4¼ to 4½ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n4.5 percent and with an aggregate operation limit of $500 billion.\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.25 percent and with a per-counterparty limit of $160 billion per day. Setting this rate\nat the bottom of the target range for the federal funds rate is intended to support\neffective monetary policy implementation and the smooth functioning of short-term\nfunding markets.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$25 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.\n• Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement\nof the Federal Reserve’s agency MBS transactions.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the\nunemployment rate has moved up but remains low. Inflation has made progress toward the\nCommittee’s 2 percent objective but remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. The Committee judges that the risks to achieving its employment and\n\nMinutes of the Federal Open Market Committee 13\ninflation goals are roughly in balance. The economic outlook is uncertain, and the Committee\nis attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to lower the target range for the federal funds\nrate by ¼ percentage point to 4¼ to 4½ percent. In considering the extent and timing of\nadditional adjustments to the target range for the federal funds rate, the Committee will\ncarefully assess incoming data, the evolving outlook, and the balance of risks. The\nCommittee will continue reducing its holdings of Treasury securities and agency debt and\nagency mortgage-backed securities. The Committee is strongly committed to supporting\nmaximum employment and returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr, Raphael\nW. Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C. Daly, Philip N. Jefferson, Adriana D. Kugler, and\nChristopher J. Waller. Voting against this action: Beth M. Hammack. President Hammack dissented because she preferred to maintain the target range for the federal\nfunds rate at 4½ to 4¾ percent, in light of uneven progress in returning inflation to 2 percent, the\nstrength of the economy and the labor market, and the state of financial conditions. In her view, with\nthe current federal funds rate not far from neutral, holding the funds rate at a modestly restrictive\nstance for a time was appropriate to ensure that inflation returns to 2 percent in a timely fashion. Consistent with the Committee's decision to lower the target range for the federal funds rate to 4¼ to\n4½ percent, the Board of Governors of the Federal Reserve System voted unanimously to lower the\ninterest rate paid on reserve balances to 4.4 percent, effective December 19, 2024. The Board of\n\n14 December 17–18, 2024\nGovernors of the Federal Reserve System voted unanimously to approve a ¼ percentage point\ndecrease in the primary credit rate to 4.5 percent, effective December 19, 2024.2\nIt was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday,\nJanuary 28–29, 2025. The meeting adjourned at 10:10 a.m. on December 18, 2024. Notation Vote\nBy notation vote completed on November 25, 2024, the Committee unanimously approved the\nminutes of the Committee meeting held on November 6–7, 2024. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nThomas I. Barkin\nMichael S. Barr\nRaphael W. Bostic\nMichelle W. Bowman\nLisa D. Cook\nMary C. Daly\nBeth M. Hammack\nPhilip N. Jefferson\nAdriana D. Kugler\nChristopher J. Waller\nSusan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, Jeffrey R. Schmid, and Sushmita Shukla,\nAlternate Members of the Committee\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Presidents of the Federal Reserve Banks of\nPhiladelphia, Minneapolis, and Dallas, respectively\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nShaghil Ahmed, James A. Clouse, Brian M. Doyle, Edward S. Knotek II, David E. Lebow, Sylvain Leduc,\nand William Wascher, Associate Economists\n2 In taking this action, the Board approved requests to establish that rate submitted by the Board of Directors of the Federal\nReserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and San Francisco. The vote also\nencompassed approval by the Board of Governors of the establishment of a 4.5 percent primary credit rate by the remaining\nFederal Reserve Banks, effective on December 19, 2024, or the date such Reserve Banks inform the Secretary of the Board of\nsuch a request. (Secretary’s note: Subsequently, the Federal Reserve Banks of St. Louis, Minneapolis, Kansas City, and Dallas\nwere informed of the Board’s approval of their establishment of a primary credit rate of 4.5 percent, effective December 19,\n2024.)\n\nMinutes of the Federal Open Market Committee 15\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nStephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nAndrea Ajello, Section Chief, Division of Monetary Affairs, Board\nDavid Altig, Executive Vice President, Federal Reserve Bank of Atlanta\nRoc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia\nAlyssa Arute,3 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\nAlessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nStephanie E. Curcuru, Deputy Director, Division of International Finance, Board\nRiccardo DiCecio, Economic Policy Advisor, Federal Reserve Bank of St. Louis\nEric M. Engen, Senior Associate Director, Division of Research and Statistics, Board\nEric C. Engstrom, Associate Director, Division of Monetary Affairs, Board\nAndrew Figura, Associate Director, Division of Research and Statistics, Board\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nMichael S. Gibson, Director, Division of Supervision and Regulation, Board\nJoseph W. Gruber, Executive Vice President, Federal Reserve Bank of Kansas City\nChristopher J. Gust,3 Associate Director, Division of Monetary Affairs, Board\nJames Hebden, Principal Economic Modeler, Division of Monetary Affairs, Board\nFrançois Henriquez, First Vice President, Federal Reserve Bank of St. Louis\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nBart Hobijn, Senior Economist and Economic Advisor, Federal Reserve Bank of Chicago\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nJordan R. Keitelman,3 Senior Financial Institution Policy Analyst II, Division of Reserve Bank Operations\nand Payment Systems, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nDon H. Kim, Senior Adviser, Division of Monetary Affairs, Board\nAnna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond\nAndreas Lehnert, Director, Division of Financial Stability, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\n3 Attended through the discussion of developments in financial markets and open market operations.\n\n16 December 17–18, 2024\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nDina Tavares Marchioni,3 Director of Money Markets, Federal Reserve Bank of New York\nJonathan P. McCarthy, Economic Research Advisor, Federal Reserve Bank of New York\nBenjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board\nKarel Mertens, Senior Vice President, Federal Reserve Bank of Dallas\nAnn E. Misback, Secretary, Office of the Secretary, Board\nEdward Nelson, Senior Adviser, Division of Monetary Affairs, Board\nAlyssa O’Connor, Special Adviser to the Board, Division of Board Members, Board\nAnna Orlik, Principal Economist, Division of Monetary Affairs, Board\nMichael G. Palumbo, Senior Associate Director, Division of Research and Statistics, Board\nAnder Perez-Orive, Principal Economist, Division of Monetary Affairs, Board\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nAlbert Queralto,4 Section Chief, Division of International Finance, Board\nOdelle Quisumbing,5 Assistant to the Secretary, Office of the Secretary, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nDenise L. Redfearn,6 Administrative Specialist, Office of the Secretary, Board\nAchilles Sangster II, Lead Information Manager, Division of Monetary Affairs, Board\nShane M. Sherlund, Associate Director, Division of Research and Statistics, Board\nClara Vega, Special Adviser to the Board, Division of Board Members, Board\nMin Wei, Senior Associate Director, Division of Monetary Affairs, Board\nRandall A. Williams, Group Manager, Division of Monetary Affairs, Board\nPaul R. Wood, Special Adviser to the Board, Division of Board Members, Board\nInes Xavier, Senior Economist, Division of Monetary Affairs, Board\nEgon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston\n_______________________\nJoshua Gallin\nSecretary\n4 Attended Tuesday’s session only.\n5 Attended through the discussion of the economic and financial situation.\n6 Attended opening remarks for Tuesday session only.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20241218.pdf",
+    "action": "Lowered",
+    "rate": "4.25%-4.50%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled it will slow the pace of future rate cuts and emphasized a cautious, data-dependent approach. Additional rate adjustments will depend on incoming economic data, the evolving outlook, and the balance of risks, particularly regarding inflation and labor market conditions.",
+    "key_economic_factors": [
+      "Inflation remains above the 2% target, with recent readings higher than expected, especially in core services and shelter costs.",
+      "Labor market conditions have eased but remain solid, with low unemployment and steady wage growth around 4%.",
+      "Economic growth has been strong, supported by solid consumer spending, rising real wages, and favorable supply-side developments.",
+      "Uncertainty around potential changes in trade, immigration, and fiscal policy is complicating the inflation outlook and increasing upside risks."
+    ],
+    "economic_outlook": "The Fed expects solid economic growth to continue, with inflation gradually moving toward 2% over the next few years but taking longer than previously anticipated. The labor market is expected to remain strong, though some participants see risks of further softening. Overall, the risks to both employment and inflation goals are viewed as roughly balanced, but with elevated uncertainty.",
+    "market_impact": "Markets can expect fewer and smaller rate cuts in 2025, leading to higher-for-longer borrowing costs for businesses and consumers. This may support the U.S. dollar and keep pressure on risk assets, while mortgage and loan rates remain elevated despite slight recent declines."
+  },
+  {
+    "date": "2024-11-07",
+    "title": "FOMC Meeting 2024-11-07",
+    "full_text": "1\nMinutes of the Federal Open Market\nCommittee\nNovember 6–7, 2024\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Wednesday, November 6, 2024,\nat 10:00 a.m. and continued on Thursday, November 7, 2024, at 9:00 a.m.1\nDevelopments in Financial Markets and Open Market Operations\nThe manager turned first to a review of developments in financial markets. Nominal Treasury yields\nrose notably over the period; factors driving the increases in yields included stronger-than-expected\ndata releases and monetary policy communications that were interpreted as signaling a more gradual\npace of policy easing than previously thought. The rise at short maturities reflected increases in both\nreal yields and inflation compensation, while the rise at longer maturities was primarily driven by\nincreases in real yields. Broad equity prices also rose over the period, likely reflecting in part the solid\nincoming data and consequent lower odds of a weakening in the economic outlook. The VIX, which\nmeasures 30-day option-implied volatility of broad equity prices, had moved higher in the period\nleading up to the November elections and then decreased following Election Day. The manager noted that the federal funds rate path had shifted up notably over the period, as\nmeasured by both the options-implied modal path and the futures-implied average path. Although the\nfutures-implied path remained below the options-implied path at longer horizons, the gap between the\ntwo paths narrowed, likely reflecting market participants’ judgment that risks had become less skewed\ntoward the downside. In the Open Market Desk’s Survey of Primary Dealers and Survey of Market\nParticipants, a large majority of respondents had a modal expectation of a 25 basis point cut at this\nmeeting and another 25 basis point cut at the December meeting. Further out, there was\nconsiderably more uncertainty. For example, although the mean of the average respondent’s\nprobability distribution for the federal funds rate at the trough of this easing cycle was close to the\naverage respondent’s expected longer-run level of the federal funds rate, respondents placed\nsubstantial weight on a wide range of outcomes. The manager also discussed balance sheet policy expectations. The average of the survey responses\nindicated that the modal expectation regarding the timing of the end of balance sheet runoff had\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 November 6–7, 2024\nshifted a bit later, to May 2025. These responses remained dispersed, though roughly two-thirds of\nrespondents expected an end to runoff in either the first or the second quarter of 2025. Survey\nresults indicated that respondents expected balance sheet runoff to continue alongside rate cuts for\nseveral more months; the surveys therefore suggested that the Committee’s two policy tools—the\npolicy rate and the balance sheet—were not seen as working at cross-purposes. Regarding international developments, the manager noted that policy rate expectations for the yearend declined in most advanced foreign economies (AFEs), with the exception of Australia and the U.K. The widening of differentials with U.S. interest rates had likely contributed to an increase in the tradeweighted dollar index, which reached its highest level this year. The manager then turned to money markets and Desk operations. Unsecured overnight rates\nremained stable over the intermeeting period. In secured funding markets, rates on overnight\nrepurchase agreements (repo) increased sharply and were volatile around the September quarter-end\nbut, on other dates, generally stayed just above the rate offered at the overnight reverse repurchase\nagreement (ON RRP) facility. Market contacts attributed the pressures seen around the quarter-end to\na combination of typical balance sheet constraints associated with financial reporting dates and a\nlarge net settlement of Treasury coupon securities that took place on the same day. Overall,\ndevelopments in the repo market at the end of September and in early October appeared to conform\nwith the typical quarter-end pattern, although the spike in repo rates observed on those days was the\nlargest in the post-pandemic period. The September quarter-end also saw the first non-test use of the standing repo facility (SRF), with two\ncounterparties borrowing $2.6 billion. The manager noted that the relatively small utilization was not\nsurprising, as repo rates in the noncentrally cleared segment of the triparty repo market—in which the\nfacility operates—did not exceed the SRF rate for the most part. The manager also observed that there\nwas a substantial volume of trades taking place above the SRF rate around quarter-end in other\nsegments of the repo market. The manager indicated that, with dealers typically earning a spread in\ntheir intermediation activity, this outcome was not surprising. The manager suggested that\nconsiderations related to market structure also helped explain why repo rates were above the SRF\nrate in those segments at quarter-end. Overall, the manager judged that the SRF performed about in\nline with the Desk’s expectations. Usage of the ON RRP facility declined about $140 billion over the intermeeting period. This decline\nappeared to be driven primarily by additional net Treasury bill supply in recent weeks, which made\nTreasury bill yields more attractive. The manager also noted that, of late, the largest ON RRP\nparticipants had substantially reduced their participation at the facility, leading to a less concentrated\nconfiguration of ON RRP take-up than had been the case for some time.\n\nMinutes of the Federal Open Market Committee 3\nOver the intermeeting period, pricing in the federal funds market continued to be insensitive to day-today changes in the supply of reserves. The manager noted that this outcome was consistent with\nreserves remaining abundant and that various other indicators pointed to the same conclusion. The staff also provided an informational briefing to the Committee on two considerations related to\nthe management of the balance sheet over the near term. The first consideration focused on the\npossibility of a technical adjustment to the ON RRP offering rate. The staff reviewed developments\nwith respect to the usage of the ON RRP facility. The staff also noted that lowering the ON RRP\noffering rate 5 basis points would align the ON RRP offering rate with the bottom of the target range\nfor the federal funds rate and would probably put some downward pressure on other money market\nrates. The second consideration focused on the possible implications for the composition of Federal Reserve\nliabilities stemming from the federal debt limit potentially being reinstated in 2025. The staff\npresentation highlighted the fact that, should this event occur, a drawdown in the Treasury General\nAccount (TGA) balances would increase the sum of reserves and ON RRP balances, and that a\nsubsequent rebuilding of TGA balances would have the reverse effect. The staff noted that these\nsubstantial shifts could mask the effects of ongoing balance sheet runoff on money market conditions\nand pose challenges in assessing reserve conditions. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that real gross domestic product (GDP)\nhad expanded solidly so far this year. The pace of job gains had moderated since the beginning of the\nyear, and the unemployment rate had moved up, on net, but remained low. Consumer price inflation\nwas well below its year-earlier pace. Consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—had moved lower in August and September. Total PCE price\ninflation was 2.1 percent in September, and core PCE price inflation—which excludes changes in\nenergy prices and many consumer food prices—was 2.7 percent. Recent data suggested that labor market conditions remained solid. Average monthly nonfarm payroll\ngains in the third quarter were similar to those seen in the second quarter. October job gains were\nheld down noticeably by the effects of strikes and hurricanes. The unemployment rate had edged\ndown slightly since August and was 4.1 percent in October; the labor force participation rate also\n\n4 November 6–7, 2024\nticked down over this period, and the employment-to-population ratio was unchanged on net. The\nunemployment rates for African Americans and for Hispanics moved down; both rates were above\nthose for Asians and for Whites. The ratio of job vacancies to unemployment was 1.1 in October,\nslightly lower than its level just before the pandemic. Average hourly earnings for all employees rose\n4 percent over the 12 months ending in October, down 0.3 percentage point relative to a year earlier,\nand the 12-month change in the employment cost index of hourly compensation for private industry\nworkers was 3.6 percent in September, down 0.7 percentage point from its year-earlier pace. According to the advance release, real GDP posted a solid gain in the third quarter that was similar to\nits second-quarter pace. Real private domestic final purchases—which comprises PCE and private\nfixed investment and which often provides a better signal than GDP of underlying economic\nmomentum—rose slightly faster than real GDP in the third quarter. Net exports were a drag on thirdquarter real GDP growth, as a brisk rise in exports was outpaced by even faster import growth. Real GDP growth in foreign economies picked up somewhat in the third quarter, including in the euro\narea and, especially, Mexico. In China, growth also firmed in the third quarter, and there were signs\nthat recent fiscal stimulus measures were starting to shore up confidence. That said, more recent\nindicators, such as purchasing managers indexes (PMIs), continued to suggest ongoing weakness in\nforeign manufacturing, in part due to monetary policies still being restrictive. Inflation abroad continued to ease. In the advanced AFEs excluding Japan, 12-month headline\ninflation slowed to near or below target levels, mainly reflecting the rapid pass-through of lower energy\nprices earlier this year. At the same time, services inflation remained high in these economies. In\nChina, core inflation fell to its lowest level since the Global Financial Crisis. By contrast, in some Latin\nAmerican countries, notably Brazil, inflation increased, partly because of renewed food price\npressures. Many foreign central banks eased policy during the intermeeting period, including the Bank of Canada\nand the European Central Bank among the AFEs and the central banks of Colombia, Mexico, Korea,\nthe Philippines, and Thailand among the emerging market economies. Staff Review of the Financial Situation\nThe expected path of the federal funds rate implied by financial market quotes increased notably over\nthe intermeeting period amid stronger-than-expected data releases pertaining to economic activity,\nsomewhat higher-than-expected readings on inflation, and comments by some FOMC participants that\nwere interpreted as signaling a more gradual approach to recalibrating the stance of monetary policy. Consistent with a higher expected path of the federal funds rate and a shift in investors’ perceptions\nof the balance of risks, nominal Treasury yields across the maturity spectrum increased significantly.\n\nMinutes of the Federal Open Market Committee 5\nThe increase in longer-term yields appeared to be mostly attributable to higher term premiums—\nconsistent with investors’ perceived shift in the balance of risks away from outcomes characterized by\nslower real GDP growth and lower inflation. Market-based measures of inflation compensation moved\nup over the period from relatively low levels, while survey-based measures of longer-term inflation\nexpectations were little changed. These measures continued to suggest an expectation that inflation\nwould return over time to the Committee’s 2 percent objective. Despite higher yields, and amid greater confidence about the growth outlook and somewhat betterthan-expected corporate earnings reports, broad equity price indexes increased notably, on net, over\nthe intermeeting period, and credit spreads for both corporate and municipal bonds narrowed. The\nVIX rose appreciably, reportedly reflecting uncertainty about the outcome of the U.S. presidential\nelection and escalating tensions in the Middle East. However, it subsequently more than retraced\nthose increases, ending the period moderately lower and slightly below the median of its historical\ndistribution. Conditions in U.S. short-term funding markets remained generally stable over the intermeeting period,\nwith the lowering of the target range for the federal funds rate in September fully passing through to\nboth secured and unsecured reference rates. Rates in secured markets exhibited significant but\ntemporary upward pressure around the September quarter-end, driven by typical quarter-end\ndynamics and a large net Treasury coupon settlement. Over the intermeeting period, government\nmoney market funds (MMFs) continued to increase allocations to Treasury bills and private repo in\nlight of the generally favorable rates on these instruments; usage of the ON RRP facility declined\nsignificantly over the period. Over the intermeeting period, foreign financial markets were driven by greater investor confidence in\nthe U.S. economic outlook, foreign economic data releases, and political developments. Higher U.S. Treasury yields spilled over to foreign yields across the curve, though softer-than-expected inflation\nand PMI survey data weighed on short-term yields in the euro area. In the U.K., yields increased\nfollowing the release of the new government’s budget as market participants processed the budget’s\nimpact on projected inflation and gilt issuance. The broad dollar index increased significantly, as U.S.\ninterest rates rose more than foreign rates. In China, the announcement of new policy stimulus\nmeasures boosted domestic risky asset prices, with limited spillovers to other markets; the\nannouncements also drove notable flows into China-focused investment funds. Most European equity\nprice indexes decreased somewhat, while Japanese and Canadian equity markets rose moderately. In domestic credit markets, borrowing costs for households and most businesses rose over the\nintermeeting period from already elevated levels, primarily reflecting increases in longer-term Treasury\nyields. Rates on 30-year fixed-rate conforming residential mortgages rose, while interest rates on\n\n6 November 6–7, 2024\ncredit cards remained relatively unchanged at near historical highs. By contrast, interest rates on new\nauto loans edged down but remained elevated. Meanwhile, interest rates on commercial and\nindustrial (C&I) loans and small business loans continued to be elevated. Yields also rose on an array\nof fixed-income securities, including commercial mortgage-backed securities (CMBS), investment- and\nspeculative-grade corporate bonds, and residential mortgage-backed securities. Over the intermeeting period, financing through capital markets and nonbank lenders remained\nbroadly available for public corporations and for large and midsize private corporations. For smaller\nfirms, however, credit availability remained relatively tight. In the October Senior Loan Officer Opinion\nSurvey on Bank Lending Practices (SLOOS), banks, on net, reported maintaining their lending\nstandards and most terms basically unchanged for C&I loans.2 Meanwhile, net growth in C&I loan\nbalances remained subdued in August and September. With respect to commercial real estate (CRE)\nloans, banks in the October SLOOS reported, on balance, basically unchanged lending standards for\nall categories of CRE loans, the first survey since early 2022 in which standards on CRE loans of every\ncategory have not tightened. Bank CRE loan balances were flat in the third quarter, partly reflecting\nlending standards staying on the tighter end of the range prevailing since 2005. Credit remained available for most consumers, although consumer credit availability continued to\ntighten moderately through September. Credit card balances expanded modestly in the third quarter,\nwhile auto credit growth continued to slow through August. In the October SLOOS, respondents, on\nnet, indicated that standards for credit cards tightened, but most of them reported no change in\nlending standards for auto loans. Access to credit in the residential mortgage market was little\nchanged, on balance, and continued to depend on borrowers’ credit risk attributes. In the October\nSLOOS, banks, on net, moderately eased residential lending standards. Credit quality remained solid in the cases of large and midsize firms, most home mortgage borrowers,\nand municipalities, but it continued to deteriorate in other sectors. The credit quality of nonfinancial\nfirms borrowing in the corporate bond and leveraged loan markets remained stable. Delinquency\nrates on loans to small businesses remained modestly above pre-pandemic levels. Credit quality in\nthe CRE market deteriorated further, with the average delinquency rate on loans in CMBS pools rising\nfurther in September, driven largely by office loans. Regarding household credit quality, delinquency\nrates on most residential mortgages were largely unchanged in September at about their historical\nlow. Delinquency rates for credit cards increased a bit further in the third quarter, while delinquency\nrates on auto loans inched down.\n2 The SLOOS results reported are based on banks’ responses, weighted by each bank’s outstanding loans in the respective loan\ncategory, and might therefore differ from the results reported in the published SLOOS, which are based on banks’ unweighted\nresponses.\n\nMinutes of the Federal Open Market Committee 7\nThe staff provided an update on its assessment of the stability of the U.S. financial system and, on\nbalance, continued to characterize the system’s financial vulnerabilities as notable. The staff judged\nthat asset valuation pressures were elevated, with estimates of risk premiums across key markets low\nby historical standards. House prices remained elevated relative to fundamentals such as rents. Although the pace of decline in CRE prices slowed, fundamentals continued to deteriorate across\nmultiple categories. Vulnerabilities associated with business and household debt were characterized as moderate. Nonfinancial business leverage was elevated by historical standards, but the ability of publicly traded\nfirms to service their debt remained strong, supported by robust earnings and the low interest rates\nthat firms continued to enjoy on the portion of fixed-rate debt issued early in the pandemic. That said,\nthe fraction of private firm debt having very low interest coverage ratios continued to increase,\npointing to further deterioration in the balance sheets of riskier firms. Household balance sheets\nremained solid overall, as aggregate home equity remained high and delinquencies on mortgage loans\ncontinued to be low. Vulnerabilities associated with leverage in the financial sector were characterized as notable. Regulatory capital ratios in the banking sector remained high; however, banks continued to hold large\nquantities of long-duration assets, leaving them more exposed than usual to an unexpected rise in\nlonger-term interest rates. In the nonbank sector, leverage at hedge funds remained high, partly on\naccount of the prevalence of the Treasury cash–futures basis trade. Life insurers’ leverage remained\nsomewhat elevated, and they continued to maintain large holdings of risky and illiquid securities. By\ncontrast, broker-dealer leverage remained low, as their capital increased in line with their assets. Vulnerabilities associated with funding risks were also characterized as notable. Assets in prime\nMMFs and other runnable cash-management vehicles remained near historical highs. Life insurers’\ngreater reliance on nontraditional liabilities suggested that adverse shocks to the industry could\ntrigger substantial funding pressures at these firms. Staff Economic Outlook\nThe staff forecast at the November meeting called for economic conditions to remain solid. Relative\nto September, the real GDP growth projection for 2024 as a whole was higher, reflecting strongerthan-expected spending and labor market indicators. The staff had revised up their assessment of\npotential output growth in light of the upward revisions to productivity implied by the recent annual\nupdate of the national income and product accounts. From 2025 to 2027, real GDP growth was\nexpected to be slightly slower than potential output growth, resulting in a very small increase in the\nunemployment rate.\n\n8 November 6–7, 2024\nThe staff’s inflation forecast for 2024 was slightly higher than the one prepared for the previous\nmeeting, reflecting incoming data. Thereafter, the outlook was similar to the previous projection: Both\ntotal and core PCE price inflation were expected to decline further as supply and demand in labor and\nproduct markets continued to move into better balance; by 2026, total and core inflation were\nexpected to be 2 percent. The staff continued to view the uncertainty around the baseline projection as close to the average over\nthe past 20 years. The staff had reduced its assessment of the downward risks to the baseline\nforecast for economic activity in light of incoming data. Nevertheless, the staff judged that these risks\nwere somewhat skewed to the downside: Although current labor market conditions remained solid, it\nwas possible that the easing in the labor market seen over the past two years could give way to a\nmore pronounced slowdown in economic activity. The risks around the inflation forecast were seen as\nroughly balanced. Participants’ Views on Current Conditions and the Economic Outlook\nIn their discussion of inflation developments, participants continued to observe that inflation had\neased substantially from its peak, although core inflation remained somewhat elevated. Almost all\nparticipants judged that, though month-to-month movements would remain volatile, incoming data\ngenerally remained consistent with inflation returning sustainably to 2 percent. Participants\ncommented that disinflationary progress had been seen across a broad range of core goods and\nservices prices. Notably, in both the core goods and nonhousing services categories, prices were now\nincreasing at rates close to those seen during earlier periods of price stability. Many participants\nnoted that the slowing in these components of core inflation corroborated reports received from their\nbusiness contacts that firms were more reluctant to increase prices, as consumers appeared to be\nmore price sensitive and were increasingly seeking discounts. Some participants remarked that\nalthough increases in housing services prices remained somewhat elevated, they continued to expect\nthat these increases would slow, as the more subdued pace of rent increases faced by new tenants\nwould eventually be reflected further in housing services prices. With regard to the outlook for inflation, participants indicated that they remained confident that\ninflation was moving sustainably toward 2 percent, although a couple noted the possibility that the\nprocess could take longer than previously expected. A few participants remarked that insofar as\nrecent robust increases in real GDP reflected favorable supply developments, the strength of\neconomic activity was unlikely to be a source of upward inflation pressures. Participants cited various\nfactors likely to put continuing downward pressure on inflation, including waning business pricing\npower, the Committee’s still-restrictive monetary policy stance, and well-anchored longer-term inflation\nexpectations. Several participants noted that nominal wage growth had continued to move down and\n\nMinutes of the Federal Open Market Committee 9\nthat the wage premium available to job switchers had diminished. In addition, some participants\nobserved that, with supply and demand in the labor market being roughly in balance and in light of\nrecent productivity gains, wage increases were unlikely to be a source of inflationary pressure in the\nnear future. In discussing labor market developments, participants generally viewed recent readings as consistent\nwith labor market conditions remaining solid, although labor strikes and the devastating hurricanes\nhad been important sources of temporary fluctuations in the employment data. Participants\ncontinued to cite declines in job vacancies, the quits rate, and turnover as consistent with a gradual\neasing in labor demand. Some participants reported that businesses were becoming more selective in\nhiring as they faced larger pools of more qualified job applicants, and job applicants were more willing\nto accept less accommodative work arrangements and more moderate wage offers. Participants\ngenerally noted, however, that there was no sign of rapid deterioration in labor market conditions, with\nlayoffs remaining low. A few participants cited business contacts who were using attrition, instead of\nlayoffs, to manage the size of their workforce. Some participants observed that the evaluation of\nunderlying trends in labor market developments had continued to be challenging— with difficulties in\nmeasuring the effects of immigration on labor supply, revisions to data, and the effects of natural\ndisasters and labor strikes among the factors cited as complicating this evaluation—and that\nassessments of the outlook for the labor market were associated with considerable uncertainty. Participants generally judged that current labor market conditions were broadly consistent with the\nCommittee’s longer-run goal of maximum employment. With regard to the outlook for the labor market, participants generally anticipated that with an\nappropriate recalibration of the Committee’s monetary policy stance over time, the labor market would\nremain solid. Participants generally agreed that labor market indicators merited close monitoring. Some participants still saw elevated risks that the labor market could deteriorate, though many\nparticipants saw the risk of an excessive cooling in the labor market as having diminished somewhat\nsince the Committee’s September meeting. Participants observed that recent data on economic activity and consumer spending were largely\nstronger than anticipated, and they assessed that economic activity had continued to expand at a\nsolid pace and consumer spending remained strong. Participants remarked that consumption had\nbeen supported by a solid labor market, rising real wages, and elevated household wealth. Many\nparticipants observed that recent upward revisions in data on household income and the saving rate\nhad made these series’ behavior more consistent with the strength in consumer spending. However,\nseveral participants cautioned that low- and moderate-income households continued to experience\nfinancial strains, which could damp their spending. A couple of participants cited recent increases in\nrates of delinquencies on credit card borrowing and automobile loans as signs of such strains.\n\n10 November 6–7, 2024\nRegarding the business sector, a few participants noted that favorable aggregate supply\ndevelopments—including increases in labor supply, business investment, and productivity—continued\nto support solid expansion of business activity. A couple of participants remarked that there was\nconsiderable uncertainty about the durability of recent rates of increase in productivity. Although a\nfew participants attributed some of the productivity gains to potentially transitory factors—such as onetime efficiency gains in response to earlier labor shortages—or the possible underestimation of labor\ninputs, some participants highlighted more durable factors, such as new business formation and\ninvestment, as well as the integration into the workplace of technological advances. A couple of\nparticipants discussed some of these recent trends, noting especially possible implications of the\nexpanded use of artificial intelligence in the workplace. Several participants indicated that their\nDistrict contacts reported larger corporations and firms in sectors like financial services, construction,\nprofessional services, and technology as having a generally more optimistic outlook than smaller\nbusinesses or firms in the manufacturing sector. Several participants remarked that the agricultural\nsector continued to face significant strains due to low crop prices and high input costs. In participants’ evaluation of the risks and uncertainties associated with the economic outlook, upside\nrisks to the inflation outlook were seen as little changed, while downside risks to employment and\ngrowth were seen as having decreased somewhat. Among the upside risks to inflation cited by\nparticipants were the possibility of sudden disruptions in global supply chains due to geopolitical\ndevelopments, a larger-than-anticipated easing in financial conditions, stronger-than-expected\nconsumption, more-persistent shelter price increases, or sharp rises in insurance charges for health,\nautos, or homes. Some participants pointed to various downside risks to economic activity and\nemployment, including weaker global growth, sharply worsening financing conditions due to an\nescalation of geopolitical tensions or a sizable asset price correction, or an unwelcome weakening of\nthe labor market. Almost all participants judged the risks to the attainment of their dual-mandate\nobjectives of maximum employment and price stability to be roughly in balance. In their discussion of financial stability, participants who commented noted vulnerabilities to the\nfinancial system that they assessed warranted monitoring. A couple of participants observed that the\nbanking system was sound but that there continued to be potential risks associated with unrealized\nlosses on bank assets. Many participants discussed vulnerabilities associated with CRE exposures,\nfocusing on risks in the office sector. A few of these participants noted signs that the deterioration of\nconditions in this sector of the CRE market might be lessening. A couple of participants noted\nconcerns about asset valuation pressures in other markets. Some participants commented on cyber\nrisks that could impair the operation of financial institutions, financial infrastructure, and, potentially,\nthe overall economy; these participants noted, in particular, vulnerabilities that could emanate from\nthird-party service providers. A couple of participants also mentioned third-party service providers in\n\nMinutes of the Federal Open Market Committee 11\nthe context of risks associated with brokered and reciprocal deposit arrangements. Several\nparticipants noted that leverage in the market for Treasury securities remained a risk and commented\nthat it would be important to monitor developments regarding the market’s resilience. A few\nparticipants discussed vulnerabilities posed by the growth of private credit and potential links to banks\nand other financial institutions. A couple of participants commented on the financial condition of lowand moderate-income households that have exhausted their savings and the importance of\nmonitoring rising delinquency rates on credit cards and auto loans. A couple of participants remarked\non the successful implementation of the Securities and Exchange Commission’s money fund rules,\nnoting that it would reduce financial stability risks posed by domestic MMFs. In their consideration of monetary policy at this meeting, participants noted that inflation had made\nprogress toward the Committee’s objective but remained somewhat elevated. Participants also\nobserved that recent indicators suggested that economic activity had continued to expand at a solid\npace, labor market conditions had generally eased since earlier in the year, and the unemployment\nrate had moved up but remained low. Almost all participants judged that the risks to achieving the\nCommittee's employment and inflation goals were roughly in balance. In support of the Committee’s\ngoals, all participants viewed it as appropriate to lower the target range for the federal funds rate by\n25 basis points to 4½ to 4¾ percent. Participants observed that such a further recalibration of the\nmonetary policy stance would help maintain the strength in the economy and the labor market while\ncontinuing to enable further progress on inflation. Participants judged that it was appropriate to\ncontinue the process of reducing the Federal Reserve’s securities holdings. In discussing the outlook for monetary policy, participants anticipated that if the data came in about\nas expected, with inflation continuing to move down sustainably to 2 percent and the economy\nremaining near maximum employment, it would likely be appropriate to move gradually toward a more\nneutral stance of policy over time. Participants noted that monetary policy decisions were not on a\npreset course and were conditional on the evolution of the economy and the implications for the\neconomic outlook and the balance of risks; they stressed that it would be important for the Committee\nto make this clear as it adjusted its policy stance. While emphasizing that monetary policy would be\ndata dependent, many participants noted the volatility of recent economic data and highlighted the\nimportance of focusing on underlying economic trends and the evolution of the outlook when\nassessing incoming information. Some participants remarked that, at a future meeting, there would\nbe value in the Committee considering a technical adjustment to the rate offered at the ON RRP\nfacility to set the rate equal to the bottom of the target range for the federal funds rate, thereby\nbringing the rate back into an alignment that had existed when the facility was established as a\nmonetary policy tool.\n\n12 November 6–7, 2024\nIn discussing risk-management considerations that could bear on the outlook for monetary policy,\nalmost all participants agreed that risks to achieving the Committee’s employment and inflation goals\nremained roughly in balance. Some participants judged that downside risks to economic activity or\nthe labor market had diminished. Participants noted that monetary policy would need to balance the\nrisks of easing policy too quickly, thereby possibly hindering further progress on inflation, with the risks\nof easing policy too slowly, thereby unduly weakening economic activity and employment. In\ndiscussing the positioning of monetary policy in response to potential changes in the balance of risks,\nsome participants noted that the Committee could pause its easing of the policy rate and hold it at a\nrestrictive level if inflation remained elevated, and some remarked that policy easing could be\naccelerated if the labor market turned down or economic activity faltered. Many participants observed\nthat uncertainties concerning the level of the neutral rate of interest complicated the assessment of\nthe degree of restrictiveness of monetary policy and, in their view, made it appropriate to reduce policy\nrestraint gradually. Committee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that economic activity had\ncontinued to expand at a solid pace. Labor market conditions had generally eased since earlier in the\nyear, and the unemployment rate had moved up but remained low. Members concurred that inflation\nhad made progress toward the Committee’s 2 percent inflation objective but that inflation remained\nsomewhat elevated. In discussing the Committee’s statement, members agreed that it was\nappropriate to omit the previous reference to their greater confidence that inflation was moving\nsustainably toward 2 percent, as this language had been specifically associated with the\ncommencement of policy easing in September and therefore was no longer needed. Almost all\nmembers agreed that the risks to achieving the Committee’s employment and inflation goals were\nroughly in balance. Members viewed the economic outlook as uncertain and agreed that they were\nattentive to the risks to both sides of the Committee’s dual mandate. In support of its goals, the Committee decided to lower the target range for the federal funds rate by\n25 basis points to 4½ to 4¾ percent. Members concurred that, in considering additional adjustments\nto the target range for the federal funds rate, they would carefully assess incoming data, the evolving\noutlook, and the balance of risks. Members agreed to continue to reduce the Federal Reserve’s\nholdings of Treasury securities and agency debt and agency mortgage-backed securities. All members\nagreed that the postmeeting statement should affirm their strong commitment both to supporting\nmaximum employment and to returning inflation to the Committee’s 2 percent objective. Members agreed that, in assessing the appropriate stance of monetary policy, they would continue to\nmonitor the implications of incoming information for the economic outlook. They would be prepared to\n\nMinutes of the Federal Open Market Committee 13\nadjust the stance of monetary policy as appropriate if risks emerged that could impede the attainment\nof the Committee’s goals. Members also agreed that their assessments would take into account a\nwide range of information, including readings on labor market conditions, inflation pressures and\ninflation expectations, and financial and international developments. At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the System Open Market Account in\naccordance with the following domestic policy directive, for release at 2:00 p.m.:\n“Effective November 8, 2024, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4½ to 4¾ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n4.75 percent and with an aggregate operation limit of $500 billion.\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.55 percent and with a per-counterparty limit of $160 billion per day.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$25 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.\n• Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement\nof the Federal Reserve’s agency MBS transactions.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Recent indicators suggest that economic activity has continued to expand at a solid pace. Since earlier in the year, labor market conditions have generally eased, and the\nunemployment rate has moved up but remains low. Inflation has made progress toward the\nCommittee’s 2 percent objective but remains somewhat elevated.\n\n14 November 6–7, 2024\nThe Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. The Committee judges that the risks to achieving its employment and\ninflation goals are roughly in balance. The economic outlook is uncertain, and the Committee\nis attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to lower the target range for the federal funds\nrate by ¼ percentage point to 4½ to 4¾ percent. In considering additional adjustments to\nthe target range for the federal funds rate, the Committee will carefully assess incoming data,\nthe evolving outlook, and the balance of risks. The Committee will continue reducing its\nholdings of Treasury securities and agency debt and agency mortgage-backed securities. The\nCommittee is strongly committed to supporting maximum employment and returning inflation\nto its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr,\nRaphael W. Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C. Daly, Beth M. Hammack,\nPhilip N. Jefferson, Adriana D. Kugler, and Christopher J. Waller. Voting against this action: None. Consistent with the Committee’s decision to lower the target range for the federal funds rate to 4½ to\n4¾ percent, the Board of Governors of the Federal Reserve System voted unanimously to lower the\ninterest rate paid on reserve balances to 4.65 percent, effective November 8, 2024. The Board of\nGovernors of the Federal Reserve System voted unanimously to approve a ¼ percentage point\ndecrease in the primary credit rate to 4.75 percent, effective November 8, 2024.3\n3 In taking this action, the Board approved requests to establish that rate submitted by the Board of Directors of the Federal\nReserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Dallas, and San\nFrancisco. The vote also encompassed approval by the Board of Governors of the establishment of a 4.75 percent primary\ncredit rate by the remaining Federal Reserve Banks, effective on November 8, 2024, or the date such Reserve Banks inform the\nSecretary of the Board of such a request. (Secretary’s note: Subsequently, the Federal Reserve Banks of St. Louis and Kansas\nCity were informed of the Board’s approval of their establishment of a primary credit rate of 4.75 percent, effective November 8,\n2024.)\n\nMinutes of the Federal Open Market Committee 15\nIt was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday,\nDecember 17–18, 2024. The meeting adjourned at 10:20 a.m. on November 7, 2024. Notation Vote\nBy notation vote completed on October 8, 2024, the Committee unanimously approved the minutes of\nthe Committee meeting held on September 17–18, 2024. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nThomas I. Barkin\nMichael S. Barr\nRaphael W. Bostic\nMichelle W. Bowman\nLisa D. Cook\nMary C. Daly\nBeth M. Hammack\nPhilip N. Jefferson\nAdriana D. Kugler\nChristopher J. Waller\nSusan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, and Jeffrey R. Schmid, Alternate Members\nof the Committee\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Presidents of the Federal Reserve Banks of\nPhiladelphia, Minneapolis, and Dallas, respectively\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nShaghil Ahmed, James A. Clouse, Brian M. Doyle, Edward S. Knotek II, and William Wascher, Associate\nEconomists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nStephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nAndrea Ajello, Section Chief, Division of Monetary Affairs, Board\nGianni Amisano, Assistant Director, Division of Research and Statistics, Board\n\n16 November 6–7, 2024\nSriya Anbil,4 Group Manager, Division of Monetary Affairs, Board\nRoc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia\nAlyssa Arute,5 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\nAlessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board\nDavid Bowman, Senior Associate Director, Division of Monetary Affairs, Board\nMark A. Carlson, Adviser, Division of Monetary Affairs, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nKevin B. Clark,4 Capital Markets Trading Principal, Federal Reserve Bank of New York\nJuan Carlos Climent, Special Adviser to the Board, Division of Board Members, Board\nStephanie E. Curcuru, Deputy Director, Division of International Finance, Board\nMarco Del Negro, Economic Research Advisor, Federal Reserve Bank of New York\nAndrew T. Foerster, Senior Research Advisor, Federal Reserve Bank of San Francisco\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nPeter M. Garavuso, Lead Information Manager, Division of Monetary Affairs, Board\nCarlos Garriga, Senior Vice President, Federal Reserve Bank of St. Louis\nMichael S. Gibson, Director, Division of Supervision and Regulation, Board\nJonathan E. Goldberg, Principal Economist, Division of Monetary Affairs, Board\nBrian Gowen,4 Capital Markets Trading Principal, Federal Reserve Bank of New York\nJoseph W. Gruber, Executive Vice President, Federal Reserve Bank of Kansas City\nJames Hebden, Principal Economic Modeler, Division of Monetary Affairs, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nDon H. Kim,4 Senior Adviser, Division of Monetary Affairs, Board\nKyungmin Kim,4 Principal Economist, Division of Monetary Affairs, Board\nElizabeth K. Kiser, Senior Associate Director, Division of Research and Statistics, Board\nAnna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond\nAndreas Lehnert, Director, Division of Financial Stability, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nDan Li, Assistant Director, Division of Monetary Affairs, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\n4 Attended through the discussion of developments in financial markets and open market operations.\n5 Attended Tuesday’s session only.\n\nMinutes of the Federal Open Market Committee 17\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nJoshua S. Louria,4 Group Manager, Division of Monetary Affairs, Board\nByron Lutz, Deputy Associate Director, Division of Research and Statistics, Board\nBenjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board\nAnn E. Misback, Secretary, Office of the Secretary, Board\nLinsey Molloy,4 Associate Director, Federal Reserve Bank of New York\nKevin B. Moore, Assistant Director, Division of Research and Statistics, Board\nKindra I. Morelock, Information Services Senior Analyst, Division of Monetary Affairs, Board, and\nFederal Reserve Bank of Chicago\nNorman J. Morin, Associate Director, Division of Research and Statistics, Board\nMichelle M. Neal, Head of Markets, Federal Reserve Bank of New York\nEdward Nelson, Senior Adviser, Division of Monetary Affairs, Board\nMarcelo Ochoa, Principal Economist, Division of Monetary Affairs, Board\nAnna Paulson, Executive Vice President, Federal Reserve Bank of Chicago\nFabrizio Perri, Monetary Advisor, Federal Reserve Bank of Minneapolis\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nAndrea Prestipino, Principal Economist, Division of International Finance, Board\nOdelle Quisumbing,4 Assistant to the Secretary, Office of the Secretary, Board\nChristine Repper,5 Manager, Division of Reserve Bank Operations and Payment Systems, Board\nZeynep Senyuz,4 Deputy Associate Director, Division of Monetary Affairs, Board\nGustavo A. Suarez, Deputy Associate Director, Division of Research and Statistics, Board\nManjola Tase,4 Principal Economist, Division of Monetary Affairs, Board\nRobert L. Triplett III, First Vice President, Federal Reserve Bank of Dallas\nClara Vega, Special Adviser to the Board, Division of Board Members, Board\nAnnette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board\nJeffrey D. Walker,5 Senior Associate Director, Division of Reserve Bank Operations and Payment\nSystems, Board\nJonathan Willis, Vice President, Federal Reserve Bank of Atlanta\nPaul R. Wood, Special Adviser to the Board, Division of Board Members, Board\nEgon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston\nRebecca Zarutskie, Senior Vice President, Federal Reserve Bank of Dallas\n_______________________\nJoshua Gallin\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20241107.pdf",
+    "action": "Lowered",
+    "rate": "4.50%-4.75%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled that future rate decisions will be data-dependent, with further gradual easing likely if inflation continues to trend toward 2% and the labor market remains stable. The Committee emphasized it is not on a preset course and will adjust policy as needed based on incoming data and risks.",
+    "key_economic_factors": [
+      "Inflation has made progress toward 2% but remains somewhat elevated",
+      "Labor market conditions have eased but remain solid, with unemployment low at 4.1%",
+      "Economic activity expanded at a solid pace in 2024",
+      "Core PCE inflation was 2.7%, with housing services still elevated but expected to moderate"
+    ],
+    "economic_outlook": "The Fed expects solid economic growth to continue, with real GDP slightly below potential in coming years and unemployment rising only modestly. Inflation is projected to decline further, reaching 2% by 2026 as supply and demand come into better balance. Risks to the outlook are seen as roughly balanced, though uncertainties remain around labor market resilience and inflation persistence.",
+    "market_impact": "Lower borrowing costs should support consumer spending and business investment, while mortgage and loan rates may stabilize or decline slightly. Equity markets may gain confidence from the Fed's cautious easing, though volatility could persist if inflation or geopolitical risks flare up."
+  },
+  {
+    "date": "2024-09-18",
+    "title": "FOMC Meeting 2024-09-18",
+    "full_text": "1\nMinutes of the Federal Open Market\nCommittee\nSeptember 17–18, 2024\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Tuesday, September 17, 2024,\nat 10:30 a.m. and continued on Wednesday, September 18, 2024, at 9:00 a.m.1\nDevelopments in Financial Markets and Open Market Operations\nThe manager turned first to a review of developments in financial markets. Nominal Treasury yields\ndeclined notably over the period, driven by weaker-than-expected data releases—especially the July\nemployment report in early August—and policy communications that were seen as affirming\nexpectations that a reduction in policy restraint would begin at this meeting. The decline in nominal\nyields over the period was primarily attributable to lower expected real yields, but measures of\ninflation compensation declined as well. Broad equity prices finished the period modestly higher,\nwhile credit spreads had come off the very tight levels seen earlier this year but were still narrow by\nhistorical standards. Overall, risky asset prices were compatible with continued economic expansion. The manager also discussed the brief episode of elevated market volatility in early August. That\nepisode saw some large moves in U.S. and foreign equity indexes, equity-implied volatilities, the\ndollar–yen exchange rate, and Treasury yields. These sharp moves appeared to be the result of a\nrapid unwinding of some speculative trading positions induced by unrelated events—such as the\nunexpectedly inflation-focused communications from the Bank of Japan (BOJ) in late July and the\nweaker-than-expected U.S. employment report in early August—and amplified by technical and liquidity\nfactors. All told, the unwinding process was contained, and market functioning recovered relatively\nquickly. Turning to policy expectations, the manager noted that the market-implied policy rate path shifted\ndown materially. At the time of the September meeting, the modal path for the federal funds rate\nimplied by options prices was consistent with about 100 basis points of cuts through year-end,\ncompared with around 50 basis points at the time of the July meeting. The average path for the\nfederal funds rate obtained from futures prices also shifted notably lower and remained below the\noptions-implied modal path, likely reflecting investors’ perception that risks were tilted toward more\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 September 17–18, 2024\nrather than fewer cuts. In the Open Market Desk’s Survey of Primary Dealers and Survey of Market\nParticipants, most respondents had a modal expectation of a 25 basis point cut at this meeting,\nthough the manager also noted that, since the time of the surveys—about a week earlier—the\nprobability of a 50 basis point cut at the September meeting implied by futures prices had increased\nand exceeded the implied probability of a 25 basis point cut. The median respondent’s modal path for\nthe federal funds rate shifted down notably over the next two years, in line with the options-implied\nmodal path, and was unchanged thereafter. Balance sheet expectations in the surveys were little\nchanged from July. Most survey respondents did not appear to be concerned about an economic\ndownturn in either the near or medium term; the median dealer’s most likely path of the\nunemployment rate for the next few years was only modestly higher than that in the July survey and\nwas roughly stable around current levels. In international developments, many central banks in advanced foreign economies (AFEs) had begun\nor continued to lower policy rates during the intermeeting period, with the Bank of England (BOE)\ndeciding to initiate its rate-cutting cycle with a 25 basis point reduction and the European Central\nBank (ECB) and the Bank of Canada (BOC) delivering their second and third 25 basis point cut,\nrespectively. The market-implied expectations for year-end policy rates fell over the period for most\ncentral banks in AFEs, although by a smaller amount than they did for the Federal Reserve,\ncontributing to a modest decline in the trade-weighted U.S. dollar index. The manager then turned to money markets and Desk operations. Unsecured overnight rates\nremained stable over the intermeeting period. In secured funding markets, rates on overnight\nrepurchase agreements (repo) were higher than a few months earlier amid large issuance of Treasury\nsecurities and elevated demand for securities financing but were little changed, on net, over the\nperiod. The manager discussed the interconnections between the repo and federal funds markets,\nunderscoring the importance of monitoring a range of indicators to assess reserve conditions and the\nstate of money markets. Looking at a range of such indicators, the manager concluded that reserves\nappeared to remain abundant. Usage of the overnight reverse repurchase agreement (ON RRP) facility declined about $100 billion\nover the intermeeting period, helped by an increase in the net supply of Treasury bills. With net bill\nsupply expected to decrease as a result of the September tax date before increasing again, the staff\nassessed that the decline in ON RRP usage might slow over the coming intermeeting period before\nresuming later this year. The manager also added that, with the concentration of ON RRP usage in a\nsmall number of fund complexes, there was an increased risk that idiosyncratic allocation decisions\ncould have an outsized effect on aggregate ON RRP volumes.\n\nMinutes of the Federal Open Market Committee 3\nBy unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that real gross domestic product (GDP)\nhad expanded solidly so far this year. The pace of job gains continued to moderate since the\nbeginning of the year, and the unemployment rate had moved up but remained low. Consumer price\ninflation was well below its year-earlier rate but remained somewhat elevated. Consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—was lower in July than it had been in March, which had followed\nsome high month-over-month changes in the beginning of the year. Monthly changes in PCE prices\nsince April had been smaller than those seen in the first three months of the year. On a 12-month\nbasis, total PCE price inflation was 2.5 percent in July, and core PCE price inflation—which excludes\nchanges in energy prices and many consumer food prices—was 2.6 percent. In August, the 12-month\nchange in the consumer price index (CPI) was 2.5 percent, and core CPI inflation was 3.2 percent;\nboth measures were well below their rates from a year ago. The staff estimated, given both the CPI\nand producer price index data, that total PCE price inflation would be 2.2 percent over the 12 months\nending in August and that core PCE price inflation would be 2.7 percent. Recent data suggested that labor market conditions had eased further but remained solid. Over July\nand August, average monthly nonfarm payroll gains were less than their average second-quarter pace,\nthe unemployment rate edged up to 4.2 percent, the labor force participation rate ticked up, and the\nemployment-to-population ratio ticked down. The unemployment rate for African Americans moved\ndown, while the rate for Hispanics rose, and both rates were above those for Asians and for Whites. The ratio of job vacancies to unemployment edged down to 1.1 in August, a bit below its level just\nbefore the pandemic. Job layoffs, as measured by initial claims for unemployment insurance benefits,\nremained low through August. Measures of nominal labor compensation continued to decelerate. Average hourly earnings for all employees rose 3.8 percent over the 12 months ending in August, and\nthe four-quarter change in business-sector compensation per hour was 3.1 percent in the second\nquarter. Both measures were well below their pace from a year earlier. Real GDP rose solidly, on balance, over the first half of the year. Real private domestic final purchases\n(PDFP)—which comprises PCE and private fixed investment and which often provides a better signal\nthan GDP of underlying economic momentum—posted a stronger first-half increase than GDP, and\nPDFP growth over the first half was only moderately slower than last year. Recent indicators for third-\n\n4 September 17–18, 2024\nquarter GDP and PDFP suggested that economic growth was continuing at a solid pace, particularly for\nPCE and business investment in equipment and intangibles. After growing at a tepid pace in the second quarter, real exports of goods moved down in July, led by\ndeclines in exports of autos and industrial supplies. By contrast, real imports of goods, especially of\ncapital goods, continued to grow at a robust pace in July. Real GDP growth in foreign economies stepped down in the second quarter, and recent economic\nindicators suggested economic growth abroad remained subdued. Although services activity and hightech manufacturing had been relatively robust, overall manufacturing activity remained weak, in part\ndue to restrictive monetary policies. Weakness in manufacturing was particularly pronounced in\nCanada, Germany, and Mexico. In China, indicators of domestic demand remained weak. Inflation in economies abroad continued to abate, on net, though developments were mixed. In the\nAFEs excluding Japan, 12-month headline inflation ticked down but remained above target levels due\nto still-high services inflation. In the emerging market economies, inflation moved sideways, with\nsome Latin American economies still experiencing upward inflation pressures from food prices. The\nBOE cut its policy rate for the first time in the current cycle, while the BOC, the ECB, and the Bank of\nMexico eased policy further, in part citing progress toward achieving their inflation targets. By\ncontrast, the BOJ continued to remove monetary accommodation. Staff Review of the Financial Situation\nThe market-implied path for the federal funds rate declined notably over the intermeeting period. Similarly, options on interest rate futures suggested that market participants were placing higher odds\non greater policy easing by early 2025 than they had just before the July FOMC meeting. Consistent\nwith the downward shift in the implied policy rate path, nominal Treasury yields declined significantly,\non net, with the most pronounced decreases at shorter horizons driven by reductions in both inflation\ncompensation and real Treasury yields. Market-based measures of interest rate uncertainty in the\nnear term rose notably, reportedly reflecting in part increased concerns among investors about\ndownside risks to economic activity. Broad stock price indexes increased, on net, despite a sizable but temporary drop in early August. Yield spreads on investment- and speculative-grade corporate bonds were little changed, on net, and\nremained in the bottom quintile of their respective historical distributions. The one-month optionimplied volatility on the S&P 500 index ended the period roughly unchanged, on net, after a large but\ntemporary spike in early August.\n\nMinutes of the Federal Open Market Committee 5\nOvernight secured rates were largely unchanged, and conditions in U.S. short-term funding markets\nremained stable. Average usage of the ON RRP facility declined as net Treasury bill issuance\nincreased, providing a more attractive alternative asset for money market funds. Market-based measures of the expected paths of policy rates as well as sovereign bond yields in most\nAFEs fell notably, largely in response to declines in U.S. interest rates. The broad dollar index declined,\nwith the dollar depreciating significantly against AFE currencies amid a narrowing in interest rate\ndifferentials between the U.S. economy and AFEs. Financial markets were volatile early in the\nintermeeting period following the weaker-than-expected U.S. employment report and the policy rate\nincrease by the BOJ, which led to the unwinding of some speculative trading positions. However,\ndeclines in equities mostly retraced over the following weeks, and moves in foreign risky asset prices\nwere mixed over the intermeeting period. In domestic credit markets, borrowing costs remained elevated despite modest declines in most credit\nsegments. Rates on 30-year conforming residential mortgages and yields on agency mortgage-backed\nsecurities (MBS) declined, on net, but continued to be elevated. Interest rates on both new credit card\noffers and new auto loans were little changed and remained at elevated levels. Interest rates for\nnewly originated commercial real estate (CRE) loans on banks’ books increased. Yields on an array of\nfixed-income securities, including investment- and speculative-grade corporate bonds and commercial\nmortgage-backed securities (CMBS), moved lower, generally following decreases in benchmark\nTreasury yields. Financing through capital markets and nonbank lenders was readily accessible for public corporations\nand for large and middle-market private corporations, and credit availability for leveraged loan\nborrowers remained solid. For smaller firms, however, credit availability remained moderately tight. Commercial and industrial loan balances at banks were little changed on net. Credit remained\ngenerally accessible to most CRE borrowers. CRE loans at banks continued to decelerate in July and\nwere unchanged in August. Non-agency CMBS issuance was robust in August, while agency CMBS\nissuance slipped to a bit below its post-pandemic average. Credit remained available for most consumers, though credit growth showed signs of moderating. Auto lending continued to slow, while balances on credit cards increased moderately in July and\nAugust on average. In the residential mortgage market, access to credit was little changed overall and\ncontinued to be sensitive to borrowers’ credit risk attributes. Credit quality continued to be solid for large and midsize firms, home mortgage borrowers, and\nmunicipalities but kept deteriorating in other sectors. The credit quality of nonfinancial firms\nborrowing in the corporate bond and leveraged loan markets remained stable. Delinquency rates on\nloans to small businesses remained slightly above pre-pandemic levels. Credit quality in the CRE\n\n6 September 17–18, 2024\nmarket deteriorated further, with the average delinquency rate for loans in CMBS and the share of\nnonperforming CRE loans at banks both rising further. Regarding household credit quality,\ndelinquency rates on most residential mortgages remained near pre-pandemic lows. Though\nconsumer loan delinquency rates remained above pre-pandemic levels, the pace of increases had\nslowed. Delinquency rates for credit cards rose moderately in the second quarter, while they were\nlargely flat for auto loans. Staff Economic Outlook\nThe staff forecast at the September meeting was for the economy to remain solid, with real GDP\ngrowth about the same as in the forecast for the July meeting but the unemployment rate a little\nhigher. Although real GDP growth in the second quarter was stronger than the staff had expected, the\nforecast for economic growth in the second half of this year was marked down, largely in response to\nrecent softer-than-expected labor market indicators. The real GDP growth forecast for 2024 as a\nwhole was little changed, though the unemployment rate was expected to be a little higher at the end\nof the year than previously forecast. Over 2025 through 2027, real GDP growth was expected to rise\nabout in line with the staff’s estimate of potential output growth. The unemployment rate was\nexpected to remain roughly flat from 2025 through 2027. All told, supply and demand in labor and\nproduct markets were forecast to be more balanced and resource utilization less tight than they had\nbeen in recent years. The staff’s inflation forecast was slightly lower than the one prepared for the previous meeting,\nprimarily reflecting incoming data, along with the projection of a less tight economy. Both total and\ncore PCE price inflation were expected to decline further as supply and demand in labor and product\nmarkets continued to move into better balance; by 2026, total and core inflation were expected to be\n2 percent. The staff judged that the risks around the baseline forecast for economic activity were tilted to the\ndownside, as the recent softening in some indicators of labor market conditions could point to greater\nslowing in aggregate demand growth than expected. The risks around the inflation forecast were seen\nas roughly balanced, reflecting both the further progress on disinflation and the effects of downside\nrisks for economic activity on inflation. The staff continued to view the uncertainty around the\nbaseline projection as close to the average over the past 20 years. Participants’ Views on Current Conditions and the Economic Outlook\nIn conjunction with this FOMC meeting, participants submitted their projections of the most likely\noutcomes for real GDP growth, the unemployment rate, and inflation for each year from 2024 through\n2027 and over the longer run. These projections were based on participants’ individual assessments\n\nMinutes of the Federal Open Market Committee 7\nof appropriate monetary policy, including their projections of the federal funds rate. The longer-run\nprojections represented each participant’s assessment of the rate to which each variable would tend\nto converge under appropriate monetary policy and in the absence of further shocks to the economy. The Summary of Economic Projections was released to the public after the meeting. In their discussion of inflation developments, participants observed that inflation remained somewhat\nelevated, but almost all participants judged that recent monthly readings had been consistent with\ninflation returning sustainably to 2 percent. Some participants commented that, though food and\nenergy prices had played an important part in the decline in the overall inflation rate, slower rates of\nprice increases had become more evident across a broad range of goods and services. Notably, core\ngoods prices had declined in recent months, and the rate of increase in core nonhousing services\nprices had moved down further. Many participants remarked that the recent inflation data were\nconsistent with reports received from business contacts, who had indicated that their pricing power\nwas limited or diminishing and that consumers were increasingly seeking discounts. Many\nparticipants also observed that inflation developments in the second and third quarters of 2024\nsuggested that the stronger-than-anticipated inflation readings in the first quarter had been only a\ntemporary interruption of progress toward 2 percent. Participants remarked that even though the rate\nof increase in housing services prices had slowed, these prices were continuing to rise at an elevated\nrate, in contrast to many other core prices. With regard to the outlook for inflation, almost all participants indicated they had gained greater\nconfidence that inflation was moving sustainably toward 2 percent. Participants cited various factors\nthat were likely to put continuing downward pressure on inflation. These included a further modest\nslowing in real GDP growth, in part due to the Committee’s restrictive monetary policy stance; wellanchored inflation expectations; waning pricing power; increases in productivity; and a softening in\nworld commodity prices. Several participants noted that nominal wage growth was continuing to slow,\nwith a few participants citing signs that it was set to decline further. These signs included lower rates\nof increases in cyclically sensitive wages and data indicating that job switchers were no longer\nreceiving a wage premium over other employees. A couple of participants remarked that, with wages\nbeing a relatively large portion of business costs in the services sector, that sector’s disinflation\nprocess would be particularly assisted by slower nominal wage growth. In addition, several\nparticipants observed that, with supply and demand in the labor market roughly in balance, wage\nincreases were unlikely to be a source of general inflation pressures in the near future. With regard to\nhousing services prices, some participants suggested that a more rapid disinflationary trend might\nemerge fairly soon, reflecting the slower pace of rent increases faced by new tenants. Participants\nemphasized that inflation remained somewhat elevated and that they were strongly committed to\nreturning inflation to the Committee’s 2 percent objective.\n\n8 September 17–18, 2024\nParticipants noted that labor market conditions had eased further in recent months and that, after\nbeing overheated in recent years, the labor market was now less tight than it had been just before the\npandemic. As evidence, participants cited the slowdown in payroll employment growth and the uptick\nin the unemployment rate in the two employment reports received since the Committee’s July\nmeeting, lower readings on hiring and job vacancies, reduced quits and job-finding rates, and\nwidespread reports from business contacts of less difficulty in hiring workers. Some participants\nhighlighted the fact that the unemployment rate had risen notably, on net, since April 2023. Participants noted, however, that labor market conditions remained solid, as layoffs had been limited\nand initial claims for unemployment insurance benefits had stayed low. Some participants stressed\nthat, rather than using layoffs to lower their demand for labor, businesses had instead been taking\nsteps such as posting fewer openings, reducing hours, or making use of attrition. A few participants\nsuggested that firms remained reluctant to lay off workers after having difficulty obtaining employees\nearlier in the post-pandemic period. Some participants remarked that the recent pace of payroll\nincreases had fallen short of what was required to keep the unemployment rate stable on a sustained\nbasis, assuming a constant labor force participation rate. Many participants observed that the\nevaluation of labor market developments had been challenging, with increased immigration, revisions\nto reported payroll data, and possible changes in the underlying growth rate of productivity cited as\ncomplicating factors. Several participants emphasized the importance of continuing to use\ndisaggregated data or information provided by business contacts as a check on readings on labor\nmarket conditions obtained from aggregate data. Participants agreed that labor market conditions\nwere at, or close to, those consistent with the Committee’s longer-run goal of maximum employment. With regard to the outlook for the labor market, participants noted that further cooling did not appear\nto be needed to help bring inflation back to 2 percent. Participants indicated that in their baseline\neconomic outlooks, which included an appropriate recalibration of the Committee’s monetary policy\nstance, the labor market would remain solid. Participants agreed that labor market indicators merited\nclose monitoring, with some noting that as conditions in the labor market have eased, the risk had\nincreased that continued easing could transition to a more serious deterioration. Participants observed that economic activity had continued to expand at a solid pace and highlighted\nresilient consumption spending. A couple of participants noted that rising real household incomes\nhad bolstered consumption, though some cited signs of a slowing in expenditures or of strains on\nhousehold budgets, including increased delinquencies in credit card and automobile loans. A couple\nof participants suggested that the financial strains being experienced by low- and moderate-income\nhouseholds would likely imply slower consumption growth in coming periods. Various participants\nreported that their business contacts were optimistic about the economic outlook, though they were\nexercising caution in their hiring and investment decisions. Participants noted that favorable\n\nMinutes of the Federal Open Market Committee 9\naggregate supply developments, including increases in productivity, had contributed to the recent\nsolid expansion of economic activity, and a few participants discussed possible implications of the\nintroduction of new technology into the workplace. Many participants emphasized that they expected\nthat real GDP would grow at roughly its trend rate over the next few years. Participants discussed the risks and uncertainties associated with the economic outlook. Almost all\nparticipants saw upside risks to the inflation outlook as having diminished, while downside risks to\nemployment were seen as having increased. As a result, those participants now assessed the risks to\nachieving the Committee’s dual-mandate goals as being roughly in balance. A couple of participants,\nhowever, did not perceive an increased risk of a significant further weakening in labor market\nconditions. Several participants cited risks of a sharper-than-expected slowing in consumer spending\nin response to labor market cooling or to continuing strains on the budgets of low- and moderateincome households. Risks to achieving the Committee’s price-stability goal had diminished\nsignificantly since the target range for the federal funds rate was last raised, and the vast majority of\nparticipants saw the risks to inflation as broadly balanced. A couple of participants specifically noted\nupside inflation risks associated with geopolitical developments. In addition, some participants cited\nrisks that progress toward the Committee’s 2 percent inflation objective could be stalled by a largerthan-anticipated easing in financial conditions, stronger-than-expected consumption growth, or\ncontinued strong increases in housing services prices. In their consideration of monetary policy at this meeting, participants noted that inflation had made\nfurther progress toward the Committee’s objective but remained somewhat elevated. Almost all\nparticipants expressed greater confidence that inflation was moving sustainably toward 2 percent. Participants also observed that recent indicators suggested that economic activity had continued to\nexpand at a solid pace, job gains had slowed, and the unemployment rate had moved up but\nremained low. Almost all participants judged that the risks to achieving the Committee’s employment\nand inflation goals were roughly in balance. In light of the progress on inflation and the balance of\nrisks, all participants agreed that it was appropriate to ease the stance of monetary policy. Given the\nsignificant progress made since the Committee first set its target range for the federal funds rate at\n5¼ to 5½ percent, a substantial majority of participants supported lowering the target range for the\nfederal funds rate by 50 basis points to 4¾ to 5 percent. These participants generally observed that\nsuch a recalibration of the stance of monetary policy would begin to bring it into better alignment with\nrecent indicators of inflation and the labor market. They also emphasized that such a move would\nhelp sustain the strength in the economy and the labor market while continuing to promote progress\non inflation, and would reflect the balance of risks. Some participants noted that there had been a\nplausible case for a 25 basis point rate cut at the previous meeting and that data over the\nintermeeting period had provided further evidence that inflation was on a sustainable path toward\n\n10 September 17–18, 2024\n2 percent while the labor market continued to cool. However, noting that inflation was still somewhat\nelevated while economic growth remained solid and unemployment remained low, some participants\nobserved that they would have preferred a 25 basis point reduction of the target range at this\nmeeting, and a few others indicated that they could have supported such a decision. Several\nparticipants noted that a 25 basis point reduction would be in line with a gradual path of policy\nnormalization that would allow policymakers time to assess the degree of policy restrictiveness as the\neconomy evolved. A few participants also added that a 25 basis point move could signal a more\npredictable path of policy normalization. A few participants remarked that the overall path of policy\nnormalization, rather than the specific amount of initial easing at this meeting, would be more\nimportant in determining the degree of policy restriction. Participants judged that it was appropriate\nto continue the process of reducing the Federal Reserve’s securities holdings. In discussing the outlook for monetary policy, participants anticipated that if the data came in about\nas expected, with inflation moving down sustainably to 2 percent and the economy near maximum\nemployment, it would likely be appropriate to move toward a more neutral stance of policy over time. Participants emphasized that it was important to communicate that the recalibration of the stance of\npolicy at this meeting should not be interpreted as evidence of a less favorable economic outlook or as\na signal that the pace of policy easing would be more rapid than participants’ assessments of the\nappropriate path. Those who commented on the degree of restrictiveness of monetary policy\nobserved that they believed it to be restrictive, though they expressed a range of views about the\ndegree of restrictiveness. Participants generally remarked on the importance of communicating that\nthe Committee’s monetary policy decisions are conditional on the evolution of the economy and the\nimplications for the economic outlook and balance of risks and therefore not on a preset course. Several participants discussed the importance of communicating that the ongoing reduction in the\nFederal Reserve’s balance sheet could continue for some time even as the Committee reduced its\ntarget range for the federal funds rate. In discussing risk-management considerations that could bear on the outlook for monetary policy,\nalmost all participants agreed that the upside risks to inflation had diminished, and most remarked\nthat the downside risks to employment had increased. Some participants emphasized that reducing\npolicy restraint too late or too little could risk unduly weakening economic activity and employment. A\nfew participants highlighted in particular the costs and challenges of addressing such a weakening\nonce it is fully under way. Several participants remarked that reducing policy restraint too soon or too\nmuch could risk a stalling or a reversal of the progress on inflation. Some participants noted that\nuncertainties concerning the level of the longer-term neutral rate of interest complicated the\nassessment of the degree of restrictiveness of policy and, in their view, made it appropriate to reduce\npolicy restraint gradually.\n\nMinutes of the Federal Open Market Committee 11\nCommittee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that economic activity had\ncontinued to expand at a solid pace. Job gains had slowed, and the unemployment rate had moved\nup but remained low. Members concurred that there had been further progress toward the\nCommittee’s 2 percent inflation objective but that inflation remained somewhat elevated. Almost all\nmembers agreed that to appropriately reflect cumulative developments related to inflation and the\nbalance of risks, the postmeeting statement should note that they had gained greater confidence that\ninflation was moving sustainably toward 2 percent and judged that the risks to achieving the\nCommittee’s employment and inflation goals were roughly in balance. Members viewed the economic\noutlook as uncertain and agreed that they were attentive to the risks to both sides of the Committee’s\ndual mandate. In light of the progress on inflation and the balance of risks, the Committee decided to lower the target\nrange for the federal funds rate to 4¾ to 5 percent. One member voted against that decision,\npreferring to lower the target range for the federal funds rate to 5 to 5¼ percent. Members concurred\nthat, in considering additional adjustments to the target range for the federal funds rate, they would\ncarefully assess incoming data, the evolving outlook, and the balance of risks. Members agreed to\ncontinue to reduce the Federal Reserve’s holdings of Treasury securities and agency debt and agency\nMBS. All members agreed that the postmeeting statement should affirm their strong commitment\nboth to supporting maximum employment and to returning inflation to the Committee’s 2 percent\nobjective. Members agreed that, in assessing the appropriate stance of monetary policy, they would continue to\nmonitor the implications of incoming information for the economic outlook. They would be prepared to\nadjust the stance of monetary policy as appropriate if risks emerged that could impede the attainment\nof the Committee’s goals. Members also agreed that their assessments would take into account a\nwide range of information, including readings on labor market conditions, inflation pressures and\ninflation expectations, and financial and international developments. At the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the System Open Market Account in\naccordance with the following domestic policy directive, for release at 2:00 p.m.:\n“Effective September 19, 2024, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 4¾ to 5 percent.\n\n12 September 17–18, 2024\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n5 percent and with an aggregate operation limit of $500 billion.\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 4.8 percent and with a per-counterparty limit of $160 billion per day.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$25 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.\n• Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement\nof the Federal Reserve’s agency MBS transactions.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have slowed, and the unemployment rate has moved up but remains low. Inflation\nhas made further progress toward the Committee’s 2 percent objective but remains\nsomewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. The Committee has gained greater confidence that inflation is moving\nsustainably toward 2 percent, and judges that the risks to achieving its employment and\ninflation goals are roughly in balance. The economic outlook is uncertain, and the Committee\nis attentive to the risks to both sides of its dual mandate. In light of the progress on inflation and the balance of risks, the Committee decided to lower\nthe target range for the federal funds rate by ½ percentage point to 4¾ to 5 percent. In\nconsidering additional adjustments to the target range for the federal funds rate, the\nCommittee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee will continue reducing its holdings of Treasury securities and agency debt and\n\nMinutes of the Federal Open Market Committee 13\nagency mortgage-backed securities. The Committee is strongly committed to supporting\nmaximum employment and returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr,\nRaphael W. Bostic, Lisa D. Cook, Mary C. Daly, Beth M. Hammack, Philip N. Jefferson, Adriana D. Kugler, and Christopher J. Waller. Voting against this action: Michelle W. Bowman. Governor Bowman preferred at this meeting to lower the target range for the federal funds rate by\n25 basis points to 5 to 5¼ percent in light of core inflation remaining well above the Committee’s\nobjective, a labor market that is near full employment, and solid underlying growth. She also\nexpressed her concern that the Committee’s larger policy action could be seen as a premature\ndeclaration of victory on the price-stability part of the dual mandate. Consistent with the Committee’s decision to lower the target range for the federal funds rate to 4¾ to\n5 percent, the Board of Governors of the Federal Reserve System voted unanimously to lower the\ninterest rate paid on reserve balances at 4.9 percent, effective September 19, 2024. The Board of\nGovernors of the Federal Reserve System voted unanimously to approve a ½ percentage point\ndecrease in the primary credit rate to 5 percent, effective September 19, 2024.2\nIt was agreed that the next meeting of the Committee would be held on Wednesday–Thursday,\nNovember 6–7, 2024. The meeting adjourned at 10:30 a.m. on September 18, 2024. Notation Vote\nBy notation vote completed on August 20, 2024, the Committee unanimously approved the minutes of\nthe Committee meeting held on July 30–31, 2024.\n2 In taking this action, the Board approved a request to establish that rate submitted by the board of directors of the Federal\nReserve Bank of Atlanta. The vote also encompassed approval by the Board of Governors of the establishment of a 5 percent\nprimary credit rate by the remaining Federal Reserve Banks, effective on September 19, 2024, or the date such Reserve Banks\ninform the Secretary of the Board of such a request. (Secretary's note: Subsequently, the Federal Reserve Banks of Boston,\nNew York, Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco were\ninformed of the Board’s approval of their establishment of a primary credit rate of 5 percent, effect September 19, 2024.)\n\n14 September 17–18, 2024\nAttendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nThomas I. Barkin\nMichael S. Barr\nRaphael W. Bostic\nMichelle W. Bowman\nLisa D. Cook\nMary C. Daly\nBeth M. Hammack\nPhilip N. Jefferson\nAdriana D. Kugler\nChristopher J. Waller\nSusan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, and Jeffrey R. Schmid, Alternate Members\nof the Committee\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Presidents of the Federal Reserve Banks of\nPhiladelphia, Minneapolis, and Dallas, respectively\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nShaghil Ahmed, James A. Clouse, Brian M. Doyle, Edward S. Knotek II, Sylvain Leduc, and William\nWascher, Associate Economists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nJose Acosta, Senior System Engineer II, Division of Information Technology, Board\nGianni Amisano, Assistant Director, Division of Research and Statistics, Board\nMary Amiti, Research Department Head, Federal Reserve Bank of New York\nRoc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia\nAlyssa Arute,3 Assistant Director, Division of Reserve Bank Operations and Payment Systems, Board\nAlessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board\nDavid Bowman, Senior Associate Director, Division of Monetary Affairs, Board\nBrent Bundick, Vice President, Federal Reserve Bank of Kansas City\n3 Attended through the discussion of developments in financial markets and open market operations.\n\nMinutes of the Federal Open Market Committee 15\nJennifer J. Burns, Deputy Directory, Division of Supervision and Regulation, Board\nIsabel Cairó, Principal Economist, Division of Monetary Affairs, Board\nMichele Cavallo, Special Adviser to the Board, Division of Board Members, Board\nDaniel M. Covitz, Deputy Director, Division of Research and Statistics, Board\nWendy E. Dunn, Adviser, Division of Research and Statistics, Board\nEric M. Engen, Senior Associate Director, Division of Research and Statistics, Board\nEric C. Engstrom, Associate Director, Division of Monetary Affairs, Board\nErin E. Ferris, Principal Economist, Division of Monetary Affairs, Board\nAndrew Figura, Associate Director, Division of Research and Statistics, Board\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nEtienne Gagnon, Senior Associate Director, Division of International Finance, Board\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nCarlos Garriga, Senior Vice President, Federal Reserve Bank of St. Louis\nJason A. Hinkle,3 Deputy Associate Director, Division of Reserve Bank Operations and Payment\nSystems, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nDon H. Kim,3 Senior Adviser, Division of Monetary Affairs, Board\nAnna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond\nAndreas Lehnert, Director, Division of Financial Stability, Board\nPaul Lengermann, Deputy Associate Director, Division of Research and Statistics, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nDavid López-Salido, Senior Associate Director, Division of Monetary Affairs, Board\nMark Meder, First Vice President, Federal Reserve Bank of Cleveland\nAnn E. Misback, Secretary, Office of the Secretary, Board\nMichelle M. Neal, Head of Markets, Federal Reserve Bank of New York\nEdward Nelson, Senior Adviser, Division of Monetary Affairs, Board\nAlyssa O’Connor, Special Adviser to the Board, Division of Board Members, Board\nAnna Paulson, Executive Vice President, Federal Reserve Bank of Chicago\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nAndrea Prestipino, Principal Economist, Division of International Finance, Board\n\n16 September 17–18, 2024\nOdelle Quisumbing,4 Assistant to the Secretary, Office of the Secretary, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nManjola Tase, Principal Economist, Division of Monetary Affairs, Board\nRobert J. Tetlow, Senior Adviser, Division of Monetary Affairs, Board\nAlex Zhou Thorp,3 Associate Director, Federal Reserve Bank of New York\nClara Vega, Special Adviser to the Board, Division of Board Members, Board\nAnnette Vissing-Jørgensen, Senior Adviser, Division of Monetary Affairs, Board\nJonathan Willis, Vice President, Federal Reserve Bank of Atlanta\nDonielle A. Winford, Senior Information Manager, Division of Monetary Affairs, Board\nPaul R. Wood, Special Adviser to the Board, Division of Board Members, Board\nEgon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston\nRebecca Zarutskie, Senior Vice President, Federal Reserve Bank of Dallas\n_______________________\nJoshua Gallin\nSecretary\n4 Attended through the discussion of the economic and financial situation.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240918.pdf",
+    "action": "Lowered",
+    "rate": "4.75%-5.00%",
+    "magnitude": "0.50 percentage points",
+    "forward_guidance": "The Fed signaled that future rate decisions will depend on incoming data, the evolving economic outlook, and the balance of risks. While additional cuts are likely if inflation continues toward 2% and employment remains stable, policymakers emphasized this move is not the start of a rapid easing cycle and that policy remains restrictive.",
+    "key_economic_factors": [
+      "Inflation has made further progress toward the 2% target, with both total and core PCE inflation moderating, and monthly price increases showing broad-based cooling.",
+      "Labor market conditions have cooled, with slower job gains, a rising unemployment rate (to 4.2%), and reduced hiring and job vacancies, though layoffs remain low.",
+      "Economic growth remains solid, supported by resilient consumer spending and strong business investment, but the outlook shows signs of moderation in the second half of 2024.",
+      "Downside risks to employment have increased, while upside inflation risks have diminished, leading the Fed to view the risks to its dual mandate as roughly balanced."
+    ],
+    "economic_outlook": "The Fed expects solid but moderating economic growth in 2024, with real GDP expanding at roughly its trend rate over the next few years. The labor market is seen as solid but cooling, with the unemployment rate expected to stabilize near current levels. Inflation is projected to continue declining toward the 2% target by 2026, supported by balanced supply and demand, slowing wage growth, and stable inflation expectations.",
+    "market_impact": "Lower borrowing costs are likely to gradually ease financial conditions, supporting consumer spending and business investment. Markets may see increased risk-taking in equities and credit, but the Fed’s caution about the pace of cuts suggests yields will remain range-bound in the near term."
+  },
+  {
+    "date": "2024-07-31",
+    "title": "FOMC Meeting 2024-07-31",
+    "full_text": "1\nMinutes of the Federal Open Market\nCommittee\nJuly 30–31, 2024\nA joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal\nReserve System was held in the offices of the Board of Governors on Tuesday, July 30, 2024, at\n10:00 a.m. and continued on Wednesday, July 31, 2024, at 9:00 a.m.1\nDevelopments in Financial Markets and Open Market Operations\nThe manager turned first to a review of developments in financial markets. Financial conditions eased\nmodestly over the intermeeting period, reflecting lower long-term interest rates and higher equity\nprices. The manager noted that current financial conditions appeared to be providing neither a\nheadwind nor tailwind to growth. Nominal Treasury yields declined over the period, with shorter-term yields having decreased by more\nthan longer-term yields, leading to a steepening of the yield curve. Treasury yields remained sensitive\nto surprises in economic data, particularly consumer price index releases and employment reports. While near-term inflation compensation fell over the intermeeting period, longer-term forward\nmeasures were little changed. Measures of inflation expectations obtained from term structure\nmodels were modestly lower. The policy rate path derived from futures prices and the modal path\nderived from options prices both declined over the intermeeting period and had come into closer\nalignment with the median of the modal responses from the Open Market Desk’s Survey of Primary\nDealers and Survey of Market Participants. Policy expectations, however measured, pointed to a first\nrate cut at the September FOMC meeting, at least one more cut later in the year, and further policy\neasing next year. In the equity markets, the high perceived likelihood of a September cut in the target range for the\npolicy rate induced a notable appreciation in the stocks of firms with small and medium capitalization,\nwhich tend to be more sensitive to interest rates. Stocks of larger companies, especially those in the\ntechnology sector, underperformed. Second-quarter earnings reports received before the meeting had\nbeen slightly above analysts’ expectations, although some companies noted a softening in consumer\nspending.\n1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes; the Board of\nGovernors of the Federal Reserve System is referenced as the “Board” in these minutes.\n\n2 July 30–31, 2024\nExpectations for policy rates in most advanced foreign economies (AFEs) declined, as recent data\ngenerally pointed to continued progress on inflation. Although most AFE central banks had cut their\npolicy rates or were expected to do so soon, the manager noted that market participants continued to\nexpect the Bank of Japan to tighten policy this year. The sudden announcement of a French election\ncontributed to some short-term market volatility early in the intermeeting period, including a widening\nbetween yields of French and German 10-year sovereign bonds and a widening in spreads for off-therun U.S. Treasury securities, but the effects on U.S. Treasury markets were short lived. The effective federal funds rate remained unchanged over the intermeeting period, but the manager\nnoted that rates on repurchase agreements (repo) had edged higher, reflecting increased demand for\nfinancing Treasury securities as well as the expected effects of gradual balance sheet normalization. Use of the overnight reverse repo (ON RRP) facility declined slightly over the intermeeting period. The\nstaff projected that ON RRP usage would decline more noticeably over the remainder of the year,\nparticularly as issuance of Treasury bills increases. However, the manager noted that it was possible\nthat idiosyncratic factors specific to some ON RRP participants might support ON RRP balances in the\nmonths ahead. Looking at a range of money market indicators, the manager concluded that reserves\nremained abundant but indicated that the staff would continue to closely monitor developments in\nmoney markets. Finally, the manager described a set of technical adjustments to the production of\nthe Secured Overnight Financing Rate that the Federal Reserve Bank of New York had proposed in a\nrecent public consultation. By unanimous vote, the Committee ratified the Desk’s domestic transactions over the intermeeting\nperiod. There were no intervention operations in foreign currencies for the System’s account during\nthe intermeeting period. Staff Review of the Economic Situation\nThe information available at the time of the meeting indicated that U.S. economic activity had\nadvanced solidly so far this year, but at a markedly slower pace than in the second half of 2023. Labor market conditions continued to ease: Job gains moderated, and the unemployment rate moved\nup further but remained low. Consumer price inflation was well below its year-earlier pace but\nremained somewhat elevated. Consumer price inflation—as measured by the 12-month change in the price index for personal\nconsumption expenditures (PCE)—was about the same in June as it was at the start of the year, though\nthe month-over-month changes in May and June were smaller than those seen earlier in the year. Total PCE price inflation was 2.5 percent in June, and core PCE price inflation—which excludes\nchanges in energy prices and many consumer food prices—was 2.6 percent.\n\nMinutes of the Federal Open Market Committee 3\nRecent data suggested that labor market conditions had eased further. Average monthly nonfarm\npayroll gains in the second quarter were smaller than the average pace seen in the first quarter and\nover the previous year. The unemployment rate moved up further in June to 4.1 percent; the labor\nforce participation rate ticked up as well, and the employment-to-population ratio was unchanged. The unemployment rate for African Americans rose in June, while the rate for Hispanics declined\nslightly; both rates were above that for Whites. The ratio of job vacancies to unemployment remained\nat 1.2 in June, about the same as its pre-pandemic level. Measures of nominal wages continued to\ndecelerate: Average hourly earnings for all employees rose 3.9 percent over the 12 months ending in\nJune, down 0.8 percentage point relative to a year earlier, and the 12-month change in the\nemployment cost index of hourly compensation of private industry workers was 3.9 percent in June,\ndown 0.6 percentage point from its year-earlier pace. According to the advance release, real gross domestic product (GDP) rose solidly in the second quarter\nafter a modest gain in the first quarter. Over the first half of the year, GDP growth was noticeably\nslower than its average pace in 2023. However, real private domestic final purchases (PDFP)—which\ncomprises PCE and private fixed investment and which often provides a better signal than GDP of\nunderlying economic momentum—posted a solid second-quarter increase that was in line with its firstquarter pace and only moderately slower than its average rate of increase in 2023. As in the first quarter, net exports subtracted from U.S. GDP growth in the second quarter. Growth in\nreal exports of goods and services remained tepid overall, as gains in exports of capital goods and\nconsumer goods were partly offset by declines in exports of foods and industrial supplies. By contrast,\nreal imports continued to rise at a brisk pace, driven by further increases in imports of capital goods. Foreign economic growth was estimated to have been subdued in the second quarter, held down by a\nsharp deceleration in economic activity in China amid ongoing property-sector woes. In Europe and\nLatin America, output likely expanded below its trend pace, as restrictive monetary policy continued to\nbe a drag on activity. Recent global inflation developments were mixed. In the AFEs, headline inflation edged down in the\nsecond quarter but generally remained above target levels. In emerging market economies, headline\ninflation rose a touch overall, reflecting, in part, run-ups in food prices in some countries. The Bank of\nCanada and the Swiss National Bank cut their policy rates further, in part citing easing inflation\npressures. The People’s Bank of China also lowered some key policy rates amid ongoing propertysector woes and weak consumer sentiment.\n\n4 July 30–31, 2024\nStaff Review of the Financial Situation\nThe market-implied path for the federal funds rate moved down over the intermeeting period. Options\non interest rate futures suggested that market participants were placing higher odds on a larger policy\neasing by early 2025 than they did just before the June meeting. Consistent with the downward shift\nin the implied policy path, nominal Treasury yields moved down, on net, with the most pronounced\ndeclines at shorter horizons driven largely by decreases in inflation compensation. Broad stock price indexes rose slightly on net. Yield spreads on investment- and speculative-grade\ncorporate bonds were little changed and remained at about the lowest decile of their respective\nhistorical distributions. The one-month option-implied volatility on the S&P 500 index rose moderately\nand was somewhat elevated by historical standards, suggesting that investors perceived some, but\nnot outsized, risks to the economic outlook. Market-based measures of the expected paths of policy rates and sovereign bond yields in most AFEs\nfell notably, largely in response to declines in U.S. rates. Following the surprise announcement of\nparliamentary elections in France, the spread between yields of French and German 10-year sovereign\nbonds widened to its highest level since 2012 but then partially retraced on the outcome of no clear\nparliamentary majority. The broad dollar index was little changed over the intermeeting period. On\nbalance, moves in foreign risky asset prices were mixed and modest. Overnight secured rates edged up over the intermeeting period, but conditions in U.S. short-term\nfunding markets remained stable, with typical dynamics observed surrounding quarter-end. Average\nusage of the ON RRP facility declined slightly. Banks’ total deposit levels increased modestly, as large\ntime deposits displayed moderate inflows. In domestic credit markets, borrowing costs remained elevated over the intermeeting period despite\nmodest declines in some markets. Rates on 30-year conforming residential mortgages declined, on\nnet, over the intermeeting period but stayed near recent high levels. Interest rates on new credit card\noffers increased slightly, while rates on new auto loans were little changed. Interest rates on small\nbusiness loans remained elevated. Yields on an array of fixed-income securities—including\ncommercial mortgage-backed securities (CMBS), investment- and speculative-grade corporate bonds,\nand residential mortgage-backed securities—moved lower to still-elevated levels relative to recent\nhistory. The declines were largely driven by decreases in Treasury yields. Financing through capital markets and nonbank lenders was readily accessible for public corporations\nand large and middle-market private corporations, and credit availability for leveraged loan borrowers\nremained solid over the intermeeting period. For smaller firms, however, credit availability remained\nmoderately tight. In the July Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS),\n\nMinutes of the Federal Open Market Committee 5\nbanks reported modestly tighter standards and lending terms for commercial and industrial (C&I)\nloans, on net, while reported demand for C&I loans remained about unchanged. Meanwhile, C&I loan\nbalances increased in the second quarter. Regarding commercial real estate (CRE) loans, banks in\nthe July SLOOS reported tightening standards for all loan categories. Nonetheless, bank CRE loan\nbalances increased over the second quarter, albeit at a diminished pace relative to the previous\nquarter. Credit remained available for most consumers over the intermeeting period, though credit growth\nshowed signs of moderating. Credit card balances slowed in June, and SLOOS respondents indicated\nthat standards for credit cards tightened moderately in the second quarter. Although banks reported\nin the SLOOS that lending standards on auto loans were unchanged in the second quarter, growth in\nauto lending at both banks and nonbanks contracted further. In the residential mortgage market,\naccess to credit was little changed overall and continued to depend on borrowers’ credit risk\nattributes. Credit quality remained solid for large and midsize firms, home mortgage borrowers, and\nmunicipalities but continued to deteriorate in other sectors. The credit quality of nonfinancial firms\nborrowing in the corporate bond and leveraged loan markets remained stable. Delinquency rates on\nloans to small businesses remained slightly above pre-pandemic levels. Credit quality in the CRE\nmarket deteriorated further, with the average delinquency rate for loans in CMBS and the share of\nnonperforming CRE loans at banks both rising further. Regarding household balance sheets,\ndelinquency rates on most residential mortgages remained near pre-pandemic lows. Though\nconsumer delinquency rates had increased, particularly among nonprime borrowers, the rise in\ndelinquency rates for both credit cards and auto loans slowed in the second quarter. The staff provided an update on its assessment of the stability of the U.S. financial system and, on\nbalance, continued to characterize the system’s financial vulnerabilities as notable. The staff judged\nthat asset valuation pressures remained elevated, with estimates of risk premiums across key\nmarkets low compared with historical standards. House prices remained elevated relative to\nfundamentals. CRE prices continued to decline, especially in the multifamily and office sectors, and\nvacancy rates in these sectors continued to increase. Vulnerabilities associated with business and household debt were characterized as moderate. Nonfinancial business leverage was high, but the ability of public firms to service their debt remained\nsolid, in large part due to strong earnings. The fraction of private firms with low debt-servicing ability\ncontinued to move up and remained at high levels compared with the past decade. Household\nbalance sheets remained strong overall, as aggregate home equity stayed quite high and\ndelinquencies on mortgage loans remained low.\n\n6 July 30–31, 2024\nLeverage in the financial sector was characterized as notable. Regulatory capital ratios in the banking\nsector remained high. The fair value of bank assets, however, remained low. For the nonbank sector,\nleverage at hedge funds was at its highest recorded level based on data since 2013, partly due to the\nprevalence of the cash–futures basis trade. Leverage at life insurers was somewhat elevated, and\ntheir holdings of risky and illiquid securities continued to grow. Funding risks were also characterized as notable. Assets in prime money market funds and other\nrunnable cash-management vehicles remained near historical highs. Life insurers’ greater reliance on\nnontraditional liabilities, coupled with their increasing holdings of risky corporate debt, suggested that\nadverse shocks to the industry could trigger substantial funding pressures at these firms. Staff Economic Outlook\nThe economic forecast prepared by the staff for the July meeting implied a lower rate of resource\nutilization over the projection period relative to the forecast prepared for the previous meeting. The\nstaff’s outlook for growth in the second half of 2024 had been marked down largely in response to\nweaker-than-expected labor market indicators. As a result, the output gap at the start of 2025 was\nsomewhat narrower than had been previously projected, although still not fully closed. Over 2025 and\n2026, real GDP growth was expected to rise about in line with potential, leaving the output gap roughly\nflat in those years. The unemployment rate was expected to edge up slightly over the remainder of\n2024 and then to remain roughly unchanged in 2025 and 2026. The staff’s inflation forecast was slightly lower than the one prepared for the previous meeting,\nreflecting incoming data and the lower projected level of resource utilization. Both total and core PCE\nprice inflation were expected to decline further as demand and supply in product and labor markets\ncontinued to move into better balance; by 2026, total and core inflation were expected to be around\n2 percent. The staff continued to view the uncertainty around the baseline projection as close to the average over\nthe past 20 years. Risks to the inflation forecast were still seen as tilted to the upside, albeit to a\nsmaller degree than at the time of the previous meeting. The risks around the forecast for real activity\nwere viewed as skewed to the downside, both because more-persistent inflation could result in tighter\nfinancial conditions than in the baseline and because the recent softening in some indicators of labor\nmarket conditions might be pointing to a larger-than-anticipated slowdown in aggregate demand\ngrowth.\n\nMinutes of the Federal Open Market Committee 7\nParticipants’ Views on Current Conditions and the Economic Outlook\nParticipants observed that inflation had eased over the past year but remained elevated and that, in\nrecent months, there had been some further progress toward the Committee’s 2 percent inflation\nobjective. Participants noted that the recent progress on disinflation was broad based across the\nmajor subcomponents of core inflation. Core goods prices were about flat from March through June\nafter having risen during the first three months of the year. Price inflation in June for housing services\nshowed a notable slowing, which participants had been anticipating for some time. In addition, core\nnonhousing services prices had decelerated in recent months. Some participants noted that the\nrecent data corroborated reports from their business contacts that firms’ pricing power was waning, as\nconsumers appeared to be more sensitive to price increases. Various contacts had also reported that\nthey had cut prices or were offering discounts to stay competitive, or that declines in input costs had\nhelped reduce pressure on retail prices. With regard to the outlook for inflation, participants judged that recent data had increased their\nconfidence that inflation was moving sustainably toward 2 percent. Almost all participants observed\nthat the factors that had contributed to recent disinflation would likely continue to put downward\npressure on inflation in coming months. These factors included a continued waning of pricing power,\nmoderating economic growth, and the runoff in excess household savings accumulated during the\npandemic. Many participants noted that the moderation of growth in labor costs as labor market\nconditions rebalanced would continue to contribute to disinflation, particularly in core nonhousing\nservices prices. Some participants noted that the lags in the time it takes for housing rental\nconditions for new tenants to show through to aggregate price data for housing services meant that\nthe disinflationary trend in this component would likely continue. Participants also observed that\nlonger-term inflation expectations had remained well anchored and viewed this anchoring as\nunderpinning the disinflation process. A couple of participants noted that inflation pressures might\npersist for some time, as they assessed that the economy had considerable momentum, and that,\neven with some easing of the demand for labor, the labor market remained strong. Participants assessed that supply and demand conditions in the labor market had continued to come\ninto better balance. The unemployment rate had moved up but remained low, having risen\n0.7 percentage point since its trough in April 2023 to 4.1 percent in June. The monthly pace of payroll\njob gains had moderated from the first quarter but had been solid in recent months. However, many\nparticipants noted that reported payroll gains might be overstated, and several assessed that payroll\ngains may be lower than those needed to keep the unemployment rate constant with a flat labor force\nparticipation rate. Participants observed that other indicators also pointed to easing in labor market\nconditions, including a lower hiring rate and a downtrend in job vacancies since the beginning of the\n\n8 July 30–31, 2024\nyear. Participants noted that the rebalancing of labor market conditions over the past year was also\naided by an expansion of the supply of workers, reflecting increases in the labor force participation\nrate among individuals aged 25 to 54 and a strong pace of immigration. Participants noted that, with\ncontinued rebalancing of labor market conditions, nominal wage growth had continued to moderate. Many participants cited reports from District contacts that supported the view that labor market\nconditions had been easing. In particular, contacts reported that they had been experiencing less\ndifficulty in hiring and retaining workers and that they saw limited wage pressures. Participants\ngenerally assessed that, overall, conditions in the labor market had returned to about where they\nstood on the eve of the pandemic—strong but not overheated. Regarding the outlook for the labor market, participants discussed various indicators of layoffs,\nincluding initial claims for unemployment benefits and measures of job separations. Some\nparticipants commented that these indicators had remained at levels consistent with a strong labor\nmarket. Participants agreed that these and other indicators of labor market conditions merited close\nmonitoring. Several participants said that their District contacts reported that they were actively\nmanaging head counts through selective hiring and attrition. Participants noted that real GDP growth was solid in the first half of the year, though slower than the\nrobust pace seen in the second half of last year. PDFP growth, which usually gives a better signal than\nGDP growth of economic momentum, also moderated in the first half, but by less than GDP growth. PDFP expanded at a solid pace, supported by growth in consumer spending and business fixed\ninvestment. Participants viewed the moderation in the growth of economic activity to be largely in line\nwith what they had anticipated. Regarding the household sector, participants observed that consumer spending had slowed from last\nyear’s robust pace, consistent with restrictive monetary policy, easing of labor market conditions, and\nslowing income growth. They noted, however, that consumer spending had still grown at a solid pace\nin the first half of the year, supported by the still-strong labor market and aggregate household\nbalance sheets. Some participants observed that lower- and moderate-income households were\nencountering increasing strains as they attempted to meet higher living costs after having largely run\ndown savings accumulated during the pandemic. These participants noted that such strains were\nevident in indicators such as rising credit card delinquency rates and an increased share of\nhouseholds paying the minimum due on balances, and warranted continued close monitoring. Several\nparticipants cited reports that consumers, especially those in lower-income households, were shifting\naway from discretionary spending and switching to lower-cost food items and brands. A couple of\nparticipants remarked that spending by some higher-income households was likely being bolstered by\nwealth effects from equity and housing price appreciation. Participants noted that residential\n\nMinutes of the Federal Open Market Committee 9\ninvestment was weak in the second quarter, likely reflecting the pickup in mortgage rates from earlier\nin the year. Regarding the business sector, participants noted that conditions varied by firm size, sector, and\nregion. A couple of participants noted that their District contacts had reported larger firms as having a\ngenerally stable outlook, while the outlook for smaller firms appeared more uncertain. A few\nparticipants said that their contacts reported that conditions in the manufacturing sector were\nsomewhat weaker, while the professional and business services sector and technology-related sectors\nremained strong. A few participants noted that the agricultural sector continued to face strains\nstemming from low food commodity prices and high input costs. Participants discussed the risks and uncertainties around the economic outlook. Upside risks to the\ninflation outlook were seen as having diminished, while downside risks to employment were seen as\nhaving increased. Participants saw risks to achieving the inflation and employment objectives as\ncontinuing to move into better balance, with a couple noting that they viewed these risks as more or\nless balanced. Some participants noted that as conditions in the labor market have eased, the risk\nhad increased that continued easing could transition to a more serious deterioration. As sources of\nupside risks to inflation, some participants cited the potential for disruptions to supply chains and a\nfurther deterioration in geopolitical conditions. A few participants noted that an easing of financial\nconditions could boost economic activity and present an upside risk to economic growth and inflation. In their discussion of financial stability, participants who commented noted vulnerabilities to the\nfinancial system that they assessed warranted monitoring. Some participants observed that the\nbanking system was sound but noted risks associated with unrealized losses on securities, reliance on\nuninsured deposits, and interconnections with nonbank financial intermediaries. In their discussion of\nbank funding, several participants commented that, because the discount window is an important\nliquidity backstop, the Federal Reserve should continue to improve the window’s operational efficiency\nand to communicate effectively about the window’s value. Participants generally noted that some\nbanks and nonbank financial institutions likely have vulnerabilities associated with high CRE\nexposures through loan portfolios and holdings of CMBS. Most of these participants remarked that\nrisks related to CRE exposures depend importantly on the property type and the local market\nconditions of the properties involved. A couple of participants noted concerns about asset valuation\npressures in other markets as well. Many participants commented on cyber risks that could impair the\noperation of financial institutions, financial infrastructure, and, potentially, the overall economy. Many\nparticipants remarked that because a few firms play a substantial role in the provision of information\ntechnology services to the financial sector and because of the highly interconnected nature of some\nfirms in the financial industry itself, there was an increased risk that significant cyber disruptions at a\nsmall number of key firms could have widespread effects. Several participants noted that leverage in\n\n10 July 30–31, 2024\nthe Treasury market remained a risk, that it would be important to monitor developments regarding\nTreasury market resilience amid the move to central clearing, or that it is valuable to communicate\nabout the Federal Reserve’s standing repo facility as a liquidity backstop. A couple of participants\ncommented on the financial condition of low- and moderate-income households that have exhausted\ntheir savings and the importance of monitoring rising delinquency rates on credit cards and auto\nloans. In their consideration of monetary policy at this meeting, participants observed that recent indicators\nsuggested that economic activity had continued to expand at a solid pace, job gains had moderated,\nand the unemployment rate had moved up but remained low. While inflation remained somewhat\nabove the Committee’s longer-run goal of 2 percent, participants noted that inflation had eased over\nthe past year and that recent incoming data indicated some further progress toward the Committee’s\nobjective. All participants supported maintaining the target range for the federal funds rate at 5¼ to\n5½ percent, although several observed that the recent progress on inflation and increases in the\nunemployment rate had provided a plausible case for reducing the target range 25 basis points at this\nmeeting or that they could have supported such a decision. Participants furthermore judged that it\nwas appropriate to continue the process of reducing the Federal Reserve’s securities holdings. In discussing the outlook for monetary policy, participants noted that growth in economic activity had\nbeen solid, there had been some further progress on inflation, and conditions in the labor market had\neased. Almost all participants remarked that while the incoming data regarding inflation were\nencouraging, additional information was needed to provide greater confidence that inflation was\nmoving sustainably toward the Committee’s 2 percent objective before it would be appropriate to\nlower the target range for the federal funds rate. Nevertheless, participants viewed the incoming data\nas enhancing their confidence that inflation was moving toward the Committee’s objective. The vast\nmajority observed that, if the data continued to come in about as expected, it would likely be\nappropriate to ease policy at the next meeting. Many participants commented that monetary policy\ncontinued to be restrictive, although they expressed a range of views about the degree of\nrestrictiveness, and a few participants noted that ongoing disinflation, with no change in the nominal\ntarget range for the policy rate, by itself results in a tightening in monetary policy. Most participants\nremarked on the importance of communicating the Committee’s data-dependent approach and\nemphasized, in particular, that monetary policy decisions are conditional on the evolution of the\neconomy rather than being on a preset path or that those decisions depend on the totality of the\nincoming data rather than on any particular data point. Several participants stressed the need to\nmonitor conditions in money markets and factors affecting the demand for reserves amid the ongoing\nreduction in the Federal Reserve’s balance sheet.\n\nMinutes of the Federal Open Market Committee 11\nIn discussing risk-management considerations that could bear on the outlook for monetary policy,\nparticipants highlighted uncertainties affecting the outlook, such as those regarding the amount of\nrestraint currently provided by monetary policy, the lags with which past and current restraint have\naffected and will affect economic activity, and the degree of normalization of the economy following\ndisruptions associated with the pandemic. A majority of participants remarked that the risks to the\nemployment goal had increased, and many participants noted that the risks to the inflation goal had\ndecreased. Some participants noted the risk that a further gradual easing in labor market conditions\ncould transition to a more serious deterioration. Many participants noted that reducing policy restraint\ntoo late or too little could risk unduly weakening economic activity or employment. A couple\nparticipants highlighted in particular the costs and challenges of addressing such a weakening once it\nis fully under way. Several participants remarked that reducing policy restraint too soon or too much\ncould risk a resurgence in aggregate demand and a reversal of the progress on inflation. These\nparticipants pointed to risks related to potential shocks that could put upward pressure on inflation or\nthe possibility that inflation could prove more persistent than currently expected. Committee Policy Actions\nIn their discussions of monetary policy for this meeting, members agreed that economic activity had\ncontinued to expand at a solid pace. Job gains had moderated, and the unemployment rate had\nmoved up but remained low. Inflation eased over the past year but remained somewhat elevated. Members concurred that, in recent months, there had been some further progress toward the\nCommittee’s 2 percent inflation objective. Members judged that the risks to achieving the\nCommittee’s employment and inflation goals had continued to move into better balance. Members\nviewed the economic outlook as uncertain and agreed that they were attentive to the risks to both\nsides of the Committee’s dual mandate. In support of the Committee’s goals to achieve maximum employment and inflation at the rate of\n2 percent over the longer run, members agreed to maintain the target range for the federal funds rate\nat 5¼ to 5½ percent. Members concurred that, in considering any adjustments to the target range for\nthe federal funds rate, they would carefully assess incoming data, the evolving outlook, and the\nbalance of risks. Members agreed that they did not expect that it would be appropriate to reduce the\ntarget range until they had gained greater confidence that inflation is moving sustainably toward\n2 percent. In addition, members agreed to continue to reduce the Federal Reserve’s holdings of\nTreasury securities and agency debt and agency mortgage‑backed securities. All members affirmed\ntheir strong commitment to returning inflation to the Committee’s 2 percent objective. Members agreed that, in assessing the appropriate stance of monetary policy, they would continue to\nmonitor the implications of incoming information for the economic outlook. They would be prepared to\n\n12 July 30–31, 2024\nadjust the stance of monetary policy as appropriate if risks emerged that could impede the attainment\nof the Committee’s goals. Members also agreed that their assessments would take into account a\nwide range of information, including readings on labor market conditions, inflation pressures and\ninflation expectations, and financial and international developments. Members agreed that to appropriately reflect developments since the previous meeting related to their\nmaximum-employment objective, they should note in the statement that “job gains have moderated,\nand the unemployment rate has moved up but remains low.” Similarly, to appropriately reflect\ndevelopments related to their price-stability objective, they agreed to note that “there has been some\nfurther progress toward the Committee’s 2 percent inflation objective.” Members also agreed to\nreflect the shifting balance of risks by stating that “the Committee judges that the risks to achieving its\nemployment and inflation goals continue to move into better balance” and that “the Committee is\nattentive to the risks to both sides of its dual mandate.”\nAt the conclusion of the discussion, the Committee voted to direct the Federal Reserve Bank of New\nYork, until instructed otherwise, to execute transactions in the System Open Market Account in\naccordance with the following domestic policy directive, for release at 2:00 p.m.:\n“Effective August 1, 2024, the Federal Open Market Committee directs the Desk to:\n• Undertake open market operations as necessary to maintain the federal funds rate in a\ntarget range of 5¼ to 5½ percent.\n• Conduct standing overnight repurchase agreement operations with a minimum bid rate of\n5.5 percent and with an aggregate operation limit of $500 billion.\n• Conduct standing overnight reverse repurchase agreement operations at an offering rate\nof 5.3 percent and with a per-counterparty limit of $160 billion per day.\n• Roll over at auction the amount of principal payments from the Federal Reserve’s\nholdings of Treasury securities maturing in each calendar month that exceeds a cap of\n$25 billion per month. Redeem Treasury coupon securities up to this monthly cap and\nTreasury bills to the extent that coupon principal payments are less than the monthly cap.\n• Reinvest the amount of principal payments from the Federal Reserve’s holdings of\nagency debt and agency mortgage-backed securities (MBS) received in each calendar\nmonth that exceeds a cap of $35 billion per month into Treasury securities to roughly\nmatch the maturity composition of Treasury securities outstanding.\n• Allow modest deviations from stated amounts for reinvestments, if needed for\noperational reasons.\n\nMinutes of the Federal Open Market Committee 13\n• Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement\nof the Federal Reserve’s agency MBS transactions.”\nThe vote also encompassed approval of the statement below for release at 2:00 p.m.:\n“Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have moderated, and the unemployment rate has moved up but remains low. Inflation has eased over the past year but remains somewhat elevated. In recent months,\nthere has been some further progress toward the Committee’s 2 percent inflation objective. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\nover the longer run. The Committee judges that the risks to achieving its employment and\ninflation goals continue to move into better balance. The economic outlook is uncertain, and\nthe Committee is attentive to the risks to both sides of its dual mandate. In support of its goals, the Committee decided to maintain the target range for the federal\nfunds rate at 5¼ to 5½ percent. In considering any adjustments to the target range for the\nfederal funds rate, the Committee will carefully assess incoming data, the evolving outlook,\nand the balance of risks. The Committee does not expect it will be appropriate to reduce the\ntarget range until it has gained greater confidence that inflation is moving sustainably toward\n2 percent. In addition, the Committee will continue reducing its holdings of Treasury\nsecurities and agency debt and agency mortgage‑backed securities. The Committee is\nstrongly committed to returning inflation to its 2 percent objective. In assessing the appropriate stance of monetary policy, the Committee will continue to\nmonitor the implications of incoming information for the economic outlook. The Committee\nwould be prepared to adjust the stance of monetary policy as appropriate if risks emerge that\ncould impede the attainment of the Committee’s goals. The Committee’s assessments will\ntake into account a wide range of information, including readings on labor market conditions,\ninflation pressures and inflation expectations, and financial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr,\nRaphael W. Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C. Daly, Austan D. Goolsbee,\nPhilip N. Jefferson, Adriana D. Kugler, and Christopher J. Waller. Voting against this action: None. Austan D. Goolsbee voted as an alternate member at this meeting. Consistent with the Committee’s decision to leave the target range for the federal funds rate\nunchanged, the Board of Governors of the Federal Reserve System voted unanimously to maintain the\n\n14 July 30–31, 2024\ninterest rate paid on reserve balances at 5.4 percent, effective August 1, 2024. The Board of\nGovernors of the Federal Reserve System voted unanimously to approve the establishment of the\nprimary credit rate at the existing level of 5.5 percent, effective August 1, 2024. It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday,\nSeptember 17–18, 2024. The meeting adjourned at 10:10 a.m. on July 31, 2024. Notation Vote\nBy notation vote completed on July 2, 2024, the Committee unanimously approved the minutes of the\nCommittee meeting held on June 11–12, 2024. Attendance\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nThomas I. Barkin\nMichael S. Barr\nRaphael W. Bostic\nMichelle W. Bowman\nLisa D. Cook\nMary C. Daly\nPhilip N. Jefferson\nAdriana D. Kugler\nChristopher J. Waller\nSusan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, Jeffrey R. Schmid, and Sushmita Shukla,\nAlternate Members of the Committee\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Presidents of the Federal Reserve Banks of\nPhiladelphia, Minneapolis, and Dallas, respectively\nMark Meder, Interim President of the Federal Reserve Bank of Cleveland\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nEdward S. Knotek II, David E. Lebow, and William Wascher, Associate Economists\nRoberto Perli, Manager, System Open Market Account\nJulie Ann Remache, Deputy Manager, System Open Market Account\nStephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board\nJose Acosta, Senior System Administrator II, Division of Information Technology, Board\n\nMinutes of the Federal Open Market Committee 15\nAlyssa G. Anderson, Principal Economist, Division of Monetary Affairs, Board\nAlessandro Barbarino, Special Adviser to the Board, Division of Board Members, Board\nDavid Bowman,2 Senior Associate Director, Division of Monetary Affairs, Board\nFang Cai, Assistant Director, Division of Financial Stability, Board\nMark A. Carlson, Adviser, Division of Monetary Affairs, Board\nStephanie E. Curcuru, Deputy Director, Division of International Finance, Board\nRochelle M. Edge, Deputy Director, Division of Monetary Affairs, Board\nJonas Fisher, Senior Vice President, Federal Reserve Bank of Chicago\nGlenn Follette, Associate Director, Division of Research and Statistics, Board\nEtienne Gagnon, Associate Director, Division of International Finance, Board\nJenn Gallagher, Assistant to the Board, Division of Board Members, Board\nCarlos Garriga, Senior Vice President, Federal Reserve Bank of St. Louis\nMichael S. Gibson, Director, Division of Supervision and Regulation, Board\nDavid Glancy, Principal Economist, Division of Monetary Affairs, Board\nJoseph W. Gruber, Executive Vice President, Federal Reserve Bank of Kansas City\nChristopher J. Gust, Associate Director, Division of Monetary Affairs, Board\nDiana Hancock, Senior Associate Director, Division of Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Monetary Affairs, Board\nColin J. Hottman, Principal Economist, Division of International Finance, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Board Members, Board\nMark J. Jensen, Vice President, Federal Reserve Bank of Atlanta\nBenjamin K. Johannsen, Assistant Director, Division of Monetary Affairs, Board\nFaten Khoury,2 Senior Financial Institution Policy Analyst, Division of Reserve Bank Operations and\nPayment Systems, Board\nMichael T. Kiley, Deputy Director, Division of Financial Stability, Board\nDon H. Kim, Senior Adviser, Division of Monetary Affairs, Board\nAnna R. Kovner, Executive Vice President, Federal Reserve Bank of Richmond\nAndreas Lehnert, Director, Division of Financial Stability, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Board Members, Board\nLaura Lipscomb, Special Adviser to the Board, Division of Board Members, Board\nRebecca D. McCaughrin,2 Policy and Market Analysis Director, Federal Reserve Bank of New York\n2 Attended through the discussion of developments in financial markets and open market operations.\n\n16 July 30–31, 2024\nBenjamin W. McDonough,3 Deputy Secretary and Ombudsman, Office of the Secretary, Board\nYvette McKnight,4 Senior Agenda Assistant, Office of Secretary, Board\nAndrew Meldrum, Assistant Director, Division of Monetary Affairs, Board\nKarel Mertens, Senior Vice President, Federal Reserve Bank of Dallas\nThomas Mertens, Vice President, Federal Reserve Bank of San Francisco\nAnn E. Misback,5 Secretary, Office of the Secretary, Board\nNorman J. Morin, Associate Director, Division of Research and Statistics, Board\nMichelle M. Neal, Head of Markets, Federal Reserve Bank of New York\nAlyssa O’Connor, Special Adviser to the Board, Division of Board Members, Board\nPaolo A. Pesenti, Director of Monetary Policy Research, Federal Reserve Bank of New York\nEugenio P. Pinto, Special Adviser to the Board, Division of Board Members, Board\nOdelle Quisumbing,4 Assistant to the Secretary, Office of the Secretary, Board\nAndrea Raffo, Senior Vice President, Federal Reserve Bank of Minneapolis\nDonald Keith Sill, Senior Vice President, Federal Reserve Bank of Philadelphia\nArsenios Skaperdas, Senior Economist, Division of Monetary Affairs, Board\nGustavo A. Suarez, Assistant Director, Division of Research and Statistics, Board\nManjola Tase, Principal Economist, Division of Monetary Affairs, Board\nThiago Teixeira Ferreira, Special Adviser to the Board, Division of Board Members, Board\nClara Vega, Special Adviser to the Board, Division of Board Members, Board\nJeffrey D. Walker,2 Associate Director, Division of Reserve Bank Operations and Payment Systems,\nBoard\nRandall A. Williams, Group Manager, Division of Monetary Affairs, Board\nPaul R. Wood, Special Adviser to the Board, Division of Board Members, Board\nEgon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston\nRebecca Zarutskie, Special Adviser to the Board, Division of Board Members, Board\n_______________________\nJoshua Gallin\nSecretary\n3 Attended Wednesday’s session only.\n4 Attended through the discussion of the economic and financial situation.\n5 Attended Tuesday’s session only.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240731.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that a rate cut could be on the table at the September 2024 meeting, but only if incoming data continues to show progress toward the 2% inflation target. Officials emphasized they need greater confidence that inflation is sustainably moving toward target before easing policy.",
+    "key_economic_factors": [
+      "Inflation has eased but remains above 2%, with June's PCE inflation at 2.5% and core PCE at 2.6%",
+      "Labor market conditions are moderating, with job gains slowing and the unemployment rate rising to 4.1%",
+      "Recent disinflation is broad-based, including in housing services and core non-housing services",
+      "Longer-term inflation expectations remain well anchored"
+    ],
+    "economic_outlook": "The Fed sees economic growth as solid but slower than in late 2023. Inflation is expected to continue declining toward 2% by 2026 as supply and demand come into better balance. However, risks to employment have increased due to signs of labor market softening, while inflation risks have diminished but remain tilted slightly to the upside.",
+    "market_impact": "Markets are pricing in a September rate cut, which could support risk assets like small-cap stocks and boost housing affordability if mortgage rates decline. However, continued restrictive policy and uncertainty around timing may keep borrowing costs elevated for consumers and businesses in the near term."
+  },
+  {
+    "date": "2024-06-12",
+    "title": "FOMC Meeting 2024-06-12",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJune 11–12, 2024\nA joint meeting of the Federal Open Market Committee Julie Ann Remache, Deputy Manager, System Open\nand the Board of Governors of the Federal Reserve Sys- Market Account\ntem was held in the offices of the Board of Governors\nStephanie R. Aaronson, Senior Associate Director,\non Tuesday, June 11, 2024, at 10:30 a.m. and continued\nDivision of Research and Statistics, Board\non Wednesday, June 12, 2024, at 9:15 a.m.1\nJose Acosta, Senior System Administrator II, Division\nAttendance\nof Information Technology, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Roc Armenter, Executive Vice President, Federal\nThomas I. Barkin Reserve Bank of Philadelphia\nMichael S. Barr\nAyelen Banegas, Principal Economist, Division of\nRaphael W. Bostic\nMonetary Affairs, Board\nMichelle W. Bowman\nLisa D. Cook Michele Cavallo, Principal Economist, Division of\nMary C. Daly Monetary Affairs, Board\nPhilip N. Jefferson\nStephanie E. Curcuru, Deputy Director, Division of\nAdriana D. Kugler\nInternational Finance, Board\nLoretta J. Mester\nChristopher J. Waller Stefania D’Amico,3 Senior Economist and Research\nAdvisor, Federal Reserve Bank of Chicago\nSusan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, and Jeffrey R. Schmid, Alternate Ryan Decker, Special Adviser to the Board, Division of\nMembers of the Committee Board Members, Board\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Rochelle M. Edge, Deputy Director, Division of\nPresidents of the Federal Reserve Banks of Monetary Affairs, Board\nPhiladelphia, Minneapolis, and Dallas, respectively\nEric M. Engen, Senior Associate Director, Division of\nJoshua Gallin, Secretary Research and Statistics, Board\nMatthew M. Luecke, Deputy Secretary\nMichele Taylor Fennell,4 Deputy Associate Secretary,\nBrian J. Bonis, Assistant Secretary\nOffice of the Secretary, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Glenn Follette, Associate Director, Division of\nRichard Ostrander, Deputy General Counsel Research and Statistics, Board\nTrevor A. Reeve, Economist\nJenn Gallagher, Assistant to the Board, Division of\nStacey Tevlin,2 Economist\nBoard Members, Board\nBeth Anne Wilson, Economist\nCarlos Garriga, Senior Vice President, Federal Reserve\nShaghil Ahmed, Kartik B. Athreya, James A. Clouse,\nBank of St. Louis\nBrian M. Doyle, Edward S. Knotek II, David E. Lebow, Paula Tkac, and William Wascher, Michael S. Gibson, Director, Division of Supervision\nAssociate Economists and Regulation, Board\nRoberto Perli, Manager, System Open Market Account David Glancy, Principal Economist, Division of\nMonetary Affairs, Board\n1 The Federal Open Market Committee is referenced as the 3 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 4 Attended the discussion of the economic and financial situthe “Board” in these minutes. ation only.\n2 Attended Tuesday’s session only.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nFrancois J. Gourio, Senior Economist and Economic Edward Nelson, Senior Adviser, Division of Monetary\nAdvisor, Federal Reserve Bank of Chicago Affairs, Board\nOlesya Grishchenko, Principal Economist, Division of Alyssa O’Connor, Special Adviser to the Board,\nMonetary Affairs, Board Division of Board Members, Board\nChristopher J. Gust, Associate Director, Division of Matthias Paustian, Assistant Director, Division of\nMonetary Affairs, Board Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Karen M. Pence, Deputy Associate Director, Division\nMonetary Affairs, Board of Research and Statistics, Board\nJasper J. Hoek, Deputy Associate Director, Division of Karen A. Pennell, First Vice President, Federal Reserve\nInternational Finance, Board Bank of Boston\nSara J. Hogan,3 Senior Financial Institution Policy Damjan Pfajfar, Group Manager, Division of Monetary\nAnalyst I, Division of Reserve Bank Operations Affairs, Board\nand Payment Systems, Board\nEugenio P. Pinto, Special Adviser to the Board,\nJane E. Ihrig, Special Adviser to the Board, Division of Division of Board Members, Board\nBoard Members, Board\nOdelle Quisumbing,5 Assistant to the Secretary, Office\nMichael T. Kiley, Deputy Director, Division of of the Secretary, Board\nFinancial Stability, Board\nGisela Rua, Principal Economist, Division of Research\nDon H. Kim,3 Senior Adviser, Division of Monetary and Statistics, Board\nAffairs, Board\nAchilles Sangster II, Senior Information Manager,\nAndreas Lehnert, Director, Division of Financial Division of Monetary Affairs, Board\nStability, Board\nA.Lee Smith, Senior Vice President, Federal Reserve\nPaul Lengermann, Deputy Associate Director, Division Bank of Kansas City\nof Research and Statistics, Board\nRobert G. Valletta, Senior Vice President, Federal\nKurt F. Lewis, Special Adviser to the Chair, Division of Reserve Bank of San Francisco\nBoard Members, Board\nFrancisco Vazquez-Grande, Group Manager, Division\nDan Li, Assistant Director, Division of Monetary of Monetary Affairs, Board\nAffairs, Board\nClara Vega, Special Adviser to the Board, Division of\nLaura Lipscomb, Special Adviser to the Board, Board Members, Board\nDivision of Board Members, Board\nAnnette Vissing-Jørgensen, Senior Adviser, Division of\nDavid López-Salido, Senior Associate Director, Monetary Affairs, Board\nDivision of Monetary Affairs, Board\nJeffrey D. Walker,3 Associate Director, Division of\nThomas Lubik, Senior Advisor, Federal Reserve Bank Reserve Bank Operations and Payment Systems,\nof Richmond Board\nBenjamin Malin, Vice President, Federal Reserve Bank Paul R. Wood, Special Adviser to the Board, Division\nof Minneapolis of Board Members, Board\nBenjamin W. McDonough, Deputy Secretary and Egon Zakrajsek, Executive Vice President, Federal\nOmbudsman, Office of the Secretary, Board Reserve Bank of Boston\nKarel Mertens, Senior Vice President, Federal Reserve Rebecca Zarutskie, Special Adviser to the Board,\nBank of Dallas Division of Board Members, Board\nMichelle M. Neal, Head of Markets, Federal Reserve\nBank of New York\n5 Attended through the discussion of the economic and financial situation.\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_1_–_12_,_ 2_0_2_4_________________________P_a_g_e_ _3\nDevelopments in Financial Markets and Open the intermeeting period. In secured funding markets, reMarket Operations purchase agreement (repo) rates remained steady for\nThe manager turned first to a review of developments in most of the period but firmed close to the end of May\nfinancial markets. Financial conditions eased modestly because of month-end pressures and the effect of large\nover the intermeeting period mainly because of higher settlements of Treasury coupon securities. Rate firmequity prices. Taking a somewhat longer perspective, ness around reporting and settlement dates was conthe manager noted that financial conditions had changed sistent with historical patterns. Use of the overnight relittle since March but eased notably since the fall. The verse repurchase agreement (ON RRP) facility remained\nmain drivers of that easing were again higher equity sensitive to market rates and the availability of alternaprices, which appeared to respond to the reductions in tive investments. Usage was little changed over much of\nthe perceived odds of a recession, and a consensus the period but dipped late in the period, coincident with\namong market participants that the federal funds rate has the month-end firming in private repo rates. The staff\nreached its peak. Nominal Treasury yields declined projected ON RRP usage to decline in coming months,\nmoderately across the curve, on net, but continued to be as net Treasury bill issuance was expected to turn posivery sensitive to incoming data surprises, especially tive and private repo rates were expected to continue to\nthose pertaining to inflation and the labor market. The move higher relative to administered rates amid large isnet decline in nominal yields over the period was primar- suance of Treasury coupon securities. The staff also\nily due to lower real yields. Inflation compensation also projected that reserves will not change much in the near\nfell somewhat, especially at shorter horizons. Longer- term, with the exception of quarter-end dates, and then\nterm inflation expectations remained well anchored. will decline about in line with the shrinking of the Federal Reserve’s portfolio after ON RRP balances are\nThe manager turned next to policy rate expectations.\nnearly fully drained. The uncertainty surrounding both\nThe path of the federal funds rate implied by futures\nprojections, however, was considerable.\nprices shifted a bit lower over the intermeeting period\nand indicated one and one-half 25 basis point cuts by The manager also discussed the responses to a Desk suryear-end. This shift appeared to reflect mostly changes vey question about the most likely spread between the\nin perceived risks rather than base-case expectations be- effective federal funds rate and the interest rate on recause the modal path implied by options was virtually serve balances at different levels of the sum of reserves\nunchanged and remained consistent with, at most, one and ON RRP balances. The responses indicated considcut this year. The median of modal paths of the federal erable uncertainty and dispersion of views about when\nfunds rate obtained from the Open Market Desk’s Sur- and how the spread would move as the sum declines.\nvey of Primary Dealers and Survey of Market Partici- The manager observed that indicators based on market\npants—taken before the May employment report—was prices and activity were likely the best gauges of how\nalso little changed. quickly reserves are transitioning from abundant to ample. Over the intermeeting period, the federal funds\nThe manager then discussed expectations regarding balmarket continued to be insensitive to day-to-day changes\nance sheet policy. Responses to the Desk surveys\nin the supply of reserves; various other indicators sugshowed a median expected timing for the end of balance\ngested that reserves remained abundant and that the risk\nsheet runoff of April 2025, one month later than in the\nof money market strains in the near term was low.\nprevious surveys, though individual respondents’ views\nof the exact timing remained dispersed. Respondents’ By unanimous vote, the Committee ratified the Desk’s\nexpectations about the size of the portfolio at the end of domestic transactions over the intermeeting period.\nrunoff had changed little in recent surveys. There were no intervention operations in foreign currencies for the System’s account during the intermeeting peIn international developments, the European Central\nriod. Bank (ECB) and the Bank of Canada (BOC) initiated\nrate-cutting cycles this period, as generally expected. Staff Review of the Economic Situation\nMarket participants reportedly had not expected easing The information available at the time of the meeting sugcycles to begin at the same time across economies but gested that U.S. economic activity had expanded at a\nappeared to expect that most advanced-economy central solid pace so far this year. Labor market conditions rebanks will have started easing policy within the next sev- mained solid. Job gains continued to be strong, while\neral months. the unemployment rate had edged up but was still low. Consumer price inflation was running well below where\nThe manager then turned to money markets and Desk\nit was a year earlier, but further progress toward the\noperations. Unsecured overnight rates were stable over\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nCommittee’s 2 percent inflation objective had been Real exports of goods edged up in April relative to\nmodest in recent months. March, following tepid growth in the first quarter. Real\nimports of goods jumped in April, driven by higher imConsumer price inflation—as measured by the\nports of autos and capital goods. Overall, the nominal\n12-month change in the price index for personal conU.S. international trade deficit widened in April, as imsumption expenditures (PCE)—was about the same in\nports of goods and services rose more than exports. April as at the end of last year, although recent monthover-month readings of PCE prices were lower than ear- Foreign GDP growth firmed in the first quarter. A\nlier this year. Total PCE price inflation was 2.7 percent buoyant service sector helped Europe recover from a\nin April, and core PCE price inflation—which excludes modest contraction in the second half of last year. In\nchanges in energy prices and many consumer food emerging market economies (EMEs), including China,\nprices—was 2.8 percent. The consumer price index growth was supported by strong external demand. The\n(CPI) in May showed that the 12-month change measure first-quarter surge in economic activity in China was also\nof total CPI inflation was 3.3 percent and core CPI in- boosted by policy support, especially from fiscal policy.\nflation was 3.4 percent, and recent monthly CPI readings More recent Chinese data, however, especially a steep\nwere lower than earlier this year. Although some survey- drop in lending to households and businesses in April,\nbased measures of short-term inflation expectations had pointed to a considerable slowdown in China’s ecomoved up, longer-term expectations were little changed nomic activity in this quarter.\nand stood at levels consistent with those that prevailed\nHeadline inflation continued to ease in the advanced forjust before the pandemic.\neign economies (AFEs) through May, albeit at a slower\nLabor demand and supply continued to move into better pace than last year. While core inflation had slowed sigbalance. Total nonfarm payroll employment increased nificantly, the core nonhousing services component reat only a somewhat slower average monthly pace over mained elevated in several regions, partly reflecting\nApril and May than the strong rate recorded in the first strong nominal wage growth. Inflation inched up in\nquarter. The recently released fourth-quarter data from EMEs, in part because of weather-related increases in\nthe Quarterly Census of Employment and Wages sug- food prices in some countries. The Riksbank, the BOC,\ngested that while the strong reported rate of payroll in- and the ECB cut their policy rates as market participants\ncreases last year may have been overstated, job gains expected, amid easing inflation. Communications about\nwere still solid. In May, the unemployment rate ticked future policy decisions varied and were focused on doup further to 4.0 percent, while the labor force partici- mestic economic conditions.\npation rate and the employment-to-population ratio\nStaff Review of the Financial Situation\nboth moved down a little. The unemployment rates for\nOver the intermeeting period, the market-implied path\nAfrican Americans and for Hispanics were somewhat\nfor the federal funds rate beyond the next few months\nhigher in May than in the first quarter; both rates were\nedged down. Options on interest rate futures suggested\nabove those for Asians and for Whites. The ratio of job\nthat market participants were placing higher odds on\nvacancies to unemployment declined further to 1.2 in\npolicy easing by early 2025 than they did just before the\nMay, about the same as its pre-pandemic level. Most\nApril FOMC meeting. Consistent with the slight downmeasures of the increase in nominal wages from a year\nward shift in the implied policy path, nominal Treasury\nearlier continued to trend down, including the 12-month\nyields at all maturities also moved down moderately,\nchange in average hourly earnings for all employees,\ndriven primarily by declines in real Treasury yields. Inwhich was 4.1 percent in May, 0.2 percentage point\nflation compensation also fell some, with larger declines\nlower than at the end of last year.\nat nearer horizons. Market-based measures of interest\nReal gross domestic product (GDP) rose modestly in the rate uncertainty ticked down but remained elevated by\nfirst quarter, held down by significant negative contribu- historical standards.\ntions from inventory investment and net exports, which\nBroad stock price indexes increased substantially, on net,\ntend to be volatile components. In contrast, private doamid a positive investor outlook on corporate profits\nmestic final purchases (PDFP)—which comprises PCE\nand economic activity. Yield spreads on investmentand private fixed investment and which often provides a\nand speculative-grade corporate bonds were little\nbetter signal than GDP of underlying economic momenchanged, remaining at about the lowest decile of their\ntum—increased at a solid pace, similar to last year. Rerespective historical distributions. The one-month opcent spending indicators suggested that GDP and PDFP\ntion-implied volatility on the S&P 500 index remained\nwere increasing at solid rates in the second quarter.\nlow by historical standards, suggesting that investors\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_1_–_12_,_ 2_0_2_4_________________________P_a_g_e_ _5\nperceived only modest near-term risks to the economic agency CMBS issuance rose in April and May, as falling\noutlook. yields extended the recent wave of refinancing. Changes in AFE yields were mixed, as spillovers from Consumer credit remained generally available over the\ndeclines in U.S. yields were partly offset by upside sur- intermeeting period despite some signs of tightening. In\nprises in economic data releases in Europe and by some- the residential mortgage market, access to credit was litwhat more restrictive-than-expected communications by tle changed and continued to depend on borrowers’\nthe ECB. The dollar depreciated against most AFE cur- credit risk attributes. Although credit card limits continrencies as differentials between U.S. and AFE yields nar- ued to rise through March, credit card balances at banks\nrowed. Nonetheless, the broad dollar index slightly in- leveled off in April and May. Auto lending at finance\ncreased as the dollar appreciated sharply against the companies continued to grow at a moderate pace\nMexican peso amid heightened policy uncertainty fol- through April, more than offsetting the decline in auto\nlowing Mexico’s presidential election results. On bal- loan balances at banks and credit unions on net.\nance, moves in foreign risky asset prices were mixed and\nCredit quality continued to be solid for large and midsize\nmodest, and EME funds saw small inflows.\nfirms, home mortgage borrowers, and municipalities but\nConditions in U.S. short-term funding markets remained deteriorated further for other sectors in recent months.\nstable over the intermeeting period. Average usage of While delinquency rates on residential mortgages rethe ON RRP facility was little changed, primarily reflect- mained near pre-pandemic lows, credit card and auto\ning the portfolio decisions of money market funds amid loan delinquency rates continued to rise in the first quarlower net Treasury bill supply. Banks’ total deposit lev- ter, signaling a further deterioration of balance sheets of\nels were roughly unchanged over the intermeeting pe- some households. The credit quality of nonfinancial\nriod, as outflows of core deposits were about offset by firms borrowing in the corporate bond and leveraged\ninflows of large time deposits. loan markets remained stable overall. Available indicators suggested that delinquency rates for the private\nIn domestic credit markets, borrowing costs remained\ncredit market and for bank C&I loans remained compaelevated despite declining modestly over the intermeetrable to the levels just before the pandemic despite ticking period. Rates on 30-year conforming residential\ning up further in the first quarter. For small business\nmortgages edged down, on net, over the intermeeting\nloans, delinquency rates stayed slightly above preperiod but remained near recent high levels. Interest\npandemic levels. In the CRE market, credit quality derates on new credit card offers were little changed in\nteriorated further, as the average CMBS delinquency rate\nApril at high levels, as were rates on new auto loans. Inrose in April and May to the highest levels since 2021,\nterest rates on commercial and industrial (C&I) loans\ndriven by the office, hotel, and retail sectors, and the\nand small business loans also remained elevated. Yields\ncredit quality of CRE borrowers at banks weakened\non an array of fixed-income securities, including comslightly further in the first quarter.\nmercial mortgage-backed securities (CMBS), investment- and speculative-grade corporate bonds, and resi- Staff Economic Outlook\ndential mortgage-backed securities, moved lower to still- The economic forecast prepared by the staff for the June\nelevated levels relative to recent history. meeting was similar to the projection at the time of the\nprevious meeting. The economy was expected to mainFinancing was readily accessible for public corporations\ntain a high rate of resource utilization over the next few\nand large and middle-market private corporations\nyears, with real GDP growth projected to be roughly\nthrough capital markets and nonbank lenders. Credit\nsimilar to the staff’s estimate of potential output growth.\navailability for leveraged loan borrowers remained solid\nThe unemployment rate was expected to edge down\nover the intermeeting period, while in private credit marslightly over the remainder of this year and the next and\nkets, loan issuance through direct lending was strong.\nthen to remain roughly flat in 2026. Bank C&I loan balances picked up in April and May. For small firms, the volume of loan originations ticked Total and core PCE price inflation were both projected\ndown in April, and credit availability remained tight. to be lower at the end of this year than they were at the\nend of last year. The staff’s inflation projections for this\nCredit remained largely available to commercial real esyear—which included a preliminary reaction to the May\ntate (CRE) borrowers outside of construction and land\nCPI data—were little changed, on balance, from the indevelopment loans. CRE loans at banks continued to\nflation forecast at the time of the previous meeting. The\nincrease in April and May, driven by growth in multifaminflation forecast was higher, however, than at the time\nily and nonfarm nonresidential loans. Agency and nonof the March meeting and the March Summary of\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nEconomic Projections (SEP) submissions. Inflation was highlighted the strong increases recorded this year in\nstill expected to decline further in 2025 and 2026, as de- core import prices. Nevertheless, participants suggested\nmand and supply in product and labor markets contin- that a number of developments in the product and labor\nued to move into better balance; by 2026, total and core markets supported their judgment that price pressures\nPCE price inflation were expected to be close to 2 per- were diminishing. In particular, a few participants emcent. phasized that nominal wage growth, though still above\nrates consistent with price stability, had declined, notably\nThe staff continued to view the uncertainty around the\nin labor-intensive sectors. A few participants also noted\nbaseline projection as close to the average over the past\nreports that various retailers had cut prices and offered\n20 years. Risks to the inflation forecast were seen as\ndiscounts. Participants further indicated that business\ntilted to the upside, reflecting the possibility that more\ncontacts reported that their pricing power had declined.\npersistent inflation dynamics or supply-side disruptions\nParticipants suggested that evidence of firms’ reduced\ncould unexpectedly materialize. The risks around the\npricing power reflected increased customer resistance to\nforecast for economic activity were seen as skewed to\nprice increases, slower growth in economic activity, and\nthe downside on the grounds that more-persistent inflaa reassessment by businesses of prospective economic\ntion could result in tighter financial conditions than in\nconditions.\nthe staff’s baseline projection; in addition, deteriorating\nhousehold financial positions, especially for lower- With regard to the outlook for inflation, participants emincome households, might prove to have a larger nega- phasized that they were strongly committed to their\ntive effect on economic activity than the staff antici- 2 percent objective and that they remained concerned\npated. that elevated inflation continued to harm the purchasing\npower of households, especially those least able to meet\nParticipants’ Views on Current Conditions and the\nthe higher costs of essentials like food, housing, and\nEconomic Outlook\ntransportation. Participants highlighted a variety of facIn conjunction with this FOMC meeting, participants\ntors that were likely to help contribute to continued dissubmitted their projections of the most likely outcomes\ninflation in the period ahead. The factors included confor real GDP growth, the unemployment rate, and inflatinued easing of demand–supply pressures in product\ntion for each year from 2024 through 2026 and over the\nand labor markets, lagged effects on wages and prices of\nlonger run. These projections were based on their indipast monetary policy tightening, the delayed response of\nvidual assessments of appropriate monetary policy, inmeasured shelter prices to rental market developments,\ncluding their projections of the federal funds rate. The\nor the prospect of additional supply-side improvements.\nlonger-run projections represented each participant’s asThe latter prospect included the possibility of a boost to\nsessment of the rate to which each variable would tend\nproductivity associated with businesses’ deployment of\nto converge under appropriate monetary policy and in\nartificial intelligence–related technology. Participants\nthe absence of further shocks to the economy. The SEP\nobserved that longer-term inflation expectations had rewas released to the public after the meeting.\nmained well anchored and viewed this anchoring as unIn their discussion of inflation developments, partici- derpinning the disinflation process. Participants afpants noted that after a significant decline in inflation firmed that additional favorable data were required to\nduring the second half of 2023, the early part of this year give them greater confidence that inflation was moving\nhad seen a lack of further progress toward the Commit- sustainably toward 2 percent.\ntee’s 2 percent objective. Participants judged that alParticipants remarked that demand and supply in the lathough inflation remained elevated, there had been modbor market had continued to come into better balance.\nest further progress toward the 2 percent goal in recent\nParticipants observed that many labor market indicators\nmonths. Participants observed that some of this propointed to a reduced degree of tightness in labor market\ngress was evident in the smaller monthly change in the\nconditions. These included a declining job openings\ncore PCE price index and a lower trimmed mean inflarate, a lower quits rate, increases in part-time employtion rate for April, with the May CPI reading providing\nment for economic reasons, a lower hiring rate, a further\nadditional evidence. Recent data had also indicated imstep-down in the ratio of job vacancies to unemployed\nprovements across a range of price categories, including\nworkers, and a gradual uptick in the unemployment rate.\nmarket-based services. Some participants commented\nIn addition, a few participants indicated that business\nthat sustained achievement of the 2 percent inflation obcontacts were reporting less difficulty in hiring and rejective would be aided by lower overall services price intaining workers, although contacts in several Districts\nflation, and some noted that shelter price inflation had\ncontinued to report tight labor market conditions in\nso far been slow to come down. A few participants also\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_1_–_12_,_ 2_0_2_4_________________________P_a_g_e_ _7\ncertain sectors, such as health care, construction, or spe- production, including households’ discretionary purcialty manufacturing. Many participants noted that labor chases and residential construction activity. A few parsupply had been boosted by increased labor force partic- ticipants remarked that spending by some higher-inipation rates as well as by immigration. A few partici- come households was likely being bolstered by increaspants noted that it was unlikely that immigration would ing asset prices. Many participants observed that, in\ncontinue at the pace seen in recent years. However, sev- contrast, lower- and moderate-income households were\neral participants judged that, with recent immigrants encountering increasing strains as they attempted to\ngradually becoming part of the workforce, past immigra- meet higher living costs after having largely run down\ntion likely would continue to add to labor supply. A few savings accumulated during the pandemic. These particparticipants observed that increases in labor force par- ipants noted that such strains, which were evident in risticipation would likely now be limited and so would not ing credit card utilization and delinquency rates as well\nbe a major source of additional labor supply. In consid- as motor vehicle loan delinquencies, were a significant\nering recent payrolls data, some participants observed concern.\nthat, although increases in payrolls had continued to be\nParticipants continued to assess that the risks to achievstrong, the monthly increase in employment consistent\ning their employment and inflation goals had moved towith labor market equilibrium might now be higher than\nward better balance over the past year. Participants cited\nin the past because of immigration. Several participants\na number of downside risks to economic activity, includalso suggested that the establishment survey may have\ning those associated with a sharper-than-anticipated\noverstated actual job gains. Several participants reslowing in aggregate demand alongside a marked deterimarked that a variety of indicators, including wage gains\noration in labor market conditions, or with strains on\nfor job switchers, suggested that nominal wage growth\nlower- and moderate-income households’ budgets leadwas slowing, consistent with easing labor market presing to an abrupt curtailment of consumer spending. A\nsures. A number of participants noted that, although the\nfew participants pointed to downside risks to economic\nlabor market remained strong, the ratio of vacancies to\nactivity associated with the fragility of some parts of the\nunemployment had returned to pre-pandemic levels and\nCRE sector or the vulnerable balance sheet positions of\nthere was some risk that further cooling in labor market\nsome banks. Some participants highlighted reasons why\nconditions could be associated with an increased pace of\ninflation could remain above 2 percent for longer than\nlayoffs. Some participants observed that, with the risks\nexpected. These participants pointed to risks that inflato the Committee’s dual-mandate goals having now\ntion could stay elevated as a result of worsening geopocome into better balance, labor market conditions would\nlitical developments, heightened trade tensions, more\nneed careful monitoring. Participants generally obpersistent shelter price inflation, financial conditions\nserved that continued labor market strength could be\nthat might be or could become insufficiently restrictive,\nconsistent with the Committee achieving both its emor U.S. fiscal policy becoming more expansionary than\nployment and inflation goals, though they noted that\nexpected; the latter two scenarios were also seen as imsome further gradual cooling in the labor market may be\nplying upside risks to economic activity. Several particirequired.\npants also cited the risk of an unanchoring of longerParticipants noted that recent indicators suggested that term inflation expectations.\neconomic activity had continued to expand at a solid\nIn their consideration of monetary policy at this meeting,\npace. Participants expected that real GDP growth this\nparticipants observed that incoming data indicated conyear would be below the strong pace recorded in 2023,\ntinued solid growth in economic activity and a strong laand they remarked that recent data on economic activity\nbor market while also pointing to modest further prowere largely consistent with the anticipated slowing.\ngress toward the Committee’s 2 percent inflation objecParticipants observed that a lower rate of output growth\ntive in recent months. Participants remained highly atthis year could aid the disinflation process while also betentive to inflation risks. All participants judged that, in\ning consistent with a strong labor market. Participants\nlight of current economic conditions and their implicagenerally viewed the Committee’s restrictive monetary\ntions for the outlook for employment and inflation, as\npolicy stance as having a restraining effect on growth in\nwell as the balance of risks, it was appropriate to mainconsumption and investment spending and as contribtain the target range for the federal funds rate at 5¼ to\nuting to a gradual slowing in the pace of economic activ5½ percent. Participants furthermore judged that it was\nity. A couple of participants particularly stressed that the\nappropriate to continue the process of reducing the FedCommittee’s past policy tightening had contributed to\neral Reserve’s securities holdings.\nhigher rates for home mortgage loans and other longerterm borrowing, which were moderating spending and\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nIn discussing the outlook for monetary policy, partici- participants emphasized the need for patience in allowpants noted that progress in reducing inflation had been ing the Committee’s restrictive policy stance to restrain\nslower this year than they had expected last December. aggregate demand and further moderate inflation presThey emphasized that they did not expect that it would sures. Several participants observed that, were inflation\nbe appropriate to lower the target range for the federal to persist at an elevated level or to increase further, the\nfunds rate until additional information had emerged to target range for the federal funds rate might need to be\ngive them greater confidence that inflation was moving raised. A number of participants remarked that monesustainably toward the Committee’s 2 percent objective. tary policy should stand ready to respond to unexpected\nIn discussing their individual outlooks for the target economic weakness. Several participants specifically\nrange for the federal funds rate, participants emphasized emphasized that with the labor market normalizing, a\nthe importance of conditioning future policy decisions further weakening of demand may now generate a larger\non incoming data, the evolving economic outlook, and unemployment response than in the recent past when\nthe balance of risks. Several participants noted that fi- lower demand for labor was felt relatively more through\nnancial market reactions to data and feedback received fewer job openings.\nfrom contacts suggested that the Committee’s policy apCommittee Policy Actions\nproach was generally well understood. Some particiIn their discussions of monetary policy for this meeting,\npants suggested that further clarity about the FOMC’s\nmembers agreed that economic activity continued to exreaction function might be provided by communications\npand at a solid pace. Job gains remained strong, and the\nthat emphasized the Committee’s data-dependent apunemployment rate remained low. Inflation eased over\nproach, with monetary policy decisions being condithe past year but remained elevated. Members contional on the evolution of the economy rather than being\ncurred that, in recent months, there was modest further\non a preset path. A couple of participants remarked that\nprogress toward the Committee’s 2 percent inflation obproviding more information about the Committee’s\njective and agreed to acknowledge this development in\nviews on the economic outlook and the risks around the\nthe postmeeting statement. Members judged that the\noutlook would improve the public’s understanding of\nrisks to achieving the Committee’s employment and inthe Committee’s decisions.\nflation goals had moved toward better balance over the\nIn discussing risk-management considerations that past year. Members viewed the economic outlook as uncould bear on the outlook for monetary policy, partici- certain and agreed that they remained highly attentive to\npants assessed that, with labor market tightness having inflation risks.\neased and inflation having declined over the past year,\nIn support of the Committee’s goals to achieve maxithe risks to achieving the Committee’s employment and\nmum employment and inflation at the rate of 2 percent\ninflation goals had moved toward better balance, leaving\nover the longer run, members agreed to maintain the tarmonetary policy well positioned to deal with the risks\nget range for the federal funds rate at 5¼ to 5½ percent.\nand uncertainties faced in pursuing both sides of the\nMembers concurred that, in considering any adjustments\nCommittee’s dual mandate. The vast majority of particto the target range for the federal funds rate, they would\nipants assessed that growth in economic activity apcarefully assess incoming data, the evolving outlook, and\npeared to be gradually cooling, and most participants rethe balance of risks. Members agreed that they did not\nmarked that they viewed the current policy stance as reexpect that it would be appropriate to reduce the target\nstrictive. Some participants noted that there was uncerrange until they have gained greater confidence that intainty about the degree of restrictiveness of current polflation is moving sustainably toward 2 percent. In addiicy. Some remarked that the continued strength of the\ntion, members agreed to continue to reduce the Federal\neconomy, as well as other factors, could mean that the\nReserve’s holdings of Treasury securities and agency\nlonger-run equilibrium interest rate was higher than predebt and agency mortgage-backed securities. All memviously assessed, in which case both the stance of monbers affirmed their strong commitment to returning inetary policy and overall financial conditions may be less\nflation to the Committee’s 2 percent objective.\nrestrictive than they might appear. A couple of participants noted that the longer-run equilibrium interest rate Members agreed that, in assessing the appropriate stance\nwas a better guide for determining where the federal of monetary policy, they would continue to monitor the\nfunds rate may need to move over the longer run than implications of incoming information for the economic\nfor assessing the restrictiveness of current policy. Par- outlook. They would be prepared to adjust the stance of\nticipants noted the uncertainty associated with the eco- monetary policy as appropriate if risks emerged that\nnomic outlook and with how long it would be appropri- could impede the attainment of the Committee’s goals.\nate to maintain a restrictive policy stance. Some Members also agreed that their assessments would take\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_1_–_12_,_ 2_0_2_4_________________________P_a_g_e_ _9\ninto account a wide range of information, including “Recent indicators suggest that economic activreadings on labor market conditions, inflation pressures ity has continued to expand at a solid pace. Job\nand inflation expectations, and financial and interna- gains have remained strong, and the unemploytional developments. ment rate has remained low. Inflation has eased\nover the past year but remains elevated. In reAt the conclusion of the discussion, the Committee\ncent months, there has been modest further\nvoted to direct the Federal Reserve Bank of New York,\nprogress toward the Committee’s 2 percent inuntil instructed otherwise, to execute transactions in the\nflation objective. SOMA in accordance with the following domestic policy\ndirective, for release at 2:00 p.m.: The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\n“Effective June 13, 2024, the Federal Open\nover the longer run. The Committee judges that\nMarket Committee directs the Desk to:\nthe risks to achieving its employment and infla-\n Undertake open market operations as nec- tion goals have moved toward better balance\nessary to maintain the federal funds rate in over the past year. The economic outlook is una target range of 5¼ to 5½ percent. certain, and the Committee remains highly attentive to inflation risks.\n Conduct standing overnight repurchase\nagreement operations with a minimum bid In support of its goals, the Committee decided\nrate of 5.5 percent and with an aggregate to maintain the target range for the federal\noperation limit of $500 billion. funds rate at 5¼ to 5½ percent. In considering\nany adjustments to the target range for the fed-\n Conduct standing overnight reverse repureral funds rate, the Committee will carefully aschase agreement operations at an offering\nsess incoming data, the evolving outlook, and\nrate of 5.3 percent and with a per-counterthe balance of risks. The Committee does not\nparty limit of $160 billion per day.\nexpect it will be appropriate to reduce the target\n Roll over at auction the amount of principal range until it has gained greater confidence that\npayments from the Federal Reserve’s hold- inflation is moving sustainably toward 2 perings of Treasury securities maturing in each cent. In addition, the Committee will continue\ncalendar month that exceeds a cap of reducing its holdings of Treasury securities and\n$25 billion per month. Redeem Treasury agency debt and agency mortgage‑backed secucoupon securities up to this monthly cap rities. The Committee is strongly committed to\nand Treasury bills to the extent that coupon returning inflation to its 2 percent objective.\nprincipal payments are less than the\nIn assessing the appropriate stance of monetary\nmonthly cap.\npolicy, the Committee will continue to monitor\n Reinvest the amount of principal payments the implications of incoming information for\nfrom the Federal Reserve’s holdings of the economic outlook. The Committee would\nagency debt and agency mortgage-backed be prepared to adjust the stance of monetary\nsecurities (MBS) received in each calendar policy as appropriate if risks emerge that could\nmonth that exceeds a cap of $35 billion per impede the attainment of the Committee’s\nmonth into Treasury securities to roughly goals. The Committee’s assessments will take\nmatch the maturity composition of Treas- into account a wide range of information, inury securities outstanding. cluding readings on labor market conditions, inflation pressures and inflation expectations, and\n Allow modest deviations from stated\nfinancial and international developments.”\namounts for reinvestments, if needed for\noperational reasons. Voting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr, Raphael W.\n Engage in dollar roll and coupon swap\nBostic, Michelle W. Bowman, Lisa D. Cook, Mary C.\ntransactions as necessary to facilitate settleDaly, Philip N. Jefferson, Adriana D. Kugler, Loretta J.\nment of the Federal Reserve’s agency MBS\nMester, and Christopher J. Waller.\ntransactions.”\nVoting against this action: None. The vote also encompassed approval of the statement\nbelow for release at 2:00 p.m.:\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nConsistent with the Committee’s decision to leave the Notation Vote\ntarget range for the federal funds rate unchanged, the By notation vote completed on May 21, 2024, the ComBoard of Governors of the Federal Reserve System mittee unanimously approved the minutes of the Comvoted unanimously to maintain the interest rate paid on mittee meeting held on April 30–May 1, 2024.\nreserve balances at 5.4 percent, effective June 13, 2024. The Board of Governors of the Federal Reserve System\nvoted unanimously to approve the establishment of the\nprimary credit rate at the existing level of 5.5 percent, _______________________\neffective June 13, 2024. Joshua Gallin\nSecretary\nIt was agreed that the next meeting of the Committee\nwould be held on Tuesday–Wednesday, July 30–31,\n2024. The meeting adjourned at 10:55 a.m. on June 12,\n2024.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240612.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled it does not expect to cut rates until it gains greater confidence that inflation is sustainably moving toward its 2% target. Future decisions will be data-dependent, with policy adjustments made as needed based on incoming economic information.",
+    "key_economic_factors": [
+      "Inflation has eased over the past year but remains elevated, with only modest further progress toward the 2% target in recent months",
+      "Labor market remains strong, with solid job gains and a low unemployment rate, though some indicators show gradual cooling",
+      "Economic activity continues to expand at a solid pace, consistent with a restrictive policy stance gradually slowing demand",
+      "Risks to achieving both employment and inflation goals have moved into better balance, reducing urgency for immediate rate cuts"
+    ],
+    "economic_outlook": "The Fed sees the economy expanding at a solid pace, with real GDP growth expected to moderate from 2023 levels but remain above trend. The labor market remains strong, though signs of normalization are emerging, including a declining job openings rate and rising unemployment. Inflation is expected to continue trending lower over 2025 and 2026, but progress has been slower than anticipated, and risks remain tilted to the upside.",
+    "market_impact": "Markets should expect rates to remain high for the foreseeable future, supporting the dollar and keeping upward pressure on yields for mortgages and business loans. Consumers and businesses should plan for sustained borrowing costs, while investors may see continued volatility until clearer disinflation trends emerge."
+  },
+  {
+    "date": "2024-05-01",
+    "title": "FOMC Meeting 2024-05-01",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nApril 30–May 1, 2024\nA joint meeting of the Federal Open Market Committee Jose Acosta, Senior System Administrator II, Division\nand the Board of Governors of the Federal Reserve Sys- of Information Technology, Board\ntem was held in the offices of the Board of Governors\nAlyssa Arute,2 Manager, Division of Reserve Bank\non Tuesday, April 30, 2024, at 10:00 a.m. and continued\nOperations and Payment Systems, Board\non Wednesday, May 1, 2024, at 9:00 a.m.1\nAyelen Banegas, Principal Economist, Division of\nAttendance\nMonetary Affairs, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Becky C. Bareford, First Vice President, Federal\nThomas I. Barkin Reserve Bank of Richmond\nMichael S. Barr\nPenelope A. Beattie,3 Section Chief, Office of the\nRaphael W. Bostic\nSecretary, Board\nMichelle W. Bowman\nLisa D. Cook Carol C. Bertaut, Senior Adviser, Division of\nMary C. Daly International Finance, Board\nPhilip N. Jefferson\nDavid Bowman, Senior Associate Director, Division of\nAdriana D. Kugler\nMonetary Affairs, Board\nLoretta J. Mester\nChristopher J. Waller Marco Cipriani, Research Department Head, Federal\nReserve Bank of New York\nSusan M. Collins, Austan D. Goolsbee, Alberto G. Musalem, Jeffrey R. Schmid, and Sushmita Shukla, Todd E. Clark, Senior Vice President, Federal Reserve\nAlternate Members of the Committee Bank of Cleveland\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Juan C. Climent, Special Adviser to the Board, Division\nPresidents of the Federal Reserve Banks of of Board Members, Board\nPhiladelphia, Minneapolis, and Dallas, respectively\nDaniel M. Covitz, Deputy Director, Division of\nJoshua Gallin, Secretary Research and Statistics, Board\nMatthew M. Luecke, Deputy Secretary\nStephanie E. Curcuru, Deputy Director, Division of\nBrian J. Bonis, Assistant Secretary\nInternational Finance, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Ryan Decker, Special Adviser to the Board, Division of\nRichard Ostrander, Deputy General Counsel Board Members, Board\nTrevor A. Reeve, Economist\nWendy E. Dunn, Adviser, Division of Research and\nStacey Tevlin, Economist\nStatistics, Board\nBeth Anne Wilson, Economist\nRochelle M. Edge, Deputy Director, Division of\nShaghil Ahmed, James A. Clouse, Brian M. Doyle,\nMonetary Affairs, Board\nWilliam Wascher, and Alexander L. Wolman,\nAssociate Economists Eric C. Engstrom, Associate Director, Division of\nMonetary Affairs, Board\nRoberto Perli, Manager, System Open Market Account\nCharles A. Fleischman, Senior Adviser, Division of\nJulie Ann Remache, Deputy Manager, System Open\nResearch and Statistics, Board\nMarket Account\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 3 Attended through the discussion of the economic and finanthe “Board” in these minutes. cial situation.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nJenn Gallagher, Assistant to the Board, Division of Makoto Nakajima, Vice President, Federal Reserve\nBoard Members, Board Bank of Philadelphia\nPeter M. Garavuso, Lead Information Manager, Michelle M. Neal, Head of Markets, Federal Reserve\nDivision of Monetary Affairs, Board Bank of New York\nCarlos Garriga, Senior Vice President, Federal Reserve Anna Paulson, Executive Vice President, Federal\nBank of St. Louis Reserve Bank of Chicago\nMichael S. Gibson, Director, Division of Supervision Eugenio P. Pinto, Special Adviser to the Board,\nand Regulation, Board Division of Board Members, Board\nJoseph W. Gruber, Executive Vice President, Federal Odelle Quisumbing,3 Assistant to the Secretary, Office\nReserve Bank of Kansas City of the Secretary, Board\nValerie S. Hinojosa, Section Chief, Division of Andrea Raffo, Senior Vice President, Federal Reserve\nMonetary Affairs, Board Bank of Minneapolis\nJane E. Ihrig, Special Adviser to the Board, Division of Samuel Schulhofer-Wohl, Senior Vice President,\nBoard Members, Board Federal Reserve Bank of Dallas\nBenjamin K. Johannsen, Assistant Director, Division Zeynep Senyuz, Deputy Associate Director, Division\nof Monetary Affairs, Board of Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Mark Spiegel, Senior Policy Advisor, Federal Reserve\nFinancial Stability, Board Bank of San Francisco\nDon H. Kim,2 Senior Adviser, Division of Monetary John J. Stevens, Senior Associate Director, Division of\nAffairs, Board Research and Statistics, Board\nAndreas Lehnert, Director, Division of Financial Balint Szoke,4 Senior Economist, Division of Monetary\nStability, Board Affairs, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of Yannick Timmer, Senior Economist, Division of\nBoard Members, Board Monetary Affairs, Board\nDan Li, Assistant Director, Division of Monetary Clara Vega, Special Adviser to the Board, Division of\nAffairs, Board Board Members, Board\nLaura Lipscomb, Special Adviser to the Board, Annette Vissing-Jørgensen, Senior Adviser, Division of\nDivision of Board Members, Board Monetary Affairs, Board\nDavid López-Salido, Senior Associate Director, Jeffrey D. Walker,2 Associate Director, Division of\nDivision of Monetary Affairs, Board Reserve Bank Operations and Payment Systems,\nBoard\nJoshua S. Louria, Group Manager, Division of\nMonetary Affairs, Board Jonathan Willis, Vice President, Federal Reserve Bank\nof Atlanta\nBenjamin W. McDonough, Deputy Secretary and\nOmbudsman, Office of the Secretary, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nAnn E. Misback, Secretary, Office of the Secretary,\nBoard Egon Zakrajsek, Executive Vice President, Federal\nReserve Bank of Boston\nRaven Molloy, Deputy Associate Director, Division of\nResearch and Statistics, Board Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nNorman J. Morin, Associate Director, Division of\nResearch and Statistics, Board\n4 Attended Tuesday’s session only.\n\n____________________________M__in_u_t_e_s _o_f_ t_h_e_ M__e_et_in_g_ _o_f_ A_p_r_i_l 3_0_–_M__a_y_ 1_,_ 2_0_2_4_______________________P_a_g_e_ _3\nDevelopments in Financial Markets and Open slowdown in the pace of runoff was not likely to transMarket Operations late to a higher terminal size of the portfolio. The manager turned first to a review of developments in\nThe manager then turned to money markets and Desk\nfinancial markets. Domestic data releases over the interoperations. Unsecured overnight rates were stable over\nmeeting period pointed to inflation being more persisthe intermeeting period. In secured funding markets,\ntent than previously expected and to a generally resilient\nrates on overnight repurchase agreements firmed someeconomy. Policy expectations shifted materially in rewhat over the March quarter-end reporting date, in line\nsponse. The policy rate path derived from futures prices\nwith recent history. Market participants generally reimplied fewer than two 25 basis point rate cuts by yearported that the return of somewhat higher rates around\nend. The modal path based on options prices was quite\nreporting dates had not been associated with any issues\nflat, suggesting at most one such rate cut in 2024. The\nin market functioning. Despite the ongoing balance\nmedian of the modal paths of the federal funds rate obsheet runoff, take-up at the overnight reverse repurchase\ntained from the Open Market Desk’s Survey of Primary\nagreement (ON RRP) facility was largely steady over the\nDealers and Survey of Market Participants also indicated\nperiod, likely reflecting fewer attractive private-market\nfewer cuts this year than previously thought. Respondalternatives for money market funds (MMFs) amid a reents’ baseline expectations for the timing of the first rate\ncent reduction in Treasury bills outstanding as well as a\ncut—which had been concentrated around June in the\ndecrease in MMFs’ weighted average maturities. March surveys—shifted out significantly and became\nON RRP usage was also likely supported by typical\nmore diffuse.\nmonth-end dynamics. The staff and respondents to the\nTreasury yields rose materially over the intermeeting pe- Desk’s Survey of Primary Dealers expected ON RRP\nriod. At shorter maturities, the increase appeared to take-up to decline in coming months.\nlargely reflect higher inflation compensation, while at\nThe manager provided an update on reserve conditions.\nlonger maturities, it was attributable mostly to a higher\nOver the intermeeting period, the federal funds market\nexpected path for the real policy rate and higher real risk\ncontinued to be insensitive to day-to-day changes in the\npremiums. Model estimates suggested that inflation exsupply of reserves and suggested that reserves remained\npectations rose some, but mostly at shorter horizons.\nabundant. The manager discussed various other indicaLonger-term inflation expectations appeared to remain\ntors that supported the same conclusion.\nwell anchored. Broad equity prices fell over the period,\nas higher interest rates weighed on valuations, while re- The Committee voted unanimously to renew the recipcent earnings reports, which were generally solid, pro- rocal currency arrangements with the Bank of Canada\nvided some support. The dollar strengthened as several and the Bank of Mexico; these arrangements are associforeign central banks were expected to start easing policy ated with the Federal Reserve’s participation in the\nbefore the Federal Reserve. Overall, higher yields and North American Framework Agreement of 1994. In adlower equity prices, together with the stronger dollar, re- dition, the Committee voted unanimously to renew the\nsulted in a tightening of financial conditions over the pe- dollar and foreign currency liquidity swap arrangements\nriod. with the Bank of Canada, the Bank of England, the Bank\nof Japan, the European Central Bank, and the Swiss NaThe manager then discussed expectations regarding baltional Bank. The votes to renew the Federal Reserve’s\nance sheet policy. Respondents to the Desk surveys exparticipation in these standing arrangements occur anpected a slowing in the pace of balance sheet reduction\nnually at the April or May FOMC meeting.\nto begin soon; the median respondent projected that the\nslowdown would start in June, one month earlier than in By unanimous vote, the Committee ratified the Desk’s\nthe March surveys. The average probability distribution domestic transactions over the intermeeting period.\nof the size of the System Open Market Account There were no intervention operations in foreign curren-\n(SOMA) portfolio at the end of runoff had become a bit cies for the System’s account during the intermeeting pemore concentrated, and its probability-weighted mean riod.\nwas slightly lower than in the March surveys. Overall,\nStaff Review of the Economic Situation\nthe survey results suggested that respondents’ expectaThe information available at the time of the April 30–\ntions for a slowdown of balance sheet runoff had been\nMay 1 meeting indicated that growth in U.S. real gross\ndecoupled from expectations about the timing and exdomestic product (GDP) stepped down in the first quartent of rate cuts, and that respondents understood that a\nter of 2024 from the robust pace seen over the second\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nhalf of 2023. Labor market conditions remained strong. Foreign GDP growth is estimated to have picked up in\nConsumer price inflation—as measured by the the first quarter from its subdued pace in the previous\n12-month change in the price index for personal con- quarter. In Europe, economic activity resumed expandsumption expenditures (PCE)—slowed significantly ing following modest contractions in several economies\nover the past year but had moved up slightly in recent amid monetary policy restraint and the repercussions of\nmonths and remained above 2 percent. the 2022 energy shock. Growth stepped up in China,\nled by strong exports, but property-sector indicators reLabor demand and supply continued to move into better\nmained weak. Elsewhere in emerging Asia, exports rebalance, though the speed of this realignment appeared\nbounded further from last year’s lows, lifted by robust\nto have slowed in recent months. Total nonfarm payroll\nglobal demand for high-tech goods.\nemployment increased at a faster average monthly pace\nin the first quarter of 2024 than in the fourth quarter of Headline inflation eased modestly further in the ad2023. The unemployment rate ticked down to 3.8 per- vanced foreign economies (AFEs) in the first quarter,\ncent in March, while the labor force participation rate but inched up in the emerging market economies in part\nand the employment-to-population ratio both moved up because of food price pressure caused by adverse\n0.2 percentage point. The unemployment rate for Afri- weather in some countries. Most major AFE central\ncan Americans increased, and the rate for Hispanics banks kept their policy rates unchanged over the intermoved down; both rates were higher than those for meeting period, and some reiterated that policy rate cuts\nAsians and for Whites. The 12-month changes in the could be appropriate at coming meetings.\nemployment cost index (ECI) and average hourly earnStaff Review of the Financial Situation\nings for all employees both declined in March relative to\nOver the intermeeting period, the market-implied path\na year earlier, but the 3-month change in the ECI\nfor the federal funds rate through 2024 increased markstepped up noticeably from the average pace that preedly, and federal funds futures rates suggested that marvailed over the second half of 2023.\nket participants were placing lower odds on significant\nRegarding consumer price inflation, total PCE prices in- policy easing in 2024 than they did just before the March\ncreased 2.7 percent over the 12 months ending in March, FOMC meeting. Consistent with the rise in the implied\nwhile core PCE price inflation—which excludes changes policy path, nominal Treasury yields at all maturities also\nin energy prices and many consumer food prices—was rose substantially as investors appeared to reassess the\n2.8 percent over the same period. Both inflation persistence of inflation and the implications for monemeasures were considerably lower than their year-earlier tary policy. Market-based measures of interest rate unlevels but had surprised to the upside. Although some certainty remained elevated by historical standards.\nmeasures of short-term inflation expectations had\nBroad stock price indexes declined moderately, on net,\nmoved up, longer-term expectations were little changed\nover the intermeeting period. Yield spreads on investand stood at levels consistent with those that prevailed\nment-grade corporate bonds were about unchanged, and\nbefore the pandemic.\nthose on speculative-grade corporate bonds increased\nAccording to the advance estimate, real GDP rose mod- moderately. The one-month option-implied volatility on\nestly in the first quarter. However, private domestic final the S&P 500 increased significantly over the period, appurchases (PDFP)—which comprises PCE and private parently reflecting rising geopolitical tensions, but refixed investment and which often provides a better sig- mained at moderate levels by historical standards.\nnal than GDP of underlying economic momentum—\nOver the intermeeting period, incoming foreign ecoposted an increase that was similar to the solid gains seen\nnomic data and central bank communications were\nover the second half of 2023.\nlargely consistent with market participants’ expectations\nReal exports of goods and services grew at a tepid pace that most AFE central banks will lower policy rates at\noverall in the first quarter, with gains in exports of foods, coming meetings. Nonetheless, AFE sovereign bond\nconsumer goods, and capital goods being mostly offset yields rose, primarily reflecting spillovers from higher\nby declines in exports of industrial supplies. By contrast, U.S. yields. Wider U.S.–AFE yield differentials and, to\nreal imports rose at a brisk pace, boosted in part by a a lesser extent, heightened geopolitical tensions in the\nlarge increase in imports of capital goods. All told, net Middle East contributed to a moderate increase in the\nexports made a significant negative contribution to broad dollar index. Though geopolitical tensions\nU.S. GDP growth in the first quarter. weighed on risk sentiment at times, prices of foreign\nrisky assets were little changed on balance.\n\n____________________________M__in_u_t_e_s _o_f_ t_h_e_ M__e_et_in_g_ _o_f_ A_p_r_i_l 3_0_–_M__a_y_ 1_,_ 2_0_2_4_______________________P_a_g_e_ _5\nConditions in U.S. short-term funding markets remained in the SLOOS that they tightened lending standards on\nstable over the intermeeting period, with typical dynam- auto loans in the first quarter.\nics observed surrounding quarter-end. Usage of the\nAlthough credit quality for household loans remained\nON RRP facility leveled off during the first few weeks\nsolid, on balance, delinquency rates for credit cards and\nof the period, primarily reflecting MMFs slowing their\nauto loans in the fourth quarter remained notably above\nre-allocation into Treasury bills.\ntheir levels just before the pandemic. For residential\nIn domestic credit markets, borrowing costs generally mortgages, delinquency rates across loan types were\nrose somewhat over the intermeeting period from al- largely unchanged in February. The credit quality of\nready elevated levels. Rates on 30-year conforming res- nonfinancial firms borrowing in the corporate bond and\nidential mortgages increased and remained near recent leveraged loan markets remained stable overall. The avhigh levels. In contrast, interest rates on new credit card erage delinquency rate for loans in CMBS pools ticked\noffers edged down in February. Interest rates on small down in March but remained at elevated levels. Meanbusiness loans increased in March and remained at ele- while, the share of nonperforming CRE loans at\nvated levels. Meanwhile, price terms for commercial and banks—defined as loans past due 90 days or in nonacindustrial (C&I) loans were little changed, on net, in the crual status—rose further through March, especially for\nfirst quarter of 2024 after several quarters of tightening. loans secured by office buildings. Yields rose on a broad array of fixed-income securities,\nThe staff provided an update on its assessment of the\nincluding commercial mortgage-backed securities\nstability of the U.S. financial system. On balance, the\n(CMBS), investment- and speculative-grade corporate\nstaff continued to characterize the system’s financial vulbonds, and residential mortgage-backed securities.\nnerabilities as notable but raised the assessment of vulFinancing through capital markets and nonbank lenders nerabilities in asset valuations to elevated, as valuations\nwas readily accessible for public corporations and large across a range of markets appeared high relative to riskand middle-market private corporations, and credit adjusted cash flows. House prices remained elevated relavailability for leveraged loan borrowers appeared to im- ative to fundamentals such as rents and Treasury yields,\nprove further over the intermeeting period. For small though the fraction of mortgage borrowers with small\nfirms, the volume of loan originations ticked up in Feb- equity positions remained low. CRE prices continued to\nruary despite the tightening of credit standards. Mean- decline, especially in the multifamily and office sectors,\nwhile, C&I loan balances declined in the first quarter, in and vacancy rates in these sectors remained elevated.\nline with the cumulative tightening in standards over the Vulnerabilities associated with business and household\npast two years. In the April Senior Loan Officer Opin- debt were characterized as moderate. Nonfinancial busiion Survey on Bank Lending Practices (SLOOS), large ness leverage was high, but the ability of firms to service\nbanks kept standards and most lending terms for their debt remained solid, partly due to robust earnings. C&I loans unchanged, on net, while smaller banks conLeverage in the financial sector was characterized as notinued to tighten standards and terms on net.\ntable. Regulatory capital ratios in the banking sector reBanks reported tightening standards further in the April mained high. However, the fair value of bank assets was\nSLOOS for all loan categories of commercial real estate estimated to have fallen further in the first quarter, re-\n(CRE) loans. The growth of bank CRE loan balances flecting the substantial duration risk on bank balance\nslowed notably over the past year, reflecting the tighten- sheets. For the nonbank sector, the prevalence of the\ning of credit standards over this period, though growth basis trade by hedge funds appeared to have declined\nof CRE loan balances picked up modestly in the first from its peak but remained elevated by historical standquarter. ards. Credit remained available for most consumers, despite Funding risks were also characterized as notable. Assets\nsome signs of recent tightening. For residential real es- in prime MMFs and other cash management vehicles\ntate borrowers, conforming and government-backed continued to grow steadily. The staff assessed that the\nloans remained generally available. Credit card balances financial stability risks associated with the fast-growing\ncontinued to grow at a robust pace, though a significant private credit sector were limited so far because of the\nnet share of SLOOS respondents indicated that lending modest leverage used by private debt funds and business\nstandards for credit cards tightened further in the first development companies and the limited maturity misquarter. Growth in auto lending moderated in January match present in their funding vehicles. However, the\nand February, and a modest net share of banks reported staff also noted the growing connections between\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nprivate credit and the banking sector, the growth of past year. A few participants remarked that unusually\nsome forms of private credit, and the fact that the private large seasonal patterns could have contributed to Janucredit market has yet to experience a severe credit down- ary’s large increase in PCE inflation, and several particiturn. pants noted that some components that typically display\nvolatile price changes had boosted recent readings. Staff Economic Outlook\nHowever, some participants emphasized that the recent\nThe economic forecast prepared by the staff for the\nincreases in inflation had been relatively broad based and\nApril–May meeting was similar to the March projection.\ntherefore should not be overly discounted. The economy was expected to maintain its high rate of\nresource utilization over the next few years, with pro- Participants generally commented that they remained\njected output growth roughly similar to the staff’s esti- highly attentive to inflation risks. They also remained\nmate of potential growth. The unemployment rate was concerned that elevated inflation continued to harm the\nexpected to edge down slightly over 2024 as labor mar- purchasing power of households, especially those least\nket functioning improved further, and to remain roughly able to meet the higher costs of essentials like food,\nsteady thereafter. housing, and transportation. Total and core PCE price inflation were both projected Participants noted that they continued to expect that into move lower this year relative to last year, though the flation would return to 2 percent over the medium term.\nexpected pace of disinflation was slower than in the However, recent data had not increased their confidence\nMarch projection, as incoming data pointed to more per- in progress toward 2 percent and, accordingly, had sugsistence in inflation in coming months. Inflation was gested that the disinflation process would likely take\nexpected to decline further beyond this year as demand longer than previously thought. Participants discussed\nand supply in product and labor markets continued to several factors that, in conjunction with appropriately remove into better balance; by 2026, total and core PCE strictive monetary policy, could support the return of inprice inflation were expected to be close to 2 percent. flation to the Committee’s goal over time. One was a\nfurther reduction in housing services price inflation as\nThe staff continued to view the uncertainty around the\nlower readings for rent growth on new leases continued\nbaseline projection as close to the average over the past\nto pass through to this category of inflation. However,\n20 years. Risks to the inflation forecast were seen as\nmany participants commented that the pass-through\ntilted to the upside, reflecting the possibility that supplywould likely take place only gradually or noted that a reside disruptions or unexpectedly persistent inflation dyacceleration of market rents could reduce the effect.\nnamics could materialize. The risks around the forecast\nSeveral participants stated that core nonhousing services\nfor economic activity were seen as skewed to the downprice inflation could resume its decline as wage growth\nside on the grounds that more-persistent inflation could\nslows further with labor demand and supply moving into\nresult in tighter financial conditions than in the staff’s\nbetter balance, aided by higher labor force participation\nbaseline projection; in addition, deteriorating household\nand strong immigration flows. In addition, many particfinancial positions, especially for lower-income houseipants commented that ongoing increases in productivity\nholds, might prove to be a larger drag on activity than\ngrowth would support disinflation if sustained, though\nthe staff anticipated.\nthe outlook for productivity growth was regarded as unParticipants’ Views on Current Conditions and the certain. Several participants said that business contacts\nEconomic Outlook in their Districts reported increased difficulty in raising\nParticipants observed that while inflation had eased over their output prices, while a few participants reported a\nthe past year, in recent months there had been a lack of continued ability of firms in their Districts to pass on\nfurther progress toward the Committee’s 2 percent ob- higher costs to consumers. Although some measures of\njective. The recent monthly data had showed significant short-term inflation expectations from surveys of conincreases in components of both goods and services sumers had increased in recent months, medium- and\nprice inflation. In particular, inflation for core services longer-term measures of expected inflation had reexcluding housing had moved up in the first quarter mained well anchored, which was seen as crucial for\ncompared with the fourth quarter of last year, and prices meeting the Committee’s inflation goal on a sustained\nof core goods posted their first three-month increase in basis. While supply chain improvements had supported\nseveral months. In addition, housing services inflation disinflation for goods prices over the previous year, parhad slowed less than had been anticipated based on the ticipants commented that an expected more gradual\nsmaller increases in measures of market rents over the pace of such improvements could slow progress on\n\n____________________________M__in_u_t_e_s _o_f_ t_h_e_ M__e_et_in_g_ _o_f_ A_p_r_i_l 3_0_–_M__a_y_ 1_,_ 2_0_2_4_______________________P_a_g_e_ _7\ninflation. Several participants commented that growth economic activity by boosting labor supply and contribof aggregate demand would likely have to slow from its uting to aggregate demand. Participants noted the imstrong pace in recent quarters for inflation to move sus- portant influence of productivity growth for the ecotainably toward the Committee’s goal. nomic outlook. Some participants suggested that the recent increase in productivity growth might not persist\nParticipants assessed that demand and supply in the labecause it reflected one-time adjustments to the level of\nbor market, on net, were continuing to come into better\nproductivity or reflected continued elevated volatility in\nbalance, though at a slower rate. Nevertheless, they saw\nthe data over the past several years. A few participants\nconditions as having generally remained tight amid recommented that higher productivity growth might be\ncent strong payroll growth and a still-low unemployment\nsustained by the incorporation of technologies such as\nrate. Participants cited a variety of indicators that sugartificial intelligence into existing business operations or\ngested some easing in labor market tightness, including\nby high rates of new business formation in the technoldeclining job vacancies, a lower quits rate, and a reduced\nogy sector.\nratio of job openings to unemployed workers. Some\nparticipants indicated that business contacts had re- In their discussion of the outlook for the household secported less difficulty in hiring or retaining workers, al- tor, participants observed that consumer spending rethough contacts in several Districts continued to report mained firm in the first quarter, supported by low unemtight labor conditions, especially in the health care and ployment and solid income growth. A number of parconstruction sectors. Many participants commented ticipants judged that consumption growth was likely to\nthat the better balance between labor demand and sup- moderate this year, as growth in labor income was exply had contributed to an easing of nominal wage pres- pected to slow and the financial positions of many\nsures. Even so, a number of participants noted that some households were expected to weaken. Many participants\nmeasures of labor cost growth, including the ECI, had noted signs that the finances of low- and moderate-innot eased in recent months, and a couple of participants come households were increasingly coming under presremarked that negotiated compensation agreements had sure, which these participants saw as a downside risk to\nadded to wage pressures in their Districts. Many partic- the outlook for consumption. They pointed to increased\nipants noted that, during the past year, labor supply had usage of credit cards and buy-now-pay-later services, as\nbeen boosted by increased labor force participation rates well as increased delinquency rates for some types of\nas well as by immigration. Participants further com- consumer loans. In addition, elevated housing costs\nmented that recent estimates of greater immigration in were adding to financial strains for lower-income housethe past few years and an overall increase in labor supply holds. A couple of participants noted that financial concould help explain the strength in employment gains ditions appeared favorable for wealthier households,\neven as the unemployment rate had remained roughly which account for a large portion of aggregate consumpflat and wage pressures had eased. tion, with hefty wealth gains resulting from recent equity\nand house price increases. Participants noted that recent indicators suggested that\neconomic activity had continued to expand at a solid Business contacts in many Districts reported a steady or\npace. Real GDP growth in the first quarter had moder- stable pace of economic activity, while contacts in a couated relative to the second half of last year, but ple of Districts conveyed increased optimism about the\nPDFP growth maintained a strong pace. High interest outlook. A few participants noted that government\nrates appeared to weigh on consumer durables purchases spending was supporting business expansion in their\nin the first quarter, and growth of business fixed invest- Districts. Consistent with a solid outlook for businesses,\nment remained modest. Despite the high interest rates, a couple of participants noted that their contacts had reresidential investment grew more strongly in the first ported increased investment in technology or in business\nquarter than its modest pace in the second half of last process improvements that were enhancing productive\nyear. capacity. Regarding the agricultural sector, a couple of\nparticipants noted that lower commodity prices were\nAlthough recent PDFP data suggested continued strong\nweighing on farm incomes.\neconomic momentum, participants generally did not interpret the data as indicating a further acceleration of ac- Participants discussed the risks and uncertainties around\ntivity and expected that GDP growth would slow from the economic outlook. They generally noted their unlast year’s strong pace. A number of participants com- certainty about the persistence of inflation and agreed\nmented that high rates of immigration could support that recent data had not increased their confidence that\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ninflation was moving sustainably toward 2 percent. assessed that maintaining the current target range for the\nSome participants pointed to geopolitical events or other federal funds rate at this meeting was supported by infactors resulting in more severe supply bottlenecks or termeeting data indicating continued solid economic\nhigher shipping costs, which could put upward pressure growth and a lack of further progress toward the Comon prices and weigh on economic growth. The possibil- mittee’s 2 percent inflation objective in recent months.\nity that geopolitical events could generate commodity\nParticipants also discussed the process of reducing the\nprice increases was also seen as an upside risk to inflaFederal Reserve’s securities holdings. Participants\ntion. A number of participants noted uncertainty regardjudged that balance sheet reduction had proceeded\ning the degree of restrictiveness of current financial consmoothly. Almost all participants expressed support for\nditions and the associated risk that such conditions were\nthe decision to begin to slow the pace of decline of the\ninsufficiently restrictive on aggregate demand and inflaFederal Reserve’s securities holdings in June by reducing\ntion. Several participants commented that increased efthe monthly redemption cap on Treasury securities from\nficiencies and technological innovations could raise\n$60 billion to $25 billion, maintaining the monthly reproductivity growth on a sustained basis, which might\ndemption cap on agency debt and agency mortallow the economy to grow faster without raising inflagage‑backed securities (MBS) at $35 billion, and reintion. Participants also noted downside risks to economic\nvesting any principal payments in excess of the $35 bilactivity, including slowing economic growth in China, a\nlion cap into Treasury securities. A few participants indeterioration in conditions in domestic CRE markets, or\ndicated that they could have supported a continuation of\na sharp tightening in financial conditions.\nthe current pace of balance sheet runoff at this time or a\nIn their discussion of financial stability, participants who slightly higher redemption cap on Treasury securities\ncommented noted vulnerabilities to the financial system than was decided upon. Various participants emphathat they assessed warranted monitoring. Participants sized that the decision to slow the pace of runoff does\ndiscussed a range of risks emanating from the banking not have implications for the stance of monetary policy.\nsector, including unrealized losses on assets resulting Several participants also emphasized that slowing the\nfrom the rise in longer-term yields, high CRE exposure, pace of balance sheet runoff did not mean that the balsignificant reliance by some banks on uninsured depos- ance sheet would ultimately shrink by less than it would\nits, cyber threats, or increased financial interconnections otherwise. Some participants commented that slowing\namong banks. Several participants commented on the the pace of balance sheet runoff would help facilitate a\nrapid growth of private credit markets, noting that such smooth transition from abundant to ample reserve baldevelopments should be monitored because the sector ances by reducing the likelihood that money markets exwas becoming more interconnected with other parts of perience undue stress that could require an early end to\nthe financial system and that some associated risks may runoff. Participants generally assessed that it would be\nnot yet be apparent. A few participants also commented important to continue to monitor indicators of reserve\non the importance of measures aimed at increasing resil- conditions as balance sheet runoff continued. In addiience in the Treasury market, such as central clearing, or tion, a few participants commented that the existing reon potential vulnerabilities posed by leveraged investors demption cap on agency debt and agency MBS was unin the Treasury market. A couple of participants com- likely to bind at any point over the coming years, but the\nmented that the Federal Reserve should continue to im- decision to reinvest any principal payments above that\nprove the operational efficiency of the discount window. cap into Treasury securities was consistent with the\nParticipants generally noted that high interest rates could Committee’s longer-run intention to hold a portfolio\ncontribute to vulnerabilities in the financial system. In that consists primarily of Treasury securities. A couple\nthat context, a number of participants emphasized that of participants commented that it would be useful to\nmonetary policy should be guided by the outlook for em- begin discussions regarding the appropriate longer-run\nployment and inflation and that other tools should be maturity composition of the SOMA portfolio.\nthe primary means to address financial stability risks. In discussing the policy outlook, participants remarked\nIn their consideration of monetary policy at this meeting, that the future path of the policy rate would depend on\nall participants judged that, in light of current economic incoming data, the evolving outlook, and the balance of\nconditions and their implications for the outlook for em- risks. Many participants commented that the public apployment and inflation, as well as the balance of risks, it peared to have a good understanding of the Committee’s\nwas appropriate to maintain the target range for the fed- data-dependent approach in formulating monetary poleral funds rate at 5¼ to 5½ percent. Participants icy and its commitment to achieving its dual-mandate\n\n____________________________M__in_u_t_e_s _o_f_ t_h_e_ M__e_et_in_g_ _o_f_ A_p_r_i_l 3_0_–_M__a_y_ 1_,_ 2_0_2_4_______________________P_a_g_e_ _9\ngoals of maximum employment and price stability. Var- over the longer run, members agreed to maintain the tarious participants also emphasized the importance of get range for the federal funds rate at 5¼ to 5½ percent.\ncontinuing to communicate this message. Participants Members concurred that, in considering any adjustments\nnoted disappointing readings on inflation over the first to the target range for the federal funds rate, they would\nquarter and indicators pointing to strong economic mo- carefully assess incoming data, the evolving outlook, and\nmentum, and assessed that it would take longer than pre- the balance of risks. Members agreed that they did not\nviously anticipated for them to gain greater confidence expect that it would be appropriate to reduce the target\nthat inflation was moving sustainably toward 2 percent. range until they have gained greater confidence that inflation is moving sustainably toward 2 percent. In addiIn discussing risk-management considerations that\ntion, members agreed to continue to reduce the Federal\ncould bear on the policy outlook, participants generally\nReserve’s holdings of Treasury securities and agency\nassessed that risks to the achievement of the Commitdebt and agency MBS. Members decided that, beginning\ntee’s employment and inflation goals had moved toward\nin June, the Committee would slow the pace of decline\nbetter balance over the past year. Participants remained\nof its securities holdings by reducing the monthly rehighly attentive to inflation risks and noted the uncerdemption cap on Treasury securities from $60 billion to\ntainty associated with the economic outlook. Although\n$25 billion. In addition, members decided that the Commonetary policy was seen as restrictive, many particimittee would maintain the monthly redemption cap on\npants commented on their uncertainty about the degree\nagency debt and agency MBS at $35 billion and, beginof restrictiveness. These participants saw this uncerning in June, would reinvest any principal payments in\ntainty as coming from the possibility that high interest\nexcess of this cap into Treasury securities. All members\nrates may be having smaller effects than in the past, that\naffirmed their strong commitment to returning inflation\nlonger-run equilibrium interest rates may be higher than\nto the Committee’s 2 percent objective.\npreviously thought, or that the level of potential output\nmay be lower than estimated. Participants assessed, Members agreed that, in assessing the appropriate stance\nhowever, that monetary policy remained well positioned of monetary policy, they would continue to monitor the\nto respond to evolving economic conditions and risks to implications of incoming information for the economic\nthe outlook. Participants discussed maintaining the cur- outlook. They would be prepared to adjust the stance of\nrent restrictive policy stance for longer should inflation monetary policy as appropriate if risks emerged that\nnot show signs of moving sustainably toward 2 percent could impede the attainment of the Committee’s goals.\nor reducing policy restraint in the event of an unexpected Members also agreed that their assessments would take\nweakening in labor market conditions. Various partici- into account a wide range of information, including\npants mentioned a willingness to tighten policy further readings on labor market conditions, inflation pressures\nshould risks to inflation materialize in a way that such an and inflation expectations, and financial and internaaction became appropriate. tional developments. Committee Policy Actions At the conclusion of the discussion, the Committee\nIn their discussions of monetary policy for this meeting, voted to direct the Federal Reserve Bank of New York,\nmembers agreed that economic activity continued to ex- until instructed otherwise, to execute transactions in the\npand at a solid pace. Job gains remained strong, and the SOMA in accordance with the following domestic policy\nunemployment rate remained low. Inflation eased over directive, for release at 2:00 p.m.:\nthe past year but remained elevated. Members also con-\n“Effective May 2, 2024, the Federal Open Marcurred that, in recent months, there was a lack of further\nket Committee directs the Desk to:\nprogress toward the Committee’s 2 percent inflation objective and agreed to acknowledge this development in • Undertake open market operations as necthe postmeeting statement. Members judged that the essary to maintain the federal funds rate in\nrisks to achieving the Committee’s employment and in- a target range of 5¼ to 5½ percent.\nflation goals had moved toward better balance over the\n• Conduct standing overnight repurchase\npast year. Members viewed the economic outlook as unagreement operations with a minimum bid\ncertain and agreed that they remained highly attentive to\nrate of 5.5 percent and with an aggregate\ninflation risks.\noperation limit of $500 billion. In support of the Committee’s goals to achieve maximum employment and inflation at the rate of 2 percent • Conduct standing overnight reverse repurchase agreement operations at an offering\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nrate of 5.3 percent and with a per-counter- the risks to achieving its employment and inflaparty limit of $160 billion per day. tion goals have moved toward better balance\nover the past year. The economic outlook is un-\n• Roll over at auction the amount of principal\ncertain, and the Committee remains highly atpayments from the Federal Reserve’s holdtentive to inflation risks.\nings of Treasury securities maturing in May\nthat exceeds a cap of $60 billion per month. In support of its goals, the Committee decided\nBeginning on June 1, roll over at auction to maintain the target range for the federal\nthe amount of principal payments from the funds rate at 5¼ to 5½ percent. In considering\nFederal Reserve’s holdings of Treasury se- any adjustments to the target range for the fedcurities maturing in each calendar month eral funds rate, the Committee will carefully asthat exceeds a cap of $25 billion per month. sess incoming data, the evolving outlook, and\nRedeem Treasury coupon securities up to the balance of risks. The Committee does not\nthese monthly caps and Treasury bills to the expect it will be appropriate to reduce the target\nextent that coupon principal payments are range until it has gained greater confidence that\nless than the monthly caps. inflation is moving sustainably toward 2 percent. In addition, the Committee will continue\n• Reinvest into agency mortgage-backed sereducing its holdings of Treasury securities and\ncurities (MBS) the amount of principal payagency debt and agency mortgage‑backed secuments from the Federal Reserve’s holdings\nrities. Beginning in June, the Committee will\nof agency debt and agency MBS received in\nslow the pace of decline of its securities holdMay that exceeds a cap of $35 billion per\nings by reducing the monthly redemption cap\nmonth. Beginning on June 1, reinvest the\non Treasury securities from $60 billion to\namount of principal payments from the\n$25 billion. The Committee will maintain the\nFederal Reserve’s holdings of agency debt\nmonthly redemption cap on agency debt and\nand agency MBS received in each calendar\nagency mortgage‑backed securities at $35 bilmonth that exceeds a cap of $35 billion per\nlion and will reinvest any principal payments in\nmonth into Treasury securities to roughly\nexcess of this cap into Treasury securities. The\nmatch the maturity composition of TreasCommittee is strongly committed to returning\nury securities outstanding.\ninflation to its 2 percent objective.\n• Allow modest deviations from stated\nIn assessing the appropriate stance of monetary\namounts for reinvestments, if needed for\npolicy, the Committee will continue to monitor\noperational reasons.\nthe implications of incoming information for\nthe economic outlook. The Committee would\n• Engage in dollar roll and coupon swap\nbe prepared to adjust the stance of monetary\ntransactions as necessary to facilitate settlepolicy as appropriate if risks emerge that could\nment of the Federal Reserve’s agency MBS\nimpede the attainment of the Committee’s\ntransactions.”\ngoals. The Committee’s assessments will take\nThe vote also encompassed approval of the statement into account a wide range of information, inbelow for release at 2:00 p.m.: cluding readings on labor market conditions, inflation pressures and inflation expectations, and\n“Recent indicators suggest that economic activfinancial and international developments.”\nity has continued to expand at a solid pace. Job\ngains have remained strong, and the unemploy- Voting for this action: Jerome H. Powell, John C.\nment rate has remained low. Inflation has eased Williams, Thomas I. Barkin, Michael S. Barr, Raphael W.\nover the past year but remains elevated. In re- Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C.\ncent months, there has been a lack of further Daly, Philip N. Jefferson, Adriana D. Kugler, Loretta J.\nprogress toward the Committee’s 2 percent in- Mester, and Christopher J. Waller.\nflation objective. Voting against this action: None. The Committee seeks to achieve maximum emConsistent with the Committee’s decision to leave the\nployment and inflation at the rate of 2 percent\ntarget range for the federal funds rate unchanged, the\nover the longer run. The Committee judges that\n\n____________________________M__in_u_t_e_s _o_f_ t_h_e_ M__e_et_in_g_ _o_f_ A_p_r_i_l 3_0_–_M__a_y_ 1_,_ 2_0_2_4______________________P__ag_e_ _1_1\nBoard of Governors of the Federal Reserve System Notation Vote\nvoted unanimously to maintain the interest rate paid on By notation vote completed on April 9, 2024, the Comreserve balances at 5.4 percent, effective May 2, 2024. mittee unanimously approved the minutes of the ComThe Board of Governors of the Federal Reserve System mittee meeting held on March 19–20, 2024.\nvoted unanimously to approve the establishment of the\nprimary credit rate at the existing level of 5.5 percent, effective May 2, 2024. It was agreed that the next meeting of the Committee _______________________\nwould be held on Tuesday–Wednesday, June 11–12,\nJoshua Gallin\n2024. The meeting adjourned at 10:05 a.m. on\nSecretary\nMay 1, 2024.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240501.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that it does not expect to cut interest rates until it gains greater confidence that inflation is sustainably moving toward its 2% target. Future rate decisions will depend on incoming data, and the Fed remains prepared to adjust policy if risks to inflation or employment emerge.",
+    "key_economic_factors": [
+      "Inflation has eased over the past year but showed a lack of further progress toward the 2% target in recent months, with core services and goods prices surprising to the upside.",
+      "Job gains remained strong and the labor market stayed tight, with solid payroll growth and a low unemployment rate of 3.8%.",
+      "Consumer spending and private domestic final purchases showed continued solid momentum, indicating resilient economic growth.",
+      "Longer-term inflation expectations remain well anchored, but recent readings on short-term inflation expectations have increased."
+    ],
+    "economic_outlook": "The Fed expects economic growth to remain solid but slow from last year’s pace, with unemployment edging down slightly in 2024 and remaining stable thereafter. Inflation is projected to decline gradually over time but at a slower pace than previously expected, with total and core PCE inflation not reaching 2% until 2026. Risks to inflation are tilted to the upside, while risks to economic activity are skewed to the downside due to persistent inflation and potential financial tightening.",
+    "market_impact": "Markets should expect higher-for-longer interest rates, supporting the dollar and putting pressure on rate-sensitive sectors like housing and tech. Businesses and consumers should prepare for sustained borrowing costs, while investors may see continued volatility until clearer signs of disinflation emerge."
+  },
+  {
+    "date": "2024-03-20",
+    "title": "FOMC Meeting 2024-03-20",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nMarch 19–20, 2024\nA joint meeting of the Federal Open Market Committee Jose Acosta, Senior System Administrator II, Division\nand the Board of Governors of the Federal Reserve Sys- of Information Technology, Board\ntem was held in the offices of the Board of Governors\nOladoyin Ajifowoke, Program Management Analyst,\non Tuesday, March 19, 2024, at 9:00 a.m. and continued\nDivision of Monetary Affairs, Board\non Wednesday, March 20, 2024, at 9:00 a.m.1\nDavid Altig, Executive Vice President, Federal Reserve\nAttendance\nBank of Atlanta\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Andre Anderson, First Vice President, Federal Reserve\nThomas I. Barkin Bank of Atlanta\nMichael S. Barr\nRoc Armenter, Executive Vice President, Federal\nRaphael W. Bostic\nReserve Bank of Philadelphia\nMichelle W. Bowman\nLisa D. Cook Alyssa Arute,2 Manager, Division of Reserve Bank\nMary C. Daly Operations and Payment Systems, Board\nPhilip N. Jefferson\nPenelope A. Beattie,2 Section Chief, Office of the\nAdriana D. Kugler\nSecretary, Board\nLoretta J. Mester\nChristopher J. Waller Carol C. Bertaut, Senior Adviser, Division of\nInternational Finance, Board\nSusan M. Collins, Austan D. Goolsbee, Kathleen\nO’Neill, and Jeffrey R. Schmid, Alternate Members David Bowman,2 Senior Associate Director, Division\nof the Committee of Monetary Affairs, Board\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Ellen J. Bromagen, First Vice President, Federal\nPresidents of the Federal Reserve Banks of Reserve Bank of Chicago\nPhiladelphia, Minneapolis, and Dallas, respectively\nIsabel Cairó, Principal Economist, Division of\nJoshua Gallin, Secretary Monetary Affairs, Board\nMatthew M. Luecke, Deputy Secretary\nMark A. Carlson, Adviser, Division of Monetary\nBrian J. Bonis, Assistant Secretary\nAffairs, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Juan C. Climent, Special Adviser to the Board, Division\nRichard Ostrander, Deputy General Counsel of Board Members, Board\nTrevor A. Reeve, Economist\nStephanie E. Curcuru, Deputy Director, Division of\nStacey Tevlin, Economist\nInternational Finance, Board\nShaghil Ahmed, Kartik B. Athreya, James A. Clouse, Ryan Decker, Special Adviser to the Board, Division of\nEdward S. Knotek II, Sylvain Leduc, and William Board Members, Board\nWascher, Associate Economists\nRochelle M. Edge, Deputy Director, Division of\nRoberto Perli, Manager, System Open Market Account Monetary Affairs, Board\nJulie Ann Remache, Deputy Manager, System Open Eric M. Engen, Senior Associate Director, Division of\nMarket Account Research and Statistics, Board\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of considerations for slow-\n“FOMC” and the “Committee” in these minutes; the Board ing the pace of balance sheet reduction.\nof Governors of the Federal Reserve System is referenced as\nthe “Board” in these minutes.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nGiovanni Favara, Assistant Director, Division of Deborah L. Leonard, Capital Markets Trading\nMonetary Affairs, Board Director, Federal Reserve Bank of New York\nRon Feldman, First Vice President, Federal Reserve Kurt F. Lewis, Special Adviser to the Chair, Division of\nBank of Minneapolis Board Members, Board\nErin E. Ferris,2 Principal Economist, Division of Laura Lipscomb, Special Adviser to the Board,\nMonetary Affairs, Board Division of Board Members, Board\nAndrew Figura, Associate Director, Division of David López-Salido, Senior Associate Director,\nResearch and Statistics, Board Division of Monetary Affairs, Board\nCharles A. Fleischman, Senior Adviser, Division of Joshua S. Louria, Group Manager, Division of\nResearch and Statistics, Board Monetary Affairs, Board\nGlenn Follette, Associate Director, Division of Byron Lutz, Deputy Associate Director, Division of\nResearch and Statistics, Board Research and Statistics, Board\nJenn Gallagher, Assistant to the Board, Division of Karel Mertens, Interim Director of Research, Federal\nBoard Members, Board Reserve Bank of Dallas\nMichael S. Gibson, Director, Division of Supervision Ann E. Misback, Secretary, Office of the Secretary,\nand Regulation, Board Board\nJoseph W. Gruber, Executive Vice President, Federal Michelle M. Neal, Head of Markets, Federal Reserve\nReserve Bank of Kansas City Bank of New York\nLuca Guerrieri, Associate Director, Division of Edward Nelson,2 Senior Adviser, Division of Monetary\nInternational Finance, Board Affairs, Board\nChristopher J. Gust,2 Associate Director, Division of Michael G. Palumbo, Senior Associate Director,\nMonetary Affairs, Board Division of Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Eugenio P. Pinto, Special Adviser to the Board,\nMonetary Affairs, Board Division of Board Members, Board\nJasper J. Hoek, Deputy Associate Director, Division of Odelle Quisumbing,2 Assistant to the Secretary, Office\nInternational Finance, Board of the Secretary, Board\nAndreas L. Hornstein, Senior Advisor, Federal Reserve Andrea Raffo, Senior Vice President, Federal Reserve\nBank of Richmond Bank of Minneapolis\nJane E. Ihrig, Special Adviser to the Board, Division of Nellisha D. Ramdass, Deputy Director, Division of\nBoard Members, Board Monetary Affairs, Board\nSebastian Infante, Section Chief, Division of Monetary Jeanne Rentezelas, First Vice President, Federal\nAffairs, Board Reserve Bank of Philadelphia\nMichael T. Kiley, Deputy Director, Division of Achilles Sangster II, Senior Information Manager,\nFinancial Stability, Board Division of Monetary Affairs, Board\nKevin L. Kliesen, Research Officer, Federal Reserve Bernd Schlusche, Principal Economist, Division of\nBank of St. Louis Monetary Affairs, Board\nSpencer Krane, Senior Vice President, Federal Reserve Andres Schneider, Principal Economist, Division of\nBank of Chicago Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial Zeynep Senyuz,2 Deputy Associate Director, Division\nStability, Board of Monetary Affairs, Board\nPaul Lengermann, Deputy Associate Director, Division Robert J. Tetlow, Senior Adviser, Division of Monetary\nof Research and Statistics, Board Affairs, Board\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 1_9_–_2_0_,_ 2_0_2_4________________________P_a_g_e_ _3\nClara Vega, Special Adviser to the Board, Division of than previously thought, and Federal Reserve communiBoard Members, Board cations. The median of modal paths of the federal funds\nrate obtained from the Open Market Desk’s Survey of\nJeffrey D. Walker,2 Associate Director, Division of\nPrimary Dealers and Survey of Market Participants was\nReserve Bank Operations and Payment Systems,\nalso slightly higher. Responses still indicated substantial\nBoard\ndifferences among survey participants in their assessMin Wei, Senior Associate Director, Division of ments of the total amount of rate cuts likely to occur this\nMonetary Affairs, Board year. Paul R. Wood, Special Adviser to the Board, Division The manager then discussed expectations regarding balof Board Members, Board ance sheet policy. Survey responses reflected judgments\nthat the Committee’s slowing of balance sheet runoff\nEgon Zakrajsek, Executive Vice President, Federal\nwould begin slightly later than previously expected, with\nReserve Bank of Boston\nthe majority of survey participants now expecting the\nRebecca Zarutskie, Special Adviser to the Board, slowing to start around midyear. Balance sheet runoff\nDivision of Board Members, Board was expected to continue for some time thereafter, and\nsurvey responses suggested a slightly smaller balance\nDevelopments in Financial Markets and Open\nsheet size at the end of runoff than respondents had preMarket Operations\nviously assessed. The manager turned first to a review of developments in\nfinancial markets over the intermeeting period. U.S. fi- The manager noted that broad equity prices had reached\nnancial conditions had eased modestly since the January new highs over the intermeeting period. This growth\nFOMC meeting, with higher equity prices more than off- was again driven primarily by the strong increases in valsetting increases in interest rates. Nominal Treasury uations of large-capitalization technology companies,\nyields had risen over the intermeeting period. At shorter while broader equity price gains were more measured.\nmaturities, most of the increase was attributable to a rise Recent bank equity price behavior reflected renewed\nin inflation compensation, prompted by indications that market attention on the challenges faced by the regional\nthe decline in inflation was proceeding somewhat more banking sector, particularly that sector’s exposures to\nslowly than markets in recent months had been expect- commercial real estate (CRE). In global financial maring. In contrast, at longer maturities, much of the in- kets, the expected policy rate path in most advanced forcrease in Treasury yields was due to a rise in real rates, eign economies (AFEs) shifted up over the intermeeting\nreflecting solid labor market readings and stronger-than- period. At the end of the intermeeting period, the Bank\nexpected data on economic activity. of Japan (BOJ) announced that it would discontinue its\npolicies of a negative short-term interest rate and yield\nThe manager turned next to policy rate expectations. An\ncurve control; this decision was largely expected by inestimate of the expected federal funds rate path derived\nvestors, and the BOJ’s announcement had a limited effrom futures prices shifted up significantly over the infect on global financial markets.\ntermeeting period. The modal federal funds rate path\nimplied by options prices had also risen, but by substan- Conditions in U.S. money markets had been stable over\ntially less than the futures-implied path. The move up in the intermeeting period, with less upward pressure on\nthe futures-implied path reflected in part some shift in repurchase agreement (repo) rates than in recent interexpectations toward policy rate cuts beginning later in meeting periods. The usage of the overnight reverse rethe year, and cumulating to a smaller rate reduction in purchase agreement (ON RRP) facility had continued to\n2024, than previously assessed. Investors also appeared decline, albeit at a somewhat slower pace than that seen\nto have considerably lowered the perceived probability over the second half of 2023. Staff projections sugof more substantial rate cuts than in their baseline ex- gested that total ON RRP balances might stabilize in\npectations. This lowering was evident in significantly coming months at either zero or a low level. This asmore concentrated probability distributions for the fed- sessment was also supported by information acquired in\neral funds rate over coming quarters. The changes in Desk outreach efforts.\npolicy rate expectations over the intermeeting period ocThe manager provided an update on indicators of recurred in the wake of stronger economic data, percepserve conditions. Over the past few years, rate control\ntions that disinflation might be proceeding more slowly\nhad been effective, with the effective federal funds rate\nbeing firmly within the Committee’s target range. The\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nstaff assessed that, over the intermeeting period, the fed- each of the expected phases of the transition to an ample\neral funds rate continued to be insensitive to day-to-day level of reserves.\nchanges in the supply of reserves. This outcome, toParticipants observed that balance sheet runoff was progether with various other indicators of reserve condiceeding smoothly. Nevertheless, taking into account the\ntions, supported the conclusion that reserves remained\nexperience around the end of the 2017–19 balance sheet\nabundant. The manager noted that there was nevertherunoff episode, participants broadly assessed it would be\nless significant uncertainty about the demand for reappropriate to take a cautious approach to further runserves and that, under the current pace of runoff of the\noff. The vast majority of participants thus judged it\nFederal Reserve’s securities portfolio, stabilization in towould be prudent to begin slowing the pace of runoff\ntal ON RRP balances would, all else equal, cause refairly soon. Most of these participants noted that, deserves to start declining at a rapid rate.\nspite significant balance sheet reduction, reserve balBy unanimous vote, the Committee ratified the Desk’s ances had remained elevated because the decline in usage\ndomestic transactions over the intermeeting period. of the ON RRP facility had shifted Federal Reserve liaThere were no intervention operations in foreign curren- bilities toward reserves. However, with the extent of fucies for the System’s account during the intermeeting pe- ture declines in ON RRP take-up becoming more limriod. ited, further balance sheet runoff will likely translate\nmore directly into declines in reserve balances, potenConsiderations for Slowing the Pace of Balance\ntially at a rapid pace. In light of the uncertainty regarding\nSheet Reduction\nthe level of reserves consistent with operating in an amParticipants began a discussion related to slowing the\nple-reserves regime, slowing the pace of balance sheet\npace of balance sheet runoff consistent with the Comrunoff sooner rather than later would help facilitate a\nmittee’s Plans for Reducing the Size of the Federal Resmooth transition from abundant to ample reserve balserve’s Balance Sheet announced in May 2022. Those\nances. Slower runoff would give the Committee more\nplans indicated that in order to ensure a smooth transitime to assess market conditions as the balance sheet\ntion, the Committee intends to slow and then stop the\ncontinues to shrink. It would allow banks, and shortdecline in the size of the balance sheet when reserve balterm funding markets more generally, additional time to\nances are somewhat above the level it judges to be conadjust to the lower level of reserves, thus reducing the\nsistent with ample reserves. Since balance sheet runoff\nprobability that money markets experience undue stress\nbegan in June 2022, the Federal Reserve’s total securities\nthat could require an early end to runoff. Therefore, the\nholdings had declined roughly $1.5 trillion. In light of\ndecision to slow the pace of runoff does not mean that\nthe ongoing sizable decline in the balance sheet, and the\nthe balance sheet will ultimately shrink by less than it\nprospect of a more rapid decline in reserve balances, parwould otherwise. Rather, a slower pace of runoff would\nticipants agreed that their discussions at this meeting\nfacilitate ongoing declines in securities holdings conwould help inform the Committee’s future decisions resistent with reaching ample reserves. A few participants,\ngarding how and when to slow the pace of runoff. No\nhowever, indicated that they preferred to continue with\ndecisions about adjusting the pace of balance sheet runthe current pace of balance sheet runoff until market inoff were made at the meeting.\ndicators begin to show signs that reserves are approachThe participants’ discussion was preceded by staff ing an ample level. All participants emphasized the impresentations. The staff reviewed the 2017–19 balance portance of communicating that a decision to slow the\nsheet runoff episode and the lessons learned from that pace of runoff would have no implications for the stance\nexperience, including the importance of monitoring of monetary policy, as it would mean implementing one\nmoney market conditions in light of the uncertainty sur- of the transitional steps previously announced in the\nrounding the level of reserves consistent with operating Committee’s balance sheet plans.\nin an ample-reserves regime. The staff presented a set\nIn their discussions regarding how to adjust the pace of\nof simulations in which the current monthly pace of serunoff, participants generally favored reducing the\ncurities runoff was reduced to illustrate how the choice\nmonthly pace of runoff by roughly half from the recent\nof when to start slowing the pace of runoff could affect\noverall pace. With redemptions of agency debt and\nthe paths for the balance sheet and reserve balances.\nagency mortgage-backed securities (MBS) expected to\nThe simulations showed how various options for when\ncontinue to run well below the current monthly cap, parto slow the pace of runoff could affect the duration of\nticipants saw little need to adjust this cap, which also\nwould be consistent with the Committee’s intention to\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 1_9_–_2_0_,_ 2_0_2_4________________________P_a_g_e_ _5\nhold primarily Treasury securities in the longer run. Ac- same in February as it was at the end of last year, and it\ncordingly, participants generally preferred to maintain remained well below its level a year ago. The Wage\nthe existing cap on agency MBS and adjust the redemp- Growth Tracker constructed by the Federal Reserve\ntion cap on U.S. Treasury securities to slow the pace of Bank of Atlanta was lower over the past two months\nbalance sheet runoff. than readings last year. Participants also shared their initial perspectives on Consumer price inflation continued to decline, but relonger-term aspects of balance sheet policy beyond the cent progress was uneven. Total PCE prices increased\nmore immediate issues concerning slowing the pace of 2.5 percent over the 12 months ending in January, while\nrunoff. Although they saw the current level of reserves core PCE price inflation—which excludes changes in\nas abundant, participants emphasized the underlying un- energy prices and many consumer food prices—was\ncertainty about the level of reserves consistent with op- 2.9 percent over the same period. Both of those\nerating in an ample-reserves regime. They noted various 12-month measures continued to trend down, although\nprice and quantity metrics that they saw as important the month-over-month readings for January had moved\nreal-time indicators of conditions in short-term funding up. The trimmed mean measure of 12-month PCE price\nmarkets that could provide signals that reserves are ap- inflation constructed by the Federal Reserve Bank of\nproaching a level somewhat above ample. Some partic- Dallas was 3.2 percent in January, lower than its level a\nipants also mentioned the importance of both the dis- year earlier. Over the 12 months ending in February, the\ncount window and the standing repo facility as liquidity consumer price index (CPI) increased 3.2 percent and\nbackstops as reserves decline. Many participants com- core CPI rose 3.8 percent; both 12-month measures\nmented on aspects of the composition of the Federal Re- were below their year-ago levels even though the recent\nserve’s securities holdings, including the appropriate month-over-month CPI readings had firmed a bit. Relonger-run maturity composition of the System Open cent survey measures of consumers’ inflation expectaMarket Account portfolio and options to achieve in the tions at both shorter- and longer-term horizons were\nlonger run a portfolio that consists primarily of Treasury broadly in line with the levels seen in the decade before\nsecurities. the pandemic. Staff Review of the Economic Situation Recent indicators suggested that real GDP was increasThe information available at the time of the March 19– ing at a solid pace in the first quarter, although more\n20 meeting suggested that U.S. real gross domestic prod- slowly than its robust fourth-quarter rate. Incoming data\nuct (GDP) was expanding at a solid rate in the first quar- pointed to some slowing in PCE growth, as expenditures\nter, although slower than its robust fourth-quarter pace. declined in January and the components of the retail\nLabor market conditions remained strong in recent sales data used to estimate PCE were soft in February.\nmonths. Consumer price inflation—as measured by the January’s readings on orders and shipments of nonde12-month change in the price index for personal con- fense capital goods excluding aircraft and on nonresisumption expenditures (PCE)—continued to trend dential construction spending suggested some deceleradown, though it remained above 2 percent. tion in business fixed investment. In contrast, starts and\npermits for single-family homes in January and February\nLabor demand and supply appeared to continue to move\npointed to a modest pickup in residential investment\ninto better balance, although recent indicators were\ngrowth. Real exports of goods stepped down in January\nmixed. Total nonfarm payroll employment increased at\nrelative to December following rapid growth last quara faster average monthly pace over January and February\nter. By contrast, real goods imports picked up in Januthan in the fourth quarter. In contrast, the unemployary, as higher imports of capital goods and automotive\nment rate edged up to 3.9 percent in February, while the\nproducts more than offset lower imports of consumer\nlabor force participation rate and the employment-togoods. Overall, the nominal U.S. international trade defpopulation ratio were essentially unchanged. The unemicit widened in January, as goods and services imports\nployment rate for African Americans increased, and the\nexpanded more than exports, which increased only\nrate for Hispanics was unchanged; both rates were\nslightly.\nhigher than those for Asians and for Whites. The private-sector job openings rate and the quits rate were little In contrast to strong U.S. GDP growth in the fourth\nchanged in January, and both rates were far below their quarter, economic growth in foreign economies was\nyear-earlier levels. The 12-month change in average generally weak amid tight monetary policy, the erosion\nhourly earnings for all employees was essentially the in real household incomes from high inflation, and the\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nongoing repercussions of the 2022 energy shock in Eu- index were little changed on net. At its meeting on\nrope. More recently, purchasing managers indexes in March 19, the BOJ exited negative interest rate policy\nEurope through February and other indicators provided and increased its overnight policy rate from negative\ntentative signs of some firming in the region’s economic 0.1 percent to a range of 0 to 0.1 percent. This policy\nactivity. In China, economic data for January and Feb- rate hike was the first by the BOJ in 17 years. The BOJ\nruary were somewhat mixed. Although exports, invest- also ended its yield curve control policy but indicated\nment, and industrial production were strong, household that it would continue bond purchases. The changes\ndemand remained depressed amid China’s ongoing were widely expected, and market reactions were limited.\nproperty-sector slump. On the other hand, some econConditions in U.S. short-term funding markets remained\nomies in emerging Asia performed well, in part reflecting\nstable over the intermeeting period. Usage of the\nstrong demand for leading-edge semiconductors. ON RRP facility continued to decline. However, the deForeign headline inflation picked up early in the year as cline in average take-up was less than in the two previous\nthe downward pressure from previous energy price de- periods, suggesting that the rate of decline could be\nclines waned and some emerging market economies slowing. The continuing decline in ON RRP take-up\n(EMEs) experienced renewed food price pressures due primarily reflected money market funds’ (MMFs) ongoto adverse weather. Most major foreign central banks ing reallocation of assets to Treasury bills amid continkept their policy rates unchanged over the intermeeting ued bill issuance and relatively attractive bill yields.\nperiod and emphasized the need for greater confidence\nBanks’ total deposit levels edged up further in January\nthat inflation was falling back to target before easing poland February, likely reflecting, in part, rising nominal inicy.\ncome and somewhat more competitive deposit rates. Staff Review of the Financial Situation MMFs continued to provide relatively attractive yields to\nOver the intermeeting period, the market-implied path investors and experienced modest inflows since the Janfor the federal funds rate through 2024 increased mark- uary FOMC meeting.\nedly, reversing the declines that had occurred since late\nIn domestic credit markets, over the intermeeting pelast year. Consistent with the increase in the implied polriod, borrowing costs remained elevated. Rates on loans\nicy rate path, intermediate- and longer-term Treasury\nto households generally rose in recent months, including\nyields moved up over the period, with larger increases\nthose for 30-year conforming residential mortgages. Inconcentrated at shorter maturities. Most of the increase\nterest rates on credit card offers increased through Dein short-term Treasury yields was attributed to a rise in\ncember, while rates on new auto loans remained elevated\nnear-term inflation compensation. Market-based\nthrough late February, near their recent highs. Yields\nmeasures of near-term interest rate uncertainty for\nmoved higher on a variety of fixed-income securities, inshorter-term yields remained elevated by historical\ncluding commercial mortgage-backed securities\nstandards, in part reflecting investors’ continued uncer-\n(CMBS), investment- and speculative-grade corporate\ntainty about the path of policy rates.\nbonds, and residential MBS. Yields on leveraged loans,\nDespite the rise in interest rates, broad stock price in- which are generally linked to the Secured Overnight Fidexes increased notably amid upbeat corporate earnings nancing Rate, declined somewhat in line with the narreports, particularly for the largest firms. Yield spreads rowing of credit spreads. In addition, interest rates on\non investment-grade corporate bonds were little small business loans ticked down in January but rechanged, and those on speculative-grade bonds nar- mained elevated.\nrowed slightly. The one-month option-implied volatility\nCredit continued to be available to most businesses,\non the S&P 500 index increased slightly over the period\nhouseholds, and municipalities. Large nonfinancial corbut remained low by historical standards.\nporations continued to find credit generally accessible. Changes in foreign financial asset prices over the inter- Capital market financing was robust during the intermeeting period were largely driven by spillovers from meeting period, while commercial and industrial loan\nU.S. financial markets. Risk appetite generally improved, balances expanded modestly. For small firms, loan origleading to increases in foreign equity indexes and a nar- inations were stable despite the tightening of credit\nrowing of EME credit spreads. Short-term yields in the standards. AFEs were also boosted by less-accommodative-thanexpected communications by European Central Bank\nofficials. Longer-term AFE yields and the broad dollar\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 1_9_–_2_0_,_ 2_0_2_4________________________P_a_g_e_ _7\nCredit in the residential mortgage market remained gen- Staff Economic Outlook\nerally available, although mortgage originations re- The economic projection prepared by the staff for the\nmained subdued. Consumer credit remained easily avail- March meeting was stronger than the January forecast.\nable as credit card balances expanded robustly in January The upward revision in the forecast primarily reflected\nand February, and credit card limits continued to in- the staff’s incorporation of a higher projected path for\ncrease broadly. Growth in auto lending at finance com- population due to a boost from immigration. The lagged\npanies was muted in January following robust growth effects of earlier monetary policy actions, through their\nlast year. continued contribution to tight financial and credit conditions, were still expected to hold output growth in\nCRE borrowers continued to find credit readily accessi2024 below the staff’s estimate of potential growth. As\nble over the period. CRE loans at banks picked up modthose policy effects waned, output was expected to rise\nerately in January and February, driven by growth in\nin line with potential in 2025 and 2026. The unemploymultifamily and residential loans. Non-agency CMBS isment rate was forecast to remain roughly flat over the\nsuance volume was moderate, on average, in January and\nnext several years. February. Total and core PCE price inflation were both projected\nCredit quality for large firms and home mortgage borto edge down in 2024, ending the year around 2½ perrowers remained solid but generally deteriorated further\ncent, as demand and supply in product and labor marin sectors such as CRE and credit cards. The trailing sixkets continued to move into better balance. By 2026,\nmonth default rates on corporate borrowers’ bonds and\ntotal and core PCE price inflation were expected to be\nloans remained low in February. In contrast, credit ratclose to 2 percent.\ning downgrades outpaced upgrades for leveraged loans\nand corporate bonds in January and February. Credit The staff viewed uncertainty around the baseline projecquality of small businesses deteriorated further in recent tion as close to the average over the past 20 years, as\nmonths. uncertainty was judged to have diminished substantially\nover the past year. Risks around the inflation forecast\nMortgage delinquency rates for conventional and Dewere seen as tilted slightly to the upside, as supply-side\npartment of Veterans Affairs loans were largely undisruptions—from developments domestically or\nchanged in December and January, but delinquency rates\nabroad—or unexpectedly persistent inflation dynamics\non Federal Housing Administration loans picked up\ncould materialize. The risks around the forecast for ecoslightly. Credit card delinquency rates increased a bit\nnomic activity were viewed as skewed a little to the\nfurther in the fourth quarter and stood above levels seen\ndownside, as any substantial setback in reducing inflajust before the pandemic. The upward trend in the auto\ntion might lead to a tightening of financial conditions\ndelinquency rate appeared to have stopped in the second\nthat would slow the pace of economic activity by more\nhalf of last year, with the delinquency rate in the fourth\nthan the staff anticipated in their baseline forecast.\nquarter remaining a little above its pre-pandemic average. Participants’ Views on Current Conditions and the\nEconomic Outlook\nDelinquency rates for nonfarm nonresidential loans at\nIn conjunction with this FOMC meeting, participants\nbanks increased at the end of 2023 to a level last seen in\nsubmitted their projections of the most likely outcomes\nlate 2014. The delinquency rate for office properties in\nfor real GDP growth, the unemployment rate, and inflaCMBS pools continued to increase in January and Febtion for each year from 2024 through 2026 and over the\nruary. Delinquency rates would have been higher had\nlonger run. The projections were based on their individmany borrowers with loans maturing last year not reual assessments of appropriate monetary policy, includceived extensions. CMBS delinquency rates for most\ning the path of the federal funds rate. The longer-run\nother property types were stable at normal-to-low levels,\nprojections represented each participant’s assessment of\npartly because many of these borrowers were also able\nthe rate to which each variable would be expected to\nto extend their loans when they reached maturity last\nconverge, over time, under appropriate monetary policy\nyear. The deterioration in CRE credit quality sparked\nand in the absence of further shocks to the economy. A\ninvestor concerns about the health of a few small U.S. Summary of Economic Projections was released to the\nand foreign banks over the intermeeting period.\npublic following the conclusion of the meeting. In their discussion of inflation, participants observed\nthat significant progress had been made over the past\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nyear toward the Committee’s 2 percent inflation objec- homebuilding amid still-elevated financing costs for detive even though the two most recent monthly readings velopers, despite strong housing demand and a limited\non core and headline inflation had been firmer than ex- supply of affordable housing. Some participants noted\npected. Some participants noted that the recent in- that increased immigration, which had likely been boostcreases in inflation had been relatively broad based and ing the growth of personal consumption spending, may\ntherefore should not be discounted as merely statistical also have been adding to the demand for housing. Many\naberrations. However, a few participants noted that re- participants pointed to indicators such as higher credit\nsidual seasonality could have affected the inflation read- card balances, greater use of buy-now-pay-later proings at the start of the year. Participants generally com- grams, or rising delinquency rates on some types of conmented that they remained highly attentive to inflation sumer loans as evidence that the finances of some lowerrisks but that they had also anticipated that there would and moderate-income households might be coming unbe some unevenness in monthly inflation readings as in- der pressure; these developments were seen by these\nflation returned to target. participants as a downside risk to the outlook for consumption spending. In their outlook for inflation, participants noted that\nthey continued to expect that inflation would return to Reports from business contacts in some industries and\n2 percent over the medium term. They remained con- Districts conveyed increased optimism about the outcerned that elevated inflation continued to harm house- look, while contacts in a couple of other Districts reholds, especially those least able to meet the higher costs ported only a steady or stable pace of economic activity.\nof essentials like food, housing, and transportation. A Restrictive credit conditions were cited by a few particifew participants remarked that they expected core non- pants as restraining sectors such as equipment investhousing services inflation to decline as the labor market ment and residential investment. However, several parcontinued to move into better balance and wage growth ticipants noted that their contacts had reported increased\nmoderated further. Participants discussed the still- investment in technology or in business process imelevated rate of housing services inflation and com- provements that were enhancing productive capacity\nmented on the uncertainty regarding when and by how and helping businesses ameliorate the effects of a tight\nmuch lower readings for rent growth on new leases labor market. Manufacturing activity was characterized\nwould pass through to this category of inflation. Several as stable. A couple of participants noted that high input\nparticipants noted that the disinflationary pressure for costs and lower expected commodity prices were weighcore goods that had resulted from the receding of supply ing on farm incomes.\nchain bottlenecks was likely to moderate. Other factors\nParticipants assessed that demand and supply in the larelated to aggregate supply, such as increases in the labor\nbor market were continuing to come into better balance,\nforce or better productivity growth, were viewed by sevalthough conditions generally remained tight. Particieral participants as likely to support continued disinflapants noted strong recent payroll growth, while the untion. Some participants reported that business contacts\nemployment rate remained low. Participants cited a vahad indicated that they were less able to pass on price\nriety of indicators that suggested some easing in labor\nincreases or that consumers were becoming more sensimarket conditions, including declining job vacancies, a\ntive to price changes. Some participants observed that\nlower quits rate, and a reduced ratio of job openings to\nlonger-term inflation expectations appeared to remain\nunemployed workers. Some participants indicated that\nwell anchored, as reflected in a broad range of surveys\nbusiness contacts had reported less difficulty in hiring or\nof households, businesses, and forecasters, as well as\nretaining workers. Several participants noted that the\nmeasures from financial markets.\nbetter balance between labor supply and demand had\nParticipants expected that economic growth would slow contributed to an easing of nominal wage pressures.\nfrom last year’s strong pace. With regard to the house- Nevertheless, some participants observed that portions\nhold sector, participants noted that consumption spend- of the labor market, such as the health-care sector and\ning generally remained solid, although many commented in less urban areas, remained very tight. Most particithat recent readings on retail sales had been soft. Several pants noted that, during the past year, labor supply had\nparticipants pointed to the strong labor market, ongoing been boosted by increased labor force participation as\nwage gains, and a generally healthy household-sector bal- well as by immigration. Participants further commented\nance sheet as likely to continue to support consumption. that recent estimates of greater immigration in the past\nParticipants noted mixed reports about the pace of few years and an overall increase in labor supply could\nhelp explain the strength in employment gains even as\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 1_9_–_2_0_,_ 2_0_2_4________________________P_a_g_e_ _9\nthe unemployment rate had remained roughly flat and cycle, and almost all participants judged that it would be\nwage pressures had eased. appropriate to move policy to a less restrictive stance at\nsome point this year if the economy evolved broadly as\nParticipants discussed the uncertainties around the ecothey expected. In support of this view, they noted that\nnomic outlook. Participants generally noted their uncerthe disinflation process was continuing along a path that\ntainty about the persistence of high inflation and exwas generally expected to be somewhat uneven. They\npressed the view that recent data had not increased their\nalso pointed to the Committee’s policy actions together\nconfidence that inflation was moving sustainably down\nwith the ongoing improvements in supply conditions as\nto 2 percent. Some participants pointed to geopolitical\nfactors working to move supply and demand into better\nrisks that might result in more severe supply bottlenecks\nbalance. Participants noted indicators pointing to strong\nor higher shipping costs that could put upward pressure\neconomic momentum and disappointing readings on inon prices, and observed that those developments could\nflation in recent months and commented that they did\nalso weigh on economic growth. The possibility that genot expect it would be appropriate to reduce the target\nopolitical events or surges in domestic demand could\nrange for the federal funds rate until they had gained\ngenerate increased energy prices was also seen as an upgreater confidence that inflation was moving sustainably\nside risk to inflation. Some participants noted the untoward 2 percent. Participants remarked that in considcertainties regarding the restrictiveness of financial conering any adjustments to the target range for the federal\nditions and the associated risk that conditions were or\nfunds rate at future meetings, they would carefully assess\ncould become less restrictive than desired, which could\nincoming data, the evolving outlook, and the balance of\nadd momentum to aggregate demand and put upward\nrisks. Participants noted the importance of continuing\npressure on inflation. Several participants commented\nto communicate clearly the Committee’s data-dependent\nthat increased efficiencies and technological innovations\napproach in formulating monetary policy and the strong\nhad the potential to raise productivity growth, which\ncommitment to achieve its dual-mandate objectives of\nmight allow the economy to grow faster without raising\nmaximum employment and price stability.\ninflation. Participants also noted downside risks to economic activity, including slowing economic growth in In discussing risk-management considerations that\nChina, a deterioration in conditions in domestic CRE could bear on the policy outlook, participants generally\nmarkets, a potential reemergence of stresses in the bank- judged that risks to the achievement of the Committee’s\ning sector, or the possibility that a pickup in layoffs could employment and inflation goals were moving into better\nresult in a relatively rapid rise in unemployment. Many balance. They remarked that it was important to weigh\nparticipants pointed to the difficulty in assessing how re- the risks of maintaining a restrictive stance for too long,\ncent immigration trends would influence the evolution which could unduly weaken economic activity and emof labor supply, aggregate demand, and overall eco- ployment, against the risks of easing policy too quickly,\nnomic activity. which could stall or even reverse progress in returning\ninflation to the Committee’s 2 percent inflation objecIn their consideration of monetary policy at this meeting,\ntive. Regarding the latter risk, participants emphasized\nall participants judged that, in light of current economic\nthe importance of carefully assessing incoming data to\nconditions, the outlook for economic activity and inflajudge whether inflation is moving down sustainably to\ntion, and the balance of risks, it was appropriate to main2 percent. Participants noted various sources of uncertain the target range for the federal funds rate at 5¼ to\ntainty associated with their outlooks for economic activ5½ percent. Participants also agreed that it was approity, the labor market, and inflation, with some participriate to continue the process of reducing the Federal\npants additionally mentioning uncertainty about the exReserve’s securities holdings, as described in the previtent to which past monetary policy actions or the current\nously announced Plans for Reducing the Size of the Fedstance of policy would weigh further on aggregate deeral Reserve’s Balance Sheet. Participants commented\nmand. Participants agreed, however, that monetary polthat maintaining the current target range for the federal\nicy remained well positioned to respond to evolving ecofunds rate at this meeting would support the Commitnomic conditions and risks to the outlook, including the\ntee’s progress to return inflation to the 2 percent objecpossibility of maintaining the current restrictive policy\ntive and keep longer-term inflation expectations well anstance for longer should the disinflation process slow, or\nchored.\nreducing policy restraint in the event of an unexpected\nIn discussing the policy outlook, participants judged that weakening in labor market conditions.\nthe policy rate was likely at its peak for this tightening\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nCommittee Policy Actions  Conduct standing overnight repurchase\nIn their discussions of monetary policy for this meeting, agreement operations with a minimum bid\nmembers agreed that economic activity had been ex- rate of 5.5 percent and with an aggregate\npanding at a solid pace. Job gains had remained strong, operation limit of $500 billion.\nand the unemployment rate had remained low. Inflation\n Conduct standing overnight reverse repurhad eased over the past year but remained elevated.\nchase agreement operations at an offering\nMembers judged that the risks to achieving the Commitrate of 5.3 percent and with a per-countertee’s employment and inflation goals were moving into\nparty limit of $160 billion per day.\nbetter balance. Members viewed the economic outlook\nas uncertain and agreed that they remained highly atten-  Roll over at auction the amount of principal\ntive to inflation risks. payments from the Federal Reserve’s holdings of Treasury securities maturing in each\nIn support of the Committee’s goals to achieve maxicalendar month that exceeds a cap of\nmum employment and inflation at the rate of 2 percent\n$60 billion per month. Redeem Treasury\nover the longer run, members agreed to maintain the tarcoupon securities up to this monthly cap\nget range for the federal funds rate at 5¼ to 5½ percent.\nand Treasury bills to the extent that coupon\nMembers concurred that, in considering any adjustments\nprincipal payments are less than the\nto the target range for the federal funds rate, they would\nmonthly cap.\ncarefully assess incoming data, the evolving outlook, and\nthe balance of risks. Members agreed that they did not  Reinvest into agency mortgage-backed seexpect that it would be appropriate to reduce the target curities (MBS) the amount of principal payrange until they have gained greater confidence that in- ments from the Federal Reserve’s holdings\nflation is moving sustainably toward 2 percent. In addi- of agency debt and agency MBS received in\ntion, members agreed to continue to reduce the Federal each calendar month that exceeds a cap of\nReserve’s holdings of Treasury securities and agency $35 billion per month.\ndebt and agency MBS, as described in its previously an-\n Allow modest deviations from stated\nnounced plans. All members affirmed their strong comamounts for reinvestments, if needed for\nmitment to returning inflation to the Committee’s 2 peroperational reasons.\ncent objective.\n Engage in dollar roll and coupon swap\nMembers agreed that, in assessing the appropriate stance\ntransactions as necessary to facilitate settleof monetary policy, they would continue to monitor the\nment of the Federal Reserve’s agency MBS\nimplications of incoming information for the economic\ntransactions.”\noutlook. They would be prepared to adjust the stance of\nmonetary policy as appropriate if risks emerge that could The vote also encompassed approval of the statement\nimpede the attainment of the Committee’s goals. Mem- below for release at 2:00 p.m.:\nbers also agreed that their assessments would take into\n“Recent indicators suggest that economic activaccount a wide range of information, including readings\nity has been expanding at a solid pace. Job gains\non labor market conditions, inflation pressures and inhave remained strong, and the unemployment\nflation expectations, and financial and international derate has remained low. Inflation has eased over\nvelopments.\nthe past year but remains elevated. At the conclusion of the discussion, the Committee\nThe Committee seeks to achieve maximum emvoted to direct the Federal Reserve Bank of New York,\nployment and inflation at the rate of 2 percent\nuntil instructed otherwise, to execute transactions in the\nover the longer run. The Committee judges that\nSOMA in accordance with the following domestic policy\nthe risks to achieving its employment and infladirective, for release at 2:00 p.m.:\ntion goals are moving into better balance. The\n“Effective March 21, 2024, the Federal Open economic outlook is uncertain, and the ComMarket Committee directs the Desk to: mittee remains highly attentive to inflation risks.\n Undertake open market operations as nec- In support of its goals, the Committee decided\nessary to maintain the federal funds rate in to maintain the target range for the federal\na target range of 5¼ to 5½ percent. funds rate at 5¼ to 5½ percent. In considering\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 1_9_–_2_0_,_ 2_0_2_4_______________________P__ag_e_ _1_1\nany adjustments to the target range for the fed- Consistent with the Committee’s decision to leave the\neral funds rate, the Committee will carefully as- target range for the federal funds rate unchanged, the\nsess incoming data, the evolving outlook, and Board of Governors of the Federal Reserve System\nthe balance of risks. The Committee does not voted unanimously to maintain the interest rate paid on\nexpect it will be appropriate to reduce the target reserve balances at 5.4 percent, effective March 21, 2024.\nrange until it has gained greater confidence that The Board of Governors of the Federal Reserve System\ninflation is moving sustainably toward 2 per- voted unanimously to approve the establishment of the\ncent. In addition, the Committee will continue primary credit rate at the existing level of 5.5 percent, efreducing its holdings of Treasury securities and fective March 21, 2024.\nagency debt and agency mortgage-backed secuIt was agreed that the next meeting of the Committee\nrities, as described in its previously announced\nwould be held on Tuesday–Wednesday, April 30–\nplans. The Committee is strongly committed to\nMay 1, 2024. The meeting adjourned at 9:55 a.m. on\nreturning inflation to its 2 percent objective. March 20, 2024. In assessing the appropriate stance of monetary\nNotation Vote\npolicy, the Committee will continue to monitor\nBy notation vote completed on February 20, 2024, the\nthe implications of incoming information for\nCommittee unanimously approved the minutes of the\nthe economic outlook. The Committee would\nCommittee meeting held on January 30–31, 2024.\nbe prepared to adjust the stance of monetary\npolicy as appropriate if risks emerge that could\nimpede the attainment of the Committee’s\ngoals. The Committee’s assessments will take\ninto account a wide range of information, in- _______________________\ncluding readings on labor market conditions, in- Joshua Gallin\nflation pressures and inflation expectations, and Secretary\nfinancial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Thomas I. Barkin, Michael S. Barr, Raphael W. Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C. Daly, Philip N. Jefferson, Adriana D. Kugler, Loretta J. Mester, and Christopher J. Waller. Voting against this action: None.",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240320.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that rate cuts are unlikely until it gains greater confidence that inflation is sustainably moving toward 2%. Policymakers expect to maintain restrictive policy for some time and emphasized a data-dependent approach, with any future adjustments hinging on incoming economic data and inflation trends.",
+    "key_economic_factors": [
+      "Persistent inflation above target, with recent readings firmer than expected",
+      "Strong labor market conditions, including solid job growth and low unemployment",
+      "Solid economic growth in early 2024, though showing signs of slowing",
+      "Elevated risks around inflation and uncertainty about the restrictiveness of financial conditions"
+    ],
+    "economic_outlook": "The Fed sees economic growth continuing at a solid pace but below 2023’s strength, with inflation gradually moving toward 2% over the medium term. Labor market conditions remain tight, though some indicators suggest a better balance between supply and demand. The outlook is uncertain, with risks tilted to both persistent inflation and potential economic slowdown.",
+    "market_impact": "Markets should expect higher-for-longer interest rates, supporting the dollar and keeping upward pressure on borrowing costs for consumers and businesses. Equities may remain volatile as investors await clearer signals on rate cuts, while bond yields are likely to stay elevated in the near term."
+  },
+  {
+    "date": "2024-01-31",
+    "title": "FOMC Meeting 2024-01-31",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJanuary 30–31, 2024\nA joint meeting of the Federal Open Market Committee Stephanie R. Aaronson, Senior Associate Director,\nand the Board of Governors of the Federal Reserve Sys- Division of Research and Statistics, Board\ntem was held in the offices of the Board of Governors\nJose Acosta, Senior System Administrator II, Division\non Tuesday, January 30, 2024, at 10:00 a.m. and continof Information Technology, Board\nued on Wednesday, January 31, 2024, at 9:00 a.m.1\nIsaiah C. Ahn, Information Management Analyst,\nAttendance\nDivision of Monetary Affairs, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Roc Armenter, Executive Vice President, Federal\nThomas I. Barkin Reserve Bank of Philadelphia\nMichael S. Barr\nAlyssa Arute, Manager, Division of Reserve Bank\nRaphael W. Bostic\nOperations and Payment Systems, Board\nMichelle W. Bowman\nLisa D. Cook Penelope A. Beattie,2 Section Chief, Office of the\nMary C. Daly Secretary, Board\nPhilip N. Jefferson\nDavid Bowman, Senior Associate Director, Division of\nAdriana D. Kugler\nMonetary Affairs, Board\nLoretta J. Mester\nChristopher J. Waller Celso Brunetti,3 Assistant Director, Division of\nResearch and Statistics, Board\nSusan M. Collins, Austan D. Goolsbee, Kathleen\nO’Neill, Jeffrey R. Schmid, and Sushmita Shukla, Juan C. Climent, Special Adviser to the Board, Division\nAlternate Members of the Committee of Board Members, Board\nPatrick Harker, Neel Kashkari, and Lorie K. Logan, Daniel M. Covitz, Deputy Director, Division of\nPresidents of the Federal Reserve Banks of Research and Statistics, Board\nPhiladelphia, Minneapolis, and Dallas, respectively\nJennifer S. Crystal, Senior Adviser, Division of\nJoshua Gallin, Secretary International Finance, Board\nMatthew M. Luecke, Deputy Secretary\nStephanie E. Curcuru, Deputy Director, Division of\nBrian J. Bonis, Assistant Secretary\nInternational Finance, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Ryan Decker, Special Adviser to the Board, Division of\nRichard Ostrander, Deputy General Counsel Board Members, Board\nTrevor A. Reeve, Economist\nSarah Devany, First Vice President, Federal Reserve\nStacey Tevlin, Economist\nBank of San Francisco\nBeth Anne Wilson, Economist\nRochelle M. Edge, Deputy Director, Division of\nShaghil Ahmed, James A. Clouse, Edward S. Knotek II, Monetary Affairs, Board\nDavid E. Lebow, Sylvain Leduc, Paula Tkac, and\nEric C. Engstrom, Associate Director, Division of\nWilliam Wascher, Associate Economists\nResearch and Statistics, Board\nRoberto Perli, Manager, System Open Market Account\nJon Faust, Senior Special Adviser to the Chair, Division\nJulie Ann Remache, Deputy Manager, System Open of Board Members, Board\nMarket Account\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of the economic and finan-\n“FOMC” and the “Committee” in these minutes; the Board cial situation.\nof Governors of the Federal Reserve System is referenced as 3 Attended opening remarks for Tuesday’s session only.\nthe “Board” in these minutes.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nJenn Gallagher, Assistant to the Board, Division of Anna Paulson, Executive Vice President, Federal\nBoard Members, Board Reserve Bank of Chicago\nCarlos Garriga, Senior Vice President, Federal Reserve Eugenio P. Pinto, Special Adviser to the Board,\nBank of St. Louis Division of Board Members, Board\nMichael S. Gibson, Director, Division of Supervision Andrea Raffo, Senior Vice President, Federal Reserve\nand Regulation, Board Bank of Minneapolis\nJoseph W. Gruber, Executive Vice President, Federal Andres Schneider, Principal Economist, Division of\nReserve Bank of Kansas City Monetary Affairs, Board\nLuca Guerrieri, Associate Director, Division of Samuel Schulhofer-Wohl, Senior Vice President,\nInternational Finance, Board Federal Reserve Bank of Dallas\nChristopher J. Gust, Associate Director, Division of Felipe F. Schwartzman, Senior Economist, Federal\nMonetary Affairs, Board Reserve Bank of Richmond\nAndrew Haughwout, Acting Director of Research, Chiara Scotti,3 Senior Vice President, Federal Reserve\nFederal Reserve Bank of New York Bank of Dallas\nValerie S. Hinojosa, Section Chief, Division of Zeynep Senyuz, Deputy Associate Director, Division\nMonetary Affairs, Board of Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Arsenios Skaperdas, Senior Economist, Division of\nBoard Members, Board Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Balint Szoke, Senior Economist, Division of Monetary\nFinancial Stability, Board Affairs, Board\nKyungmin Kim, Principal Economist, Division of Clara Vega, Special Adviser to the Board, Division of\nMonetary Affairs, Board Board Members, Board\nElizabeth K. Kiser, Senior Associate Director, Division Annette Vissing-Jørgensen, Senior Adviser, Division of\nof Research and Statistics, Board Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial Jeffrey D. Walker, Associate Director, Division of\nStability, Board Reserve Bank Operations and Payment Systems,\nBoard\nKurt F. Lewis, Special Adviser to the Chair, Division of\nBoard Members, Board Fabian Winkler, Principal Economist, Division of\nMonetary Affairs, Board\nDan Li,4 Assistant Director, Division of Monetary\nAffairs, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nLaura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Egon Zakrajsek, Executive Vice President, Federal\nReserve Bank of Boston\nAnn E. Misback, Secretary, Office of the Secretary,\nBoard Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nPhillip Monin, Senior Economist, Division of\nMonetary Affairs, Board\nMichelle M. Neal, Head of Markets, Federal Reserve\nBank of New York\nChristopher J. Nekarda, Principal Economist, Division\nof Research and Statistics, Board\n4 Attended Tuesday’s session only.\n\n_____________________________M_i_n_u_te_s_ o_f_ _th_e_ _M_e_e_ti_n_g_ o_f_ _Ja_n_u_a_ry_ _3_0_–_3_1_, _20_2_4________________________P_a_g_e_ _3\nAnnual Organizational Matters5 Brian M. Doyle\nThe agenda for this meeting reported that advices of the Edward S. Knotek II\nelection of the following members and alternate mem- David E. Lebow\nbers of the Federal Open Market Committee for a term Sylvain Leduc\nbeginning January 30, 2024, were received and that these Paula Tkac\nindividuals executed their oaths of office. William Wascher\nAlexander L. Wolman Associate Economists\nThe elected members and alternate members were as follows:\nBy unanimous vote, the Committee selected the Federal\nJohn C. Williams, President of the Federal Reserve Bank Reserve Bank of New York to execute transactions for\nof New York, with Sushmita Shukla, First Vice President the System Open Market Account (SOMA).\nof the Federal Reserve Bank of New York, as alternate;\nBy unanimous vote, the Committee selected Roberto\nThomas I. Barkin, President of the Federal Reserve Perli and Julie Ann Remache to serve at the pleasure of\nBank of Richmond, with Susan M. Collins, President of the Committee as manager and deputy manager of the\nthe Federal Reserve Bank of Boston, as alternate; SOMA, respectively, on the understanding that these selections were subject to being satisfactory to the Federal\nLoretta J. Mester, President of the Federal Reserve Bank\nReserve Bank of New York.\nof Cleveland, with Austan D. Goolsbee, President of the\nFederal Reserve Bank of Chicago, as alternate; Secretary’s note: The Federal Reserve Bank of\nNew York subsequently sent advice that the seRaphael W. Bostic, President of the Federal Reserve\nlections indicated previously were satisfactory. Bank of Atlanta, with Kathleen O’Neill, Interim President of the Federal Reserve Bank of St. Louis, as alter- By unanimous vote, the Committee approved the\nnate; FOMC Authorizations and Continuing Directives for\nOpen Market Operations, with a revision to Section II,\nMary C. Daly, President of the Federal Reserve Bank of\nContinuing Directive for Domestic Open Market OperSan Francisco, with Jeffrey R. Schmid, President of the\nations, to add a standing seven-day term option to the\nFederal Reserve Bank of Kansas City, as alternate.\nexisting standing Foreign and International Monetary\nBy unanimous vote, the following officers of the Com- Authorities Repurchase Agreement Operations.\nmittee were selected to serve until the selection of their\nAhead of the vote on policies relating to investment and\nsuccessors at the first regularly scheduled meeting of the\ntrading, information security, and external communicaCommittee in 2025:\ntions, the Chair commented on the critical importance\nJerome H. Powell Chair of earning and keeping the public’s trust in the imparJohn C. Williams Vice Chair tiality of the Committee’s decisionmaking. A revised inJoshua Gallin Secretary vestment and trading policy was proposed which exMatthew M. Luecke Deputy Secretary panded the scope of employees subject to the CommitBrian J. Bonis Assistant Secretary tee’s investment and trading rules, and introduced new\nMichelle A. Smith Assistant Secretary investment restrictions on all employees with access to\nMark E. Van Der Weide General Counsel FOMC information. All participants indicated support\nRichard Ostrander Deputy General Counsel for, and agreed to abide by, the FOMC Policy on InvestCharles C. Gray Assistant General Counsel ment and Trading for Committee Participants and FedTrevor A. Reeve Economist eral Reserve System Staff, the Program for Security of\nStacey Tevlin Economist FOMC Information, the FOMC Policy on External\nBeth Anne Wilson Economist Communications of Committee Participants, and the\nFOMC Policy on External Communications of Federal\nShaghil Ahmed Reserve System Staff. The Committee voted unaniKartik B. Athreya6 mously to approve those four policies.5\nJames A. Clouse\n5 Committee organizational documents are available at 6 Kartik B. Athreya’s selection was effective upon employment\nwww.federalreserve.gov/monetarypolicy/rules_authoriza- at the Federal Reserve Bank of New York.\ntions.htm.\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nAhead of the vote on the Statement on Longer-Run expected timing for the end of runoff shifted slightly earGoals and Monetary Policy Strategy, the Chair indicated lier, and the portfolio size at the end of runoff was\nthe next five-year review of the statement would begin slightly higher than in the December surveys.\nin the latter half of this year, and the results would be\nRegarding developments in money markets and Desk\nannounced about a year later. All participants indicated\noperations, the effective federal funds rate was stable\nsupport for the Statement on Longer-Run Goals and\nover the intermeeting period. While the Secured OverMonetary Policy Strategy, and the Committee voted\nnight Financing Rate experienced temporary and modest\nunanimously to reaffirm it without revision.5\nupward pressure over the past few month-ends, includDevelopments in Financial Markets and Open ing the year-end, such a pattern was common before the\nMarket Operations pandemic. The usage of the overnight reverse repurThe manager turned first to a review of developments in chase agreement (ON RRP) facility continued to fall\nfinancial markets over the intermeeting period. Finan- over the period, with balances below $600 billion in late\ncial conditions eased modestly but remained about as January. Since June 2023, when the debt ceiling was sustight as they were last summer and much tighter than pended, usage of the ON RRP facility had declined at a\nwhen the hiking cycle began. Over the intermeeting pe- much faster pace than the Federal Reserve securities\nriod, declines in nominal Treasury yields were concen- portfolio, and reserve balances had increased some.\ntrated at the front end of the yield curve. Staff models\nAs part of its ongoing market surveillance, the staff consuggested that the declines in shorter-term yields were\ntinued to monitor a wide range of money market indicamostly attributable to a lower expected policy rate path\ntors; those gauges suggested that the supply of reserves\nand were concentrated in expected real rates, while exremained abundant. The staff also noted that once the\npected inflation was little changed. Pricing of inflation\nON RRP facility is either depleted or stabilized at a low\nderivatives continued to suggest a near-term path of inlevel, reserves will decline at a pace comparable with the\nflation consistent with a return to 2 percent later this\nrunoff of the Federal Reserve’s securities portfolio, all\nyear. Broad equity prices reached new highs over the\nelse equal.\nintermeeting period, but they were driven mostly by the\nstrong gains of large-capitalization technology compa- By unanimous vote, the Committee ratified the Desk’s\nnies; broader measures of equity valuations were more domestic transactions over the intermeeting period.\nsubdued. Still, equities appeared priced for continued There were no intervention operations in foreign curreneconomic resilience. cies for the System’s account during the intermeeting period. The manager turned next to expectations for monetary\npolicy. Market participants broadly viewed recent infla- Staff Review of the Economic Situation\ntion data and the December Summary of Economic Pro- The data available at the time of the January 30–31 meetjections (SEP) as increasing the odds that rate cuts might ing indicated that growth in U.S. real gross domestic\nstart sooner than previously thought. The modal path product (GDP) was solid in the fourth quarter of 2023\nof the federal funds rate from the Open Market Desk’s but had stepped down from the third quarter’s strong\nSurvey of Primary Dealers and Survey of Market Partic- pace. Labor market conditions continued to be tight but\nipants was little changed from December but showed an showed further signs of easing. Consumer price inflaincreased likelihood of earlier rate cuts. The modal path tion had declined markedly over the course of the year,\nimplied by options prices declined some over the inter- though it remained above 2 percent.\nmeeting period. Both modal paths were closer to the\nLabor demand and supply continued to gradually move\nDecember median SEP projection than the average path\ninto better alignment. The average monthly pace of\nfor the policy rate implied by futures prices, which had\nnonfarm payroll employment gains in the fourth quarter\ndeclined more substantially over the period. The fuwas slower than in the third quarter. The unemployment\ntures-based path likely reflected the effect of investors’\nrate remained at 3.7 percent in December, the same as\nperceived probability of more substantial rate cuts rather\nits third-quarter average. However, the labor force parthan their baseline expectations.\nticipation rate moved down, as did the employment-toCommunications over the period heightened market at- population ratio. The African American unemployment\ntention around a potential slowing of balance sheet run- rate declined, and the rate for Hispanics rose; both rates\noff. Most Desk survey respondents expected a slowing were higher than those for Asians and for whites. The\nof the pace to start by July, although there was consider- private-sector job openings rate was little changed in\nable uncertainty about the exact start date. The average November and December, and the quits rate edged\n\n_____________________________M_i_n_u_te_s_ o_f_ _th_e_ _M_e_e_ti_n_g_ o_f_ _Ja_n_u_a_ry_ _3_0_–_3_1_, _20_2_4________________________P_a_g_e_ _5\ndown; both rates were below their levels at the start of part by rebounding global demand for high-tech prod2023. Easing labor market imbalances were also appar- ucts.\nent in the wage data, with the December 12-month\nForeign headline inflation continued to fall. However,\nchanges in the employment cost index and in average\nthe pace of decline had varied across countries as well as\nhourly earnings for all employees each below their yearsectors, with a moderation in goods prices generally havearlier levels.\ning outpaced that in services prices. Most major foreign\nConsumer price inflation continued to slow. The price central banks kept their policy rates unchanged over the\nindex for total personal consumption expenditures intermeeting period and emphasized the need to main-\n(PCE) increased 2.6 percent over the 12 months ending tain a stance of policy that is sufficiently restrictive to\nin December, while core PCE price inflation—which ex- ensure that inflation falls back to their targets.\ncludes changes in energy prices and many consumer\nStaff Review of the Financial Situation\nfood prices—was 2.9 percent over the same period. Over the intermeeting period, nominal Treasury yields\nBoth total and core PCE price inflation were well below\ndeclined, and the expected market-implied path for the\ntheir year-earlier levels. The trimmed mean measure of\nfederal funds rate through 2024 shifted downward, as\n12-month PCE price inflation constructed by the Fedmarket participants viewed monetary policy communieral Reserve Bank of Dallas was 3.3 percent in Decemcations, on balance, as pointing to notably less restrictive\nber, also lower than its level a year earlier. Survey\npolicy than expected. Indicators of broad financial conmeasures of consumers’ short-run inflation expectations\nditions eased over the period, but the staff’s Financial\nmoved lower in December, while survey measures of\nConditions Impulse on Growth index remained restricmedium- to longer-term inflation expectations were\ntive. Similarly, financing conditions for households and\nbroadly in line with the levels seen in the decade before\nbusinesses continued to be moderately restrictive, as\nthe pandemic.\nborrowing costs remained elevated. According to the advance estimate, real GDP rose at a\nThe market-implied path for the federal funds rate\nsolid pace in the fourth quarter. Private domestic final\nthrough 2024 decreased over the intermeeting period. A\npurchases—which comprises PCE and private fixed instraight read of federal funds futures rates suggested that\nvestment and which often provides a better signal than\nmarket participants were placing higher odds on signifiGDP of underlying economic momentum—also rose\ncant policy easing in 2024 than they did just before the\nsolidly, though at a slower rate. December FOMC meeting. Beyond 2024, the policy\nReal exports grew robustly in the fourth quarter of 2023, rate path implied by overnight index swap quotes dedriven in part by a jump in exports of industrial supplies, clined. Consistent with the decline in the implied policy\nwhich had declined markedly earlier last year. By con- path, short- and intermediate-term Treasury yields also\ntrast, real imports grew at a tepid pace, as gains in im- declined notably. Real yields declined more than nomiports of capital goods and services were partially offset nal yields, implying somewhat higher measures of inflaby declines in imports of consumer goods and autos. All tion compensation. Market-based measures of interest\ntold, net exports contributed about ½ percentage point rate uncertainty remained highly elevated by historical\nto U.S. GDP growth in the fourth quarter after making standards.\nroughly neutral contributions in the preceding two quarBroad stock price indexes increased, and spreads on inters.\nvestment- and speculative-grade bonds narrowed modForeign economic growth remained subdued in the estly over the intermeeting period. The one-month opfourth quarter. In the advanced foreign economies tion-implied volatility on the S&P 500 increased some-\n(AFEs), a significant tightening of monetary policy over what over the period but remained low by historical\nthe past two years, the erosion of real household in- standards.\ncomes from high inflation rates, and the repercussions\nMovements in foreign markets over the intermeeting peof last year’s energy shock in Europe continued to weigh\nriod were modest, on net, with most foreign asset prices\non economic activity. In China, a property-sector slump\nand the exchange value of the dollar little changed. Marand depressed consumer confidence continued to weigh\nket participants generally considered current levels of\non domestic demand, with the government rolling out a\nmost AFE policy rates to be at the peaks of their respecseries of policy measures to support growth. Economic\ntive tightening cycles. Declines in market-based\nactivity in Asia excluding China firmed, supported in\nmeasures of U.S. policy expectations contributed to a\nmoderate step-down in short-term yields in most AFEs,\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nwhile longer-term foreign yields were little changed. Ma- cards tightened in the fourth quarter and were expected\njor AFE equity indexes increased slightly. to tighten further over 2024. Auto loan balances grew\nmodestly in November. A modest share of banks reConditions in short-term funding markets remained staported in the SLOOS that they tightened standards on\nble over the intermeeting period, with typical dynamics\nauto loans in the fourth quarter and expected to tighten\nobserved surrounding year-end. Usage of the ON RRP\nthem further over 2024.\nfacility continued to decline over the period, primarily\nreflecting money market funds reallocating their assets The credit quality of businesses and households deterioto Treasury bills and private-market repurchase agree- rated slightly but remained broadly solid, as delinquency\nments, which offered slightly more attractive market rates in most sectors were relatively low. Delinquency\nrates relative to the ON RRP rate. Banks’ total deposit rates on conventional mortgages remained low, while\nlevels were roughly unchanged in the fourth quarter of delinquency rates on credit cards and auto loans rose in\nlast year, as outflows of core deposits were about offset the third quarter to levels notably above those just beby inflows of large time deposits. fore the pandemic. The credit quality of nonfinancial\nfirms borrowing in the corporate bond and leveraged\nIn domestic credit markets, borrowing costs for most\nloan markets remained sound overall. Aggregate delinbusinesses, households, and municipalities decreased\nquency rates on CMBS backed by office properties conmoderately over the intermeeting period but remained\ntinued to be elevated in November. In the January\nelevated. Rates on loans to households declined over\nSLOOS, banks reported that credit quality was expected\nthe intermeeting period but remained relatively high,\nto deteriorate somewhat across loan categories over\nwhile interest rates on existing credit card accounts were\n2024.\nlittle changed. Interest rates on commercial and industrial (C&I) loans and small business loans increased over The staff provided an update on its assessment of the\nthe intermeeting period. Yields declined on a broad ar- stability of the U.S. financial system and, on balance,\nray of fixed-income securities, including investment- and characterized the system’s financial vulnerabilities as nospeculative-grade corporate bonds, residential and com- table. The staff judged that asset valuation pressures remercial mortgage-backed securities (CMBS), and munic- mained notable, as valuations across a range of markets\nipal bonds. The declines were largely driven by decreases appeared high relative to fundamentals. House prices\nin Treasury yields and, to some extent, by narrower increased to the upper end of their historical range, relaspreads. tive to rents and Treasury yields, though underwriting\nstandards remained restrictive. CRE prices continued to\nCredit continued to be generally available to businesses,\ndecline, especially in the multifamily and office sectors,\nhouseholds, and municipalities. However, credit availaand low levels of transactions in the office sector likely\nbility for smaller firms continued to tighten. Total core\nindicated that prices had not yet fully reflected the secloans at banks increased slightly in the fourth quarter.\ntor’s weaker fundamentals. Vulnerabilities associated\nFinancing in capital markets continued to be available,\nwith business and household debt were characterized as\nalthough issuance in most markets remained at moderate\nmoderate. Nonfinancial business debt growth declined,\nlevels.\nand the ability of firms to service their debt remained\nIn the January Senior Loan Officer Opinion Survey on high relative to history. Bank Lending Practices (SLOOS), banks reported tightLeverage in the financial sector was characterized as noening standards and terms on C&I loans to firms of all\ntable. In the banking sector, regulatory risk-based capital\nsizes over the fourth quarter. Regarding commercial real\nratios continued to increase and indicated ample lossestate (CRE), banks reported tightening standards across\nbearing capacity in the banking system. The fair value\nall loan categories in the fourth quarter. Banks reported\nof banks’ longer-term fixed-rate assets, including loans,\nthat they expected to keep lending standards unchanged\nincreased in the fourth quarter as longer-term interest\nfor C&I loans and to tighten standards for CRE loans\nrates decreased, though banks remained vulnerable to\nduring 2024.\nsignificant increases in longer-term interest rates. InsurCredit in the residential mortgage market remained easily ers had been increasing their investments in risky corpoavailable for high-credit-score borrowers who met rate debt. Funding risks were also characterized as nostandard conforming loan criteria, and consumer credit table. Uninsured deposits declined in the aggregate but\nremained available for most borrowers. Growth in remained high for some banks. Assets in prime money\ncredit card balances was strong in November, though market mutual funds and other cash management vehiSLOOS respondents indicated that standards for credit cles continued to increase.\n\n_____________________________M_i_n_u_te_s_ o_f_ _th_e_ _M_e_e_ti_n_g_ o_f_ _Ja_n_u_a_ry_ _3_0_–_3_1_, _20_2_4________________________P_a_g_e_ _7\nStaff Economic Outlook demand, many participants attributed the recent expanThe economic forecast prepared by the staff for the Jan- sion in economic activity to favorable supply developuary meeting was slightly stronger than the December ments. Participants noted that the pace of job gains had\nprojection, as the upward revision to 2023 GDP growth moderated since early last year but remained strong and\nimplied by incoming data boosted the level of output that the unemployment rate had remained low. Inflation\nthroughout the projection period. The lagged effects of had eased over the past year but remained elevated.\nearlier monetary policy actions, through their continued\nRegarding the economic outlook, participants judged\ncontribution to tight financial and credit conditions,\nthat the current stance of monetary policy was restrictive\nwere still expected to push output growth in 2024 and\nand would continue to put downward pressure on eco2025 below the staff’s estimate of potential growth; in\nnomic activity and inflation. Accordingly, they expected\n2026, output was expected to rise in line with potential.\nthat supply and demand in product and labor markets\nThe projected path for the unemployment rate was rewould continue to move into better balance. In light of\nvised down slightly, reflecting the upward revision to the\nthe policy restraint in place, along with more favorable\nlevel of output.\ninflation data amid ongoing improvements in supply\nTotal and core PCE price inflation were both projected conditions, participants viewed the risks to achieving the\nto step down in 2024 as demand and supply in product Committee’s employment and inflation goals as moving\nand labor markets moved into better alignment. By into better balance. However, participants noted that\n2026, total and core PCE price inflation were expected the economic outlook was uncertain and that they reto be close to 2 percent. mained highly attentive to inflation risks. The staff continued to view the uncertainty around the In their discussion of inflation, participants observed\nbaseline projection as elevated but noted that this uncer- that inflation had eased over the past year but remained\ntainty had diminished substantially over the past year. above the Committee’s 2 percent inflation objective. Risks around the inflation forecast were seen as tilted They remained concerned that elevated inflation continslightly to the upside; although inflation had come in ued to harm households, especially those with limited\nclose to expectations throughout most of 2023, the staff means to absorb higher prices. While the inflation data\nplaced some weight on the possibility that further pro- had indicated significant disinflation in the second half\ngress in reducing inflation could take longer than ex- of last year, participants observed that they would be\npected. The risks around the forecast for real activity carefully assessing incoming data in judging whether inwere viewed as skewed to the downside, as any substan- flation was moving down sustainably toward 2 percent.\ntial setback in reducing inflation might lead to a tightenParticipants noted improvements in both headline and\ning of financial conditions that would slow the pace of\ncore inflation and discussed the underlying components\nreal activity by more than the staff anticipated in their\nof these series. Although total PCE inflation in Decembaseline forecast. In addition, the possibility of a largerber remained above the Committee’s 2 percent objective\nthan-expected erosion of households’ financial positions\non a 12-month basis, on a 6-month basis, total PCE inwas seen as a downside risk to the projection for real\nflation was near 2 percent at an annual rate, and core\nactivity. PCE inflation was just below 2 percent. Participants\nParticipants’ Views on Current Conditions and the judged that some of the recent improvement in inflation\nEconomic Outlook reflected idiosyncratic movements in a few series. NevIn their discussion of current economic conditions, par- ertheless, they viewed that there had been significant\nticipants noted that recent indicators suggested that eco- progress recently on inflation returning to the Commitnomic activity had been expanding at a solid pace. Real tee’s longer-run goal. Many participants indicated that\nGDP growth in the fourth quarter of last year came in they expected core nonhousing services inflation to\nabove 3 percent at an annual rate, below the strong gradually decline further as the labor market continued\ngrowth posted in the third quarter but still above most to move into better balance and wage growth moderated\nforecasters’ expectations. Participants observed that the further. Various participants noted that housing services\nunexpected strength in real GDP growth in the fourth inflation was likely to fall further as the deceleration in\nquarter reflected stronger-than-expected net exports and rents on new leases continued to pass through to\ninventory investment, which tend to be volatile and may measures of such inflation. While many participants\ncarry little signal for future growth. Still, consumption pointed to disinflationary pressures associated with imcontinued to grow at a solid pace. In addition to strong provements in aggregate supply—such as increases in\nthe labor force or better productivity growth—a couple\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nof participants judged that the downward pressure on ratio of job openings to unemployed workers had decore goods prices from the normalization of supply clined over the past year but still remained somewhat\nchains was likely to moderate. above its pre-pandemic level. Consistent with a reduction in labor market tightness, business contacts in sevParticipants observed that longer-term inflation expeceral Districts reported an easing in wage pressures or an\ntations had remained well anchored at a level consistent\nincreased ability to hire and retain workers. Participants\nwith the Committee’s 2 percent inflation objective.\nmentioned several developments that had boosted labor\nMeasures of near-term inflation expectations had also\nsupply last year, including higher labor force participadeclined recently, in some cases to within their ranges in\ntion, immigration, and an improved job-matching prothe years before the pandemic. Some participants\ncess; however, a few participants judged that further inpointed to reports from contacts that firms could not as\ncreases in labor supply may be limited, pointing, for ineasily pass on price increases to consumers or were makstance, to the decline in labor force participation in Deing less frequent price adjustments than they had in recember. While labor market conditions were generally\ncent years.\nseen as strong, several participants noted that recent job\nIn their discussion of the household sector, participants gains were concentrated in a few sectors, which, in their\nobserved that consumer spending had been stronger view, pointed to downside risks to the outlook for emthan expected, supported by low unemployment and ployment.\nsolid income growth. A number of participants judged\nParticipants discussed the uncertainty surrounding the\nthat consumption growth was likely to moderate this\neconomic outlook. As an upside risk to both inflation\nyear, as growth in labor income was expected to slow\nand economic activity, participants noted that momenand pandemic-related excess savings were expected to\ntum in aggregate demand may be stronger than currently\ndiminish. In addition, some participants noted signs that\nassessed, especially in light of surprisingly resilient conthe finances of some households—especially those in\nsumer spending last year. Furthermore, several particithe low- and moderate-income categories—were inpants mentioned the risk that financial conditions were\ncreasingly coming under pressure, which these particior could become less restrictive than appropriate, which\npants saw as a downside risk to the outlook for concould add undue momentum to aggregate demand and\nsumption. In particular, they pointed to increased usage\ncause progress on inflation to stall. Participants also\nof credit card revolving balances and buy-now-pay-later\nnoted some other sources of upside risks to inflation, inservices, as well as increased delinquency rates for some\ncluding possible disruptions to supply chains from geotypes of consumer loans.\npolitical developments, a potential rebound in core\nThe reports of business contacts cited by participants goods prices as the effects of supply-side improvements\nvaried across industries and Districts. In a few Districts, dissipate, or the possibility that wage growth remains elcontacts reported that the pace of economic activity was evated. Downside risks to inflation and economic activsteady or solid, while in several others, contacts ex- ity noted by participants included geopolitical risks that\npressed increased optimism about the economic outlook could result in a material pullback in demand, possible\nand prospects for investment. District reports from negative spillovers from lower growth in some foreign\nmanufacturers were mixed, as some contacts saw in- economies, the risk that financial conditions could recreased activity, whereas others saw subdued or weaken- main restrictive for too long, or the possibility that a\ning activity. A couple of participants noted that although weakening of household balance sheets could contribute\nsoft commodity prices and elevated borrowing costs had to a greater-than-expected deceleration in consumption.\ncontributed to a decline in farm incomes recently, agri- A few participants mentioned the possibility that ecocultural land values remained resilient, and delinquencies nomic activity could surprise to the upside and inflation\non farm loans continued to be low. A few participants to the downside because of more-favorable-than-exremarked that financing and credit conditions were par- pected supply-side developments.\nticularly challenging for small businesses. In the discussion of financial stability, participants obParticipants noted that the labor market remained tight, served that risks to the banking system had receded nobut demand and supply in that market had continued to tably since last spring, though they noted vulnerabilities\ncome into better balance. Payroll growth had remained at some banks that they assessed warranted monitoring.\nstrong in the last few months of 2023 but had slowed These participants noted potential risks for some banks\nfrom its pace seen a year ago, while the unemployment associated with increased funding costs, significant relirate remained low. Participants also observed that the ance on uninsured deposits, unrealized losses on assets\n\n_____________________________M_i_n_u_te_s_ o_f_ _th_e_ _M_e_e_ti_n_g_ o_f_ _Ja_n_u_a_ry_ _3_0_–_3_1_, _20_2_4________________________P_a_g_e_ _9\nresulting from the rise in longer-term interest rates, or supply in the labor market had continued to move into\nhigh CRE exposures. Participants judged that liquidity better balance. Participants commented that maintainin the financial system remained more than ample and ing the target range for the federal funds rate at this\ndiscussed the importance of considering liquidity condi- meeting would promote further progress toward the\ntions as the Federal Reserve’s balance sheet continues to Committee’s goals and allow participants to gather addinormalize. While participants noted that they were not tional information to evaluate this progress.\nseeing any signs of liquidity pressures at banks, several\nIn discussing the policy outlook, participants judged that\nparticipants noted that, as a matter of prudent continthe policy rate was likely at its peak for this tightening\ngency planning, banks should continue to improve their\ncycle. They pointed to the decline in inflation seen durreadiness to use the Federal Reserve’s discount window,\ning 2023 and to growing signs of demand and supply\nand that the Federal Reserve should continue to improve\ncoming into better balance in product and labor markets\nthe operational efficiency of the window. In addition,\nas informing that view. Participants generally noted that\nsome participants commented on the difficulties associthey did not expect it would be appropriate to reduce the\nated with banks relying on some forms of private wholetarget range for the federal funds rate until they had\nsale funding during times of stress. A few participants\ngained greater confidence that inflation was moving susremarked on the importance of measures aimed at intainably toward 2 percent. Many participants remarked\ncreasing the resilience of the Treasury market. A few\nthat the Committee’s past policy actions and ongoing\nparticipants noted cyber risks and the importance of\nimprovements in supply conditions were working tofirms being able to recover from cyber events. A few\ngether to move supply and demand into better balance.\nparticipants also commented on the financial condition\nParticipants noted that the future path of the policy rate\nof low- and moderate-income households who have exwould depend on incoming data, the evolving outlook,\nhausted their savings, as well as the importance of monand the balance of risks. Several participants emphaitoring data on rising delinquencies on credit cards and\nsized the importance of continuing to communicate\nautos.\nclearly about the Committee’s data-dependent approach. In their consideration of appropriate monetary policy acIn discussing risk-management considerations that\ntions at this meeting, participants noted that recent indicould bear on the policy outlook, participants remarked\ncators suggested that economic activity had been exthat while the risks to achieving the Committee’s empanding at a solid pace. Job gains had moderated since\nployment and inflation goals were moving into better\nearly last year but remained strong, and the unemploybalance, they remained highly attentive to inflation risks.\nment rate had remained low. Inflation had eased over\nIn particular, they saw upside risks to inflation as having\nthe past year but remained elevated. Participants also\ndiminished but noted that inflation was still above the\nnoted that the risks to achieving the Committee’s emCommittee’s longer-run goal. Some participants noted\nployment and inflation goals were moving into better\nthe risk that progress toward price stability could stall,\nbalance and that the Committee remained highly attenparticularly if aggregate demand strengthened or supplytive to inflation risks. Participants continued to be resoside healing slowed more than expected. Participants\nlute in their commitment to bring inflation down to the\nhighlighted the uncertainty associated with how long a\nCommittee’s 2 percent objective.\nrestrictive monetary policy stance would need to be\nIn light of current economic conditions and their impli- maintained. Most participants noted the risks of moving\ncations for the outlook for economic activity and infla- too quickly to ease the stance of policy and emphasized\ntion, as well as the balance of risks, all participants judged the importance of carefully assessing incoming data in\nit appropriate to maintain the target range for the federal judging whether inflation is moving down sustainably to\nfunds rate at 5¼ to 5½ percent at this meeting. All par- 2 percent. A couple of participants, however, pointed to\nticipants also judged it appropriate to continue the pro- downside risks to the economy associated with maincess of reducing the Federal Reserve’s securities hold- taining an overly restrictive stance for too long.\nings, as described in the previously announced Plans for\nParticipants observed that the continuing process of reReducing the Size of the Federal Reserve’s Balance\nducing the size of the Federal Reserve’s balance sheet\nSheet.\nwas an important part of the Committee’s overall apParticipants viewed maintaining the current stance of proach to achieving its macroeconomic objectives and\npolicy as appropriate given the incoming data, which in- that balance sheet runoff had so far proceeded smoothly.\ndicated that inflation had continued to move toward the In light of ongoing reductions in usage of the ON RRP\nCommittee’s 2 percent objective and that demand and\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nfacility, many participants suggested that it would be ap- on labor market conditions, inflation pressures and inpropriate to begin in-depth discussions of balance sheet flation expectations, and financial and international deissues at the Committee’s next meeting to guide an even- velopments.\ntual decision to slow the pace of runoff. Some particiGiven that the stresses that emerged at some banks early\npants remarked that, given the uncertainty surrounding\nlast year have subsided, members agreed to remove from\nestimates of the ample level of reserves, slowing the pace\nthe statement the reference to the resilience of the U.S.\nof runoff could help smooth the transition to that level\nbanking system as well as to tighter financial and credit\nof reserves or could allow the Committee to continue\nconditions and their effects on the economic outlook.\nbalance sheet runoff for longer. In addition, a few parMembers also agreed to note the progress made toward\nticipants noted that the process of balance sheet runoff\nthe 2 percent inflation objective and the resilience of\ncould continue for some time even after the Committee\neconomic activity over the past year by stating that the\nbegins to reduce the target range for the federal funds\nCommittee “judges that the risks to achieving its emrate.\nployment and inflation goals are moving into better balCommittee Policy Actions ance.” Regarding considerations relevant for future polIn their discussions of monetary policy for this meeting, icy actions, members agreed, given their assessment of\nmembers agreed that economic activity had been ex- the policy rate being likely at its peak for this tightening\npanding at a solid pace. Job gains had moderated since cycle, to remove the reference to “the extent of any adearly last year but remained strong, and the unemploy- ditional policy firming that may be appropriate to return\nment rate had remained low. Inflation had eased over inflation to 2 percent over time,” as was included in the\nthe past year but remained elevated. Members judged December statement. In its place, they agreed to adopt\nthat the risks to achieving the Committee’s employment phrasing referencing their “considering any adjustments\nand inflation goals were moving into better balance. to the target range for the federal funds rate.” Members\nMembers viewed the economic outlook to be uncertain also agreed that the statement should convey that “the\nand agreed that they remained highly attentive to infla- Committee will carefully assess incoming data, the\ntion risks. evolving outlook, and the balance of risks” and that it\n“does not expect it will be appropriate to reduce the tarIn support of the Committee’s goals to achieve maxiget range until it has gained greater confidence that inmum employment and inflation at the rate of 2 percent\nflation is moving sustainably toward 2 percent.”\nover the longer run, members agreed to maintain the target range for the federal funds rate at 5¼ to 5½ percent. At the conclusion of the discussion, the Committee\nMembers concurred that, in considering any adjustments voted to direct the Federal Reserve Bank of New York,\nto the target range for the federal funds rate, they would until instructed otherwise, to execute transactions in the\ncarefully assess incoming data, the evolving outlook, and SOMA in accordance with the following domestic policy\nthe balance of risks. Members agreed that they did not directive, for release at 2:00 p.m.:\nexpect that it would be appropriate to reduce the target\n“Effective February 1, 2024, the Federal Open\nrange until they have gained greater confidence that inMarket Committee directs the Desk to:\nflation is moving sustainably toward 2 percent. In addition, members agreed to continue to reduce the Federal • Undertake open market operations as necReserve’s holdings of Treasury securities and agency essary to maintain the federal funds rate in\ndebt and agency mortgage-backed securities, as de- a target range of 5¼ to 5½ percent.\nscribed in its previously announced plans. All members\n• Conduct standing overnight repurchase\naffirmed their strong commitment to returning inflation\nagreement operations with a minimum bid\nto the Committee’s 2 percent objective.\nrate of 5.5 percent and with an aggregate\nMembers agreed that, in assessing the appropriate stance operation limit of $500 billion.\nof monetary policy, they would continue to monitor the\n• Conduct standing overnight reverse repurimplications of incoming information for the economic\nchase agreement operations at an offering\noutlook. They would be prepared to adjust the stance of\nrate of 5.3 percent and with a per-countermonetary policy as appropriate if risks emerge that could\nparty limit of $160 billion per day.\nimpede the attainment of the Committee’s goals. Members also agreed that their assessments would take into\naccount a wide range of information, including readings\n\n_____________________________M_i_n_u_te_s_ o_f_ _th_e_ _M_e_e_ti_n_g_ o_f_ _Ja_n_u_a_ry_ _3_0_–_3_1_, _20_2_4_______________________P__ag_e_ _1_1\n• Roll over at auction the amount of principal inflation is moving sustainably toward 2 perpayments from the Federal Reserve’s hold- cent. In addition, the Committee will continue\nings of Treasury securities maturing in each reducing its holdings of Treasury securities and\ncalendar month that exceeds a cap of agency debt and agency mortgage-backed secu-\n$60 billion per month. Redeem Treasury rities, as described in its previously announced\ncoupon securities up to this monthly cap plans. The Committee is strongly committed to\nand Treasury bills to the extent that coupon returning inflation to its 2 percent objective.\nprincipal payments are less than the\nIn assessing the appropriate stance of monetary\nmonthly cap.\npolicy, the Committee will continue to monitor\n• Reinvest into agency mortgage-backed se- the implications of incoming information for\ncurities (MBS) the amount of principal pay- the economic outlook. The Committee would\nments from the Federal Reserve’s holdings be prepared to adjust the stance of monetary\nof agency debt and agency MBS received in policy as appropriate if risks emerge that could\neach calendar month that exceeds a cap of impede the attainment of the Committee’s\n$35 billion per month. goals. The Committee’s assessments will take\ninto account a wide range of information, in-\n• Allow modest deviations from stated\ncluding readings on labor market conditions, inamounts for reinvestments, if needed for\nflation pressures and inflation expectations, and\noperational reasons.\nfinancial and international developments.”\n• Engage in dollar roll and coupon swap\nVoting for this action: Jerome H. Powell, John C.\ntransactions as necessary to facilitate settleWilliams, Thomas I. Barkin, Michael S. Barr, Raphael W.\nment of the Federal Reserve’s agency MBS\nBostic, Michelle W. Bowman, Lisa D. Cook, Mary C.\ntransactions.”\nDaly, Philip N. Jefferson, Adriana D. Kugler, Loretta J. The vote also encompassed approval of the statement Mester, and Christopher J. Waller.\nbelow for release at 2:00 p.m.:\nVoting against this action: None.\n“Recent indicators suggest that economic activConsistent with the Committee’s decision to leave the\nity has been expanding at a solid pace. Job gains\ntarget range for the federal funds rate unchanged, the\nhave moderated since early last year but remain\nBoard of Governors of the Federal Reserve System\nstrong, and the unemployment rate has revoted unanimously to maintain the interest rate paid on\nmained low. Inflation has eased over the past\nreserve balances at 5.4 percent, effective Februyear but remains elevated.\nary 1, 2024. The Board of Governors of the Federal ReThe Committee seeks to achieve maximum em- serve System voted unanimously to approve the estabployment and inflation at the rate of 2 percent lishment of the primary credit rate at the existing level of\nover the longer run. The Committee judges that 5.5 percent, effective February 1, 2024.\nthe risks to achieving its employment and inflaIt was agreed that the next meeting of the Committee\ntion goals are moving into better balance. The\nwould be held on Tuesday–Wednesday, March 19–\neconomic outlook is uncertain, and the Com20, 2024. The meeting adjourned at 10:25 a.m. on Janumittee remains highly attentive to inflation risks.\nary 31, 2024. In support of its goals, the Committee decided\nNotation Vote\nto maintain the target range for the federal\nBy notation vote completed on January 2, 2024, the\nfunds rate at 5¼ to 5½ percent. In considering\nCommittee unanimously approved the minutes of the\nany adjustments to the target range for the fedCommittee meeting held on December 12–13, 2023.\neral funds rate, the Committee will carefully assess incoming data, the evolving outlook, and\nthe balance of risks. The Committee does not\nexpect it will be appropriate to reduce the target _______________________\nrange until it has gained greater confidence that Joshua Gallin\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20240131.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that rate cuts are not imminent and will depend on sustained progress toward the 2% inflation target. Officials emphasized they do not expect to reduce rates until they gain greater confidence that inflation is moving sustainably toward 2%.",
+    "key_economic_factors": [
+      "Inflation has eased but remains above the 2% target, with core PCE at 2.9% and total PCE at 2.6% over the past 12 months",
+      "Labor market remains strong but is gradually cooling, with job gains moderating and labor supply improving",
+      "Economic growth was solid in late 2023, driven by strong consumer spending and net exports",
+      "Financial conditions have eased modestly, but credit remains tight for smaller businesses and commercial real estate"
+    ],
+    "economic_outlook": "The Fed views the economy as resilient, with solid growth and a gradually rebalancing labor market. Inflation is moving lower but is still above target, and supply-demand imbalances are improving. The outlook remains uncertain, with risks tilted to both higher inflation and weaker growth, depending on demand resilience and supply-side developments.",
+    "market_impact": "Markets should expect rates to stay high for an extended period, supporting yields on savings and fixed income but keeping borrowing costs elevated for consumers and businesses. Equities may face volatility as investors await clearer signals on rate cuts, while the dollar could remain strong."
+  },
+  {
+    "date": "2023-12-13",
+    "title": "FOMC Meeting 2023-12-13",
+    "full_text": "_ _______________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nDecember 12–13, 2023\nA joint meeting of the Federal Open Market Committee Julie Ann Remache, Deputy Manager, System Open\nand the Board of Governors of the Federal Reserve Sys- Market Account\ntem was held in the offices of the Board of Governors\nJose Acosta, Senior System Administrator II, Division\non Tuesday, December 12, 2023, at 10:30 a.m. and conof Information Technology, Board\ntinued on Wednesday, December 13, 2023, at 9:00 a.m.1\nDavid Altig, Executive Vice President, Federal Reserve\nAttendance\nBank of Atlanta\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Alyssa Arute,2 Manager, Division of Reserve Bank\nMichael S. Barr Operations and Payment Systems, Board\nMichelle W. Bowman\nKimberly N. Bayard, Section Chief, Division of\nLisa D. Cook\nResearch and Statistics, Board\nAustan D. Goolsbee\nPatrick Harker Penelope A. Beattie,3 Section Chief, Office of the\nPhilip N. Jefferson Secretary, Board\nNeel Kashkari\nPaola Boel, Vice President, Federal Reserve Bank of\nAdriana D. Kugler\nCleveland\nLorie K. Logan\nChristopher J. Waller David Bowman, Senior Associate Director, Division of\nMonetary Affairs, Board\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly,\nand Loretta J. Mester, Alternate Members of the Celso Brunetti, Assistant Director, Division of\nCommittee Research and Statistics, Board\nSusan M. Collins and Jeffrey R. Schmid, Presidents of Jennifer J. Burns, Deputy Director, Division of\nthe Federal Reserve Banks of Boston and Kansas Supervision and Regulation, Board\nCity, respectively\nJuan C. Climent, Special Adviser to the Board, Division\nKathleen O’Neill Paese, Interim President of the of Board Members, Board\nFederal Reserve Bank of St. Louis\nEdmund S. Crawley, Senior Economist, Division of\nJoshua Gallin, Secretary Monetary Affairs, Board\nMatthew M. Luecke, Deputy Secretary\nStephanie E. Curcuru, Deputy Director, Division of\nBrian J. Bonis, Assistant Secretary\nInternational Finance, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Ryan Decker, Special Adviser to the Board, Division of\nRichard Ostrander, Deputy General Counsel Board Members, Board\nTrevor A. Reeve, Economist\nRiccardo DiCecio, Economic Policy Advisor, Federal\nStacey Tevlin, Economist\nReserve Bank of St. Louis\nBeth Anne Wilson, Economist\nCynthia L. Doniger, Principal Economist, Division of\nShaghil Ahmed, Roc Armenter, James A. Clouse, Eric Monetary Affairs, Board\nM.Engen, Anna Paulson, Andrea Raffo, Chiara\nRochelle M. Edge, Deputy Director, Division of\nScotti, and William Wascher, Associate Economists\nMonetary Affairs, Board\nRoberto Perli, Manager, System Open Market Account\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 3 Attended through the discussion of the economic and finanthe “Board” in these minutes. cial situation.\n\n_P _ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nJon Faust, Senior Special Adviser to the Chair, Division Achilles Sangster II, Senior Information Manager,\nof Board Members, Board Division of Monetary Affairs, Board\nGlenn Follette, Associate Director, Division of Adam H. Shapiro, Vice President, Federal Reserve\nResearch and Statistics, Board Bank of San Francisco\nJoseph W. Gruber, Executive Vice President, Federal Shane M. Sherlund, Associate Director, Division of\nReserve Bank of Kansas City Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Nitish Ranjan Sinha, Special Adviser to the Board,\nMonetary Affairs, Board Division of Board Members, Board\nJasper J. Hoek, Deputy Associate Director, Division of Balint Szoke, Senior Economist, Division of Monetary\nInternational Finance, Board Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Giorgio Topa, Economic Research Advisor, Federal\nBoard Members, Board Reserve Bank of New York\nElizabeth Klee, Senior Associate Director, Division of Clara Vega, Special Adviser to the Board, Division of\nFinancial Stability, Board Board Members, Board\nDavid E. Lebow, Senior Associate Director, Division Annette Vissing-Jørgensen, Senior Adviser, Division of\nof Research and Statistics, Board Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial Jeffrey D. Walker,2 Associate Director, Division of\nStability, Board Reserve Bank Operations and Payment Systems,\nBoard\nEric LeSueur,2 Policy and Market Analysis Advisor,\nFederal Reserve Bank of New York Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nKurt F. Lewis, Special Adviser to the Chair, Division of\nBoard Members, Board Egon Zakrajsek, Executive Vice President, Federal\nReserve Bank of Boston\nLaura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nDavid López-Salido, Senior Associate Director,\nDivision of Monetary Affairs, Board Developments in Financial Markets and Open\nMarket Operations\nThomas Lubik, Senior Advisor, Federal Reserve Bank\nThe manager turned first to a review of developments in\nof Richmond\nfinancial markets over the intermeeting period. FinanByron Lutz, Deputy Associate Director, Division of cial conditions eased, driven by a decline in interest rates,\nResearch and Statistics, Board an increase in equity prices, and a depreciation in the dollar. The rise in equity prices was supported by the deMark Meder, First Vice President, Federal Reserve\ncline in Treasury yields and by earnings growth that exBank of Cleveland\nceeded consensus expectations. Implied volatility for\nAnn E. Misback, Secretary, Office of the Secretary, equities diminished notably. The easing in financial conBoard ditions reversed some of the tightening that occurred\nover the summer and much of the fall. Michelle M. Neal, Head of Markets, Federal Reserve\nBank of New York Yields on nominal Treasury securities declined sharply\nover the intermeeting period—more so at longer maturEdward Nelson, Senior Adviser, Division of Monetary\nities—after having increased notably during the previous\nAffairs, Board\nintermeeting period, as investors appeared to interpret\nLubomir Petrasek,4 Section Chief, Division of incoming data as reducing risks of prolonged inflation\nMonetary Affairs, Board pressures. In addition, market participants interpreted\ncommunications from FOMC participants as solidifying\n4 Attended Tuesday’s session only.\n\n_ ___________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_2_–_1_3_, _2_0_23_______________________P_a_g_e_ _3\nthe view that the Committee’s policy rate may be at its part of their ongoing market surveillance, the staff will\npeak. Early in the period, the market also reacted to continue to monitor a wide range of indicators of money\ncommunications from the Treasury Department indicat- market conditions, including the composition of boring that issuance of Treasury securities was likely to be rowers in money markets, borrowing demand for varimore skewed toward shorter-dated maturities than pre- ous sources of liquidity, the distribution of reserve balviously expected. Models, on average, suggested that ances across the financial system, the pricing of money\nabout two-thirds of the decline in longer-term yields on market investments relative to the Federal Reserve’s adTreasury securities over the period was attributable to a ministered rates, and the sensitivity of money market\nreduction in term premiums and about one-third to a rates to changes in aggregate reserves.\ndecline in expectations for the policy rate. Pricing of inBy unanimous vote, the Committee ratified the Desk’s\nflation derivatives over the intermeeting period sugdomestic transactions over the intermeeting period.\ngested that investors had become more optimistic about\nThere were no intervention operations in foreign currenthe near-term outlook for inflation.\ncies for the System’s account during the intermeeting peThe manager turned next to expectations for monetary riod.\npolicy. Respondents to the Open Market Desk’s Survey\nStaff Review of the Economic Situation\nof Primary Dealers and Survey of Market Participants\nThe data available at the time of the December 12–13\nlargely converged around the view that the peak level of\nmeeting suggested that growth in U.S. real gross domesthe federal funds rate for this tightening cycle had been\ntic product (GDP) was slowing from its strong thirdreached. The modal path from the Desk surveys sugquarter pace. Labor market conditions continued to be\ngested that the first reduction in the policy rate would\ntight, with moderating but still-strong job gains and a\noccur in June, unchanged from the October surveys.\nlow unemployment rate. Consumer price inflation had\nThe average path for the policy rate implied by market\neased over the past year but remained elevated.\npricing shifted down considerably over the period. Labor demand and supply continued to move gradually\nRegarding developments in money markets and Desk\ninto better alignment. Total nonfarm payroll employoperations, usage of the overnight reverse repurchase\nment expanded at a slower pace, on balance, over Octoagreement (ON RRP) facility continued to fall over the\nber and November than its average monthly rate in the\nperiod; take-up at the facility had dropped about\nthird quarter. The unemployment rate was little\n$1.3 trillion since early June. The decline was again\nchanged, on net, and stood at 3.7 percent in November,\ndriven primarily by lower participation by money market\nthe same as its third-quarter average. The labor force\nmutual funds, as such funds found it more attractive to\nparticipation rate was essentially flat over the past two\ninvest in Treasury bills and, increasingly, the private marmonths, remaining above its level early in the year, while\nket for repurchase agreement (repo) transactions.\nthe employment-to-population ratio rose slightly on balOvernight repo rates continued to experience some ance. The unemployment rates for African Americans\nmodest upward pressure over the period. As reflected and for Hispanics were little changed, and both rates\nby a rise in the Secured Overnight Financing Rate, there were higher than those for Asians and for Whites. The\nwas some tightening of conditions in repo markets in job openings rate continued to trend down, and the quits\nlate November and early December in response to typi- rate was flat; both rates were below their levels earlier\ncal lending dynamics around month-end, the settlement this year. The lessening of labor market imbalances was\nof a large amount of Treasury issuance, and increased apparent in recent wage data, as the 12-month change in\ndemand for Treasury financing. The market absorbed average hourly earnings for all employees was well below\nthis episode well. its year-earlier level and the Wage Growth Tracker constructed by the Federal Reserve Bank of Atlanta was\nThe manager expected that private-market repo rates\ntrending down and lower than a year ago.\nwould likely remain above the rate offered at the\nON RRP facility, which should continue to induce a re- Consumer price inflation remained elevated but continduction in usage of the facility. Respondents to the Desk ued to show notable signs of easing. The price index for\nsurveys again reduced their expectations for the trajec- total personal consumption expenditures (PCE) intory for ON RRP balances and correspondingly raised creased 3.0 percent over the 12 months ending in Octotheir expectations for the trajectory of reserve balances. ber, while core PCE inflation—which excludes changes\nAggregate reserves across the banking system remained in energy prices and many consumer food prices—was\nabundant, and no signs of pressures were evident. As 3.5 percent over the same period; both total and core\n\n_P _ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nPCE inflation were well below their year-earlier levels. intermeeting period and emphasized the need to mainThe six-month change measures of total and core PCE tain a sufficiently restrictive stance of policy to ensure\ninflation in October were each 2.5 percent, down from that inflation fell back to their targets.\ntheir levels six months earlier. The trimmed mean measStaff Review of the Financial Situation\nure of 12-month PCE inflation constructed by the FedOver the intermeeting period, some softer-than-exeral Reserve Bank of Dallas was 3.6 percent in October,\npected data releases appeared to lessen the perception\nalso down from its level a year ago. In November, the\namong investors that policy may need to tighten further\n12-month change in the consumer price index (CPI) was\nin order to bring inflation down to 2 percent over time.\n3.1 percent, core CPI rose 4.0 percent over the same peMarket participants also viewed monetary policy comriod, and both measures were well below their year-earmunications, on balance, as pointing to somewhat less\nlier levels. Recent survey measures of medium- to\nrestrictive policy than expected. As a result, nominal\nlonger-term inflation expectations were in the range seen\nTreasury yields declined significantly and the expected\nin the decade before the pandemic. In contrast, survey\nmarket-implied path for the federal funds rate beyond\nmeasures of consumers’ short-run inflation expectations\nthe next few months shifted downward. Meanwhile,\nremained above their pre-pandemic levels.\nbroad equity price indexes were boosted by many of the\nAvailable indicators suggested that real GDP growth same factors that lowered Treasury yields, and spreads\nwas slowing from its strong third-quarter pace, which on investment- and speculative-grade corporate bonds\nhad been led by a sizable increase in consumer spending. narrowed. Financing conditions remained moderately\nIn October, PCE growth slowed from its average restrictive, as borrowing costs remained elevated despite\nmonthly rate in the third quarter. As for business invest- declining over the intermeeting period.\nment, nominal shipments of nondefense capital goods\nThe market-implied path for the federal funds rate beexcluding aircraft were essentially flat in October, alyond the next few months moved down notably over the\nthough nonresidential construction spending by busiintermeeting period. A straight read of federal funds funesses edged up. Residential housing starts moved\ntures rates suggested that market participants expected\nmostly sideways, and home sales continued to fall. Manthe federal funds rate to be 25 basis points below its curufacturing production declined in October, and factory\nrent level by the May 2024 FOMC meeting, two meetoutput was weak, even after excluding the decrease in\nings earlier than at the time of the October–November\nmotor vehicle assemblies caused by the autoworkers’\nFOMC meeting. The policy rate path implied by overstrike. The nominal trade deficit widened in October, as\nnight index swap quotes moved down 45 basis points to\nexports declined and imports rose slightly.\n4.2 percent by the end of 2024. Similarly, nominal TreasForeign economic growth slowed in the third quarter, ury yields declined significantly. The decline in nominal\nand available indicators pointed to subdued growth in yields mostly reflected a decrease in real yields, while\nthe fourth quarter. The significant tightening of mone- measures of inflation compensation were moderately\ntary policy by foreign central banks over the past two lower, on net, amid softer-than-expected data releases.\nyears and the repercussions of last year’s energy shock in Measures of uncertainty about the path of interest rates\nEurope continued to weigh on foreign economic activ- decreased notably, consistent with the tempering of conity. Chinese economic indicators, such as retail sales and cerns about inflation, but remained elevated by historical\nindustrial production, pointed to economic growth re- standards.\nmaining modest. By contrast, economic activity in Asia\nBroad stock price indexes increased markedly over the\nexcluding China stepped up, supported in part by a reintermeeting period, and spreads on investment-grade\ncovery in industrial production, especially in the highbonds narrowed moderately, while those on speculativetech sector.\ngrade corporate bonds declined more notably. The oneWhile inflation was still elevated in most major econo- month option-implied volatility on the S&P 500 demies, incoming data indicated that it had moved down creased moderately and reached its lowest level since\nmarkedly. These decreases reflected notable step-downs January 2020.\nin both energy and core inflation amid slowing aggregate\nSpillovers from falling U.S. yields, below-expectations\ndemand and declines in oil prices. Most major foreign\nreadings on global inflation, and oil price drops led to\ncentral banks kept their policy rates unchanged over the\nlarge declines in foreign yields. These declines were accompanied by an improvement in market sentiment,\nwith foreign equity prices increasing, foreign credit\n\n_ ___________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_2_–_1_3_, _2_0_23_______________________P_a_g_e_ _5\nspreads narrowing, and outflows from funds investing in many markets, including those for corporate bonds, levemerging market economies slowing notably. The im- eraged loans, and agency and non-agency commercial\nprovement in sentiment and declines in U.S. yields con- mortgage-based securities (CMBS).\ntributed to a broad depreciation of the foreign exchange\nCredit quality remained broadly solid but deteriorated\nvalue of the dollar.\nfurther for some sectors in recent months. Delinquency\nConditions in U.S. short-term funding markets remained rates on nonfarm nonresidential CRE bank loans rose\nlargely stable over the intermeeting period. Usage of the further in the third quarter, and delinquency rates for\nON RRP facility continued to decline over the period. construction and land development as well as multifamThe decline in usage primarily reflected money market ily loans ticked up. After increases over the first three\nmutual funds reallocating their assets to Treasury bills quarters of the year, delinquency rates for loans in CMBS\nand private-market repo, which offered slightly more at- pools edged lower in October, but the large volume of\ntractive market rates relative to the ON RRP rate amid loans scheduled to mature over the next few quarters\ncontinued increases in net Treasury bill issuance and suggested that delinquencies would likely surge again. Federal Reserve balance sheet reduction. Banks’ total The delinquency rate for small business loans continued\ndeposit levels were roughly unchanged over the inter- to tick up in September and was above levels observed\nmeeting period, as outflows of core deposits were about just before the pandemic. Credit card delinquency rates\noffset by inflows of large time deposits. also increased further, while delinquency rates on auto\nloans were little changed in the third quarter. The trailIn domestic credit markets, borrowing costs for most\ning default rates for investment- and speculative-grade\nbusinesses, households, and municipalities declined over\ncorporate bonds were little changed on net, and the trailthe intermeeting period, reflecting both lower longering default rate for leveraged loans increased a bit.\nmaturity Treasury yields and narrower credit spreads, although borrowing costs remained significantly elevated. Staff Economic Outlook\nRates on loans to households, including those for The economic forecast prepared by the staff for the De30-year conforming residential mortgages and new auto cember meeting was broadly similar to the projection for\nloans, declined over the intermeeting period, while inter- the previous meeting. The staff continued to expect that\nest rates on commercial and industrial (C&I) loans and GDP growth would slow markedly in the fourth quarter\nsmall business loans were little changed. Yields on cor- from its outsized third-quarter rate but that economic\nporate bonds fell more than Treasury yields, particularly growth for 2023 as a whole would still be solid. The\nfor speculative-grade bonds. lagged effects of earlier monetary policy actions, through\ntheir contributions to continued tight financial and credit\nBank credit conditions appeared to tighten somewhat\nconditions, were expected to show through more fully in\nover the intermeeting period, but credit to businesses\nrestraining economic activity in the coming years. Real\nand households generally remained accessible. C&I loan\nGDP was projected to increase more slowly than the\nbalances contracted through November, on balance,\nstaff’s estimate of potential over the next two years bewhile expansion of commercial real estate (CRE) loans\nfore rising in line with potential in 2026. The unemploystepped down appreciably across most categories from\nment rate was expected to be roughly flat through 2026\nan already moderating pace in the third quarter.\nas the effects of below-potential output growth were offCredit remained available for most consumers, although set by the effects of further improvements in labor marconsumer credit flows softened in recent months. ket functioning. Growth of credit card balances moderated significantly\nThe staff revised down their inflation forecast, reflecting\nthrough November from the brisk pace seen in the sumlower-than-expected incoming data—including the Nomer. For residential real estate borrowers, credit availavember CPI and producer price index—and their judgbility was little changed. Credit conditions for small\nment that inflation would be less persistent than in the\nbusinesses appeared to have tightened further in recent\nprevious projection. Measured on a four-quarter change\nmonths. Data from the Federal Reserve’s Small Busibasis, total PCE price inflation was expected to be someness Lending Survey showed that originations had been\nwhat below 3 percent this year, with core PCE price inroughly flat since mid-2022 before ticking down in the\nflation somewhat above 3 percent. Inflation was prothird quarter. Credit continued to be generally accessible\njected to move lower in coming years as demand and\nthrough capital markets, although issuance was slow in\nsupply in product and labor markets moved into better\n\n_P _ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nalignment; by 2026, total and core PCE price inflation monetary policy was restrictive and appeared to be rewere expected to be close to 2 percent. straining economic activity and inflation. In light of the\npolicy restraint in place, along with more favorable data\nThe staff continued to view uncertainty around the baseon inflation, participants generally viewed risks to inflaline projection as elevated, although they observed that\ntion and employment as moving toward greater balance.\nthe volatility of incoming data and staff forecast errors\nHowever, participants remained highly attentive to inflagenerally had become less pronounced over the past\ntion risks.\nyear. Risks around the inflation forecast were seen as\nskewed to the upside, given that inflation was still ele- In their discussion of inflation, all participants observed\nvated and the possibility that inflation might prove to be that clear progress had been made in 2023 toward the\nmore persistent than expected or that adverse shocks to Committee’s 2 percent inflation objective. They resupply conditions might occur. The risks around the mained concerned that elevated inflation continued to\nforecast for economic activity were viewed to be tilted harm households, especially those with limited means to\nto the downside. In particular, the additional monetary absorb higher prices. Participants observed that inflapolicy tightening that could be put in place if upside in- tion remained above the Committee’s objective and that\nflation risks were to materialize, with the potential for a they would need to see more evidence that inflation\ngreater tightening of financial conditions, represented a pressures were abating to become confident in a susdownside risk to the projection for economic activity. tained return of inflation to 2 percent. Participants’ Views on Current Conditions and the In reviewing progress to date in reducing inflation, parEconomic Outlook ticipants noted the improvement in both headline and\nIn conjunction with this FOMC meeting, participants core inflation and discussed the developments in comsubmitted their projections of the most likely outcomes ponents of these aggregate measures. They observed\nfor real GDP growth, the unemployment rate, and infla- that progress had been uneven across components, with\ntion for each year from 2023 through 2026 and over the energy and core goods prices falling or changing little\nlonger run. The projections were based on their individ- recently, but core services prices still increasing at an elual assessments of appropriate monetary policy, includ- evated pace. Several participants observed that the oning the path of the federal funds rate. The longer-run going rebalancing of labor supply and demand would\nprojections represented each participant’s assessment of help reduce core services inflation. Several participants\nthe rate to which each variable would be expected to assessed that housing services inflation would fall furconverge, over time, under appropriate monetary policy ther over time as the earlier deceleration in rents on new\nand in the absence of further shocks to the economy. A leases continued to pass through to broader rent\nSummary of Economic Projections (SEP) was released measures. Participants also discussed the role played by\nto the public following the conclusion of the meeting. various supply and demand factors in the progress on\nreducing inflation thus far. They assessed that the conIn their discussion of current economic conditions, partribution of improved supply had come from supply\nticipants observed that after stronger than expected\nchain normalization, boosts to labor supply due to a\ngrowth of real GDP in the third quarter, recent indicahigher labor force participation rate and immigration,\ntors suggested that growth in economic activity had\nbetter productivity growth, or increased domestic oil\nslowed. While still strong, job gains had moderated since\nproduction. They also noted that restrictive monetary\nearlier this year, and the unemployment rate had repolicy had helped restrain growth of demand, particumained low. Participants observed that inflation had\nlarly in interest-sensitive sectors such as business fixed\neased over the past year but remained elevated and\ninvestment, housing, and autos and other durable goods.\nabove the Committee’s longer-run goal of 2 percent. Several participants assessed that healing in supply\nRegarding the economic outlook, participants generally chains and labor supply was largely complete, and therejudged that, in 2024, real GDP growth would cool and fore that continued progress in reducing inflation may\nthat rebalancing of the labor market would continue, need to come mainly from further softening in product\nwith the unemployment rate rising somewhat from its and labor demand, with restrictive monetary policy concurrent level. Based on better-than-expected data on in- tinuing to play a central role. A few others saw potential\nflation, participants revised down their inflation projec- for further improvements in supply. Several participants\ntions for 2023 and, to a lesser extent, in subsequent noted that longer-term inflation expectations remained\nyears. Participants judged that the current stance of well anchored and that near-term inflation expectations\nof households had declined recently.\n\n_ ___________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_2_–_1_3_, _2_0_23_______________________P_a_g_e_ _7\nIn their comments about the household sector, partici- the economy. As evidence for the softening of the\npants observed that consumer spending had been growth of labor demand during 2023, many participants\nstrong, supported by the healthy balance sheets of many noted the decline in job openings, and a few remarked\nhouseholds, a strong labor market, and robust income on the lower quits rate. Several participants noted the\ngrowth. Retail sales growth had stepped down noticea- risk that, if labor demand were to weaken substantially\nbly in October, though a few participants remarked that further, the labor market could transition quickly from a\ncontacts reported strong sales in November, notably re- gradual easing to a more abrupt downshift in conditions.\nlated to holiday spending. Participants mentioned sevParticipants generally perceived a high degree of uncereral factors that may contribute to softer consumer\ntainty surrounding the economic outlook. As an upside\nspending, including slower growth of labor income and\nrisk to both inflation and economic activity, participants\ndiminishing pandemic-related excess savings. Relatedly,\nnoted that the momentum of economic activity may be\nmany participants noted increased usage of credit by\nstronger than currently assessed, possibly on account of\nhouseholds, including from credit cards, buy-now-paythe continued balance sheet strength of many houselater borrowing, and payday loans, as well as increased\nholds. Furthermore, participants observed that, after a\ndelinquency rates for many types of consumer loans.\nsharp tightening since the summer, financial conditions\nReports from participants’ business-sector contacts were had eased over the intermeeting period. Many particimixed, with some contacts remaining relatively optimis- pants remarked that an easing in financial conditions betic and others expecting slower growth for 2024. Several yond what is appropriate could make it more difficult for\nparticipants observed that higher interest rates were the Committee to reach its inflation goal. Participants\nleading firms to reassess future projects and were con- also noted other sources of upside risks to inflation, intributing to softer business investment and hiring. A cluding possible effects on global energy and food prices\ncouple of participants commented on small businesses, of geopolitical developments, a potential rebound in\nnoting that such businesses were experiencing tighter core goods prices following the period of supply chain\ncredit conditions and increasing delinquencies. A few improvements, or the effects of nearshoring and onparticipants noted that contacts in manufacturing re- shoring activities on labor demand and inflation. Downported slowing growth, while a couple of participants ex- side risks to economic activity noted by participants inpected that low prices for some commodities and cluded the possibility that effects of past policy tightendrought conditions would reduce agricultural incomes ing may be larger than expected, the risk of a marked\nthis year. Regarding concerns about CRE, several par- weakening of household balance sheets, possible negaticipants noted that a significant share of properties tive spillovers from lower growth in some foreign econwould need to be refinanced in 2024 against a backdrop omies, geopolitical risks, and lingering risks of further\nof higher interest rates, continued weakness in the office tightening in bank credit. Relatedly, several participants\nsector, and balance sheet pressures faced by some lend- noted that the weakness in gross domestic income\ners. growth relative to GDP growth over the past few quarters may suggest that economic momentum during that\nParticipants assessed that while the labor market reperiod was not as strong as indicated by the GDP readmained tight, it continued to come into better balance.\nings. Many noted that nominal wage growth had continued to\nslow broadly and that business contacts expected a fur- In their consideration of appropriate monetary policy acther reduction in wage growth. A few participants ob- tions at this meeting, participants noted that recent indiserved that payroll growth had slowed substantially since cators suggested that growth of economic activity had\nthe beginning of the year. Some participants remarked slowed from its strong pace in the third quarter. Job\nthat their contacts reported larger applicant pools for va- gains had moderated since earlier in the year but recancies, and some participants highlighted that the ratio mained strong, the unemployment rate had remained\nof vacancies to unemployed workers had declined to a low, and there were continuing signs that supply and devalue only modestly above its level just before the pan- mand in the labor market were coming into better baldemic. Participants viewed improvements in labor sup- ance. Inflation had eased over the past year but reply and the easing of labor demand as both having con- mained elevated. Participants also noted that tighter fitributed to the labor market coming into better balance. nancial and credit conditions facing households and\nSupply had improved because of higher labor force par- businesses would likely weigh on economic activity, hirticipation and immigration, with continued solid produc- ing, and inflation, although the extent of these effects\ntivity growth also supporting the productive capacity of\n\n_P _ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nremained uncertain. Participants continued to be reso- possible that the economy could evolve in a manner that\nlute in their commitment to bring inflation down to the would make further increases in the target range approCommittee’s 2 percent objective. priate. Several also observed that circumstances might\nwarrant keeping the target range at its current value for\nIn light of current economic conditions and their implilonger than they currently anticipated. Participants gencations for the outlook for economic activity and inflaerally stressed the importance of maintaining a careful\ntion, as well as the balance of risks, all participants judged\nand data-dependent approach to making monetary polit appropriate to maintain the target range for the federal\nicy decisions and reaffirmed that it would be appropriate\nfunds rate at 5¼ to 5½ percent at this meeting. All parfor policy to remain at a restrictive stance for some time\nticipants also agreed that it was appropriate to continue\nuntil inflation was clearly moving down sustainably tothe process of reducing the Federal Reserve’s securities\nward the Committee’s objective.\nholdings, as described in the previously announced Plans\nfor Reducing the Size of the Federal Reserve’s Balance Participants discussed several risk-management considSheet. erations that could bear on future policy decisions. Participants saw upside risks to inflation as having diminParticipants assessed that maintaining the current policy\nished but noted that inflation was still well above the\nstance was supported by intermeeting data indicating\nCommittee’s longer-run goal and that a risk remained\nthat inflation had continued to move toward the Comthat progress toward price stability would stall. A nummittee’s 2 percent objective and that the labor market\nber of participants highlighted the uncertainty associated\nhad continued to move into better balance. They judged\nwith how long a restrictive monetary policy stance would\nthat maintaining the target range for the federal funds\nneed to be maintained, and pointed to the downside\nrate at this meeting would promote further progress torisks to the economy that would be associated with an\nward the Committee’s goals and allow participants more\noverly restrictive stance. A few suggested that the Comtime to gather additional information to evaluate this\nmittee potentially could face a tradeoff between its dualprogress.\nmandate goals in the period ahead. In discussing the policy outlook, participants viewed the\nParticipants observed that the continuing process of repolicy rate as likely at or near its peak for this tightening\nducing the size of the Federal Reserve’s balance sheet\ncycle, though they noted that the actual policy path will\nwas an important part of the Committee’s overall apdepend on how the economy evolves. Participants\nproach to achieving its macroeconomic objectives and\npointed to the decline in inflation seen during 2023, notthat balance sheet runoff had so far proceeded smoothly.\ning the recent shift down in six-month inflation readings\nSeveral participants noted that, amid the ongoing balin particular, and to growing signs of demand and supply\nance sheet normalization, there had been a further decoming into better balance in product and labor markets\ncline over the intermeeting period in use of the ON RRP\nas informing that view. Several participants remarked\nfacility and that this reduced usage largely reflected portthat the Committee’s past policy actions were having\nfolio shifts by money market mutual funds toward\ntheir intended effect of helping to slow the growth of\nhigher-yielding investments, including Treasury bills and\naggregate demand and cool labor market conditions.\nprivate-market repo. Several participants remarked that\nThey judged that, in combination with improvements in\nthe Committee’s balance sheet plans indicated that it\nthe supply situation, these developments were helping to\nwould slow and then stop the decline in the size of the\nbring inflation back to 2 percent over time. Most particbalance sheet when reserve balances are somewhat\nipants noted that, as indicated in their submissions to the\nabove the level judged consistent with ample reserves. SEP, they expected the Committee’s restrictive policy\nThese participants suggested that it would be appropristance to continue to soften household and business\nate for the Committee to begin to discuss the technical\nspending, helping to promote further reductions in infactors that would guide a decision to slow the pace of\nflation over the next few years.\nrunoff well before such a decision was reached in order\nIn their submitted projections, almost all participants in- to provide appropriate advance notice to the public.\ndicated that, reflecting the improvements in their inflaCommittee Policy Actions\ntion outlooks, their baseline projections implied that a\nIn their discussions of monetary policy for this meeting,\nlower target range for the federal funds rate would be\nmembers agreed that recent indicators suggested that\nappropriate by the end of 2024. Participants also noted,\ngrowth of economic activity had slowed from its strong\nhowever, that their outlooks were associated with an unpace in the third quarter. Job gains had moderated since\nusually elevated degree of uncertainty and that it was\n\n_ ___________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_2_–_1_3_, _2_0_23_______________________P_a_g_e_ _9\nearlier in the year but remained strong, and the unem- erally viewed the addition of the word “any” to this senployment rate had remained low. Inflation had eased tence as appropriately relaying their judgment that the\nover the past year but remained elevated. target range for the federal funds rate was likely now at\nor near its peak for this policy tightening cycle while\nMembers concurred that the U.S. banking system was\nleaving open the possibility of further increases in the\nsound and resilient. They also agreed that tighter finantarget range if these were warranted by the totality of the\ncial and credit conditions for households and businesses\nincoming data, the evolving outlook, and the balance of\nwere likely to weigh on economic activity, hiring, and inrisks.\nflation but that the extent of these effects was uncertain. Members agreed that they remained highly attentive to At the conclusion of the discussion, the Committee\ninflation risks. voted to direct the Federal Reserve Bank of New York,\nuntil instructed otherwise, to execute transactions in the\nIn support of the Committee’s objective to achieve maxSystem Open Market Account in accordance with the\nimum employment and inflation at the rate of 2 percent\nfollowing domestic policy directive, for release at\nover the longer run, members agreed to maintain the tar2:00 p.m.:\nget range for the federal funds rate at 5¼ to 5½ percent. They also agreed that they would continue to assess ad- “Effective December 14, 2023, the Federal\nditional information and its implications for monetary Open Market Committee directs the Desk to:\npolicy. In determining the extent of any additional pol-\n• Undertake open market operations as necicy firming that may be appropriate to return inflation to\nessary to maintain the federal funds rate in\n2 percent over time, members concurred that they would\na target range of 5¼ to 5½ percent.\ntake into account the cumulative tightening of monetary\npolicy, the lags with which monetary policy affects eco- • Conduct standing overnight repurchase\nnomic activity and inflation, and economic and financial agreement operations with a minimum bid\ndevelopments. In addition, members agreed to continue rate of 5.5 percent and with an aggregate\nto reduce the Federal Reserve’s holdings of Treasury se- operation limit of $500 billion.\ncurities and agency debt and agency mortgage-backed\n• Conduct standing overnight reverse repursecurities, as described in its previously announced\nchase agreement operations at an offering\nplans. All members affirmed their strong commitment\nrate of 5.3 percent and with a per-counterto returning inflation to their 2 percent objective.\nparty limit of $160 billion per day. Members agreed that, in assessing the appropriate stance\n• Roll over at auction the amount of principal\nof monetary policy, they would continue to monitor the\npayments from the Federal Reserve’s holdimplications of incoming information for the economic\nings of Treasury securities maturing in each\noutlook. They would be prepared to adjust the stance of\ncalendar month that exceeds a cap of\nmonetary policy as appropriate if risks emerge that could\n$60 billion per month. Redeem Treasury\nimpede the attainment of the Committee’s goals. Memcoupon securities up to this monthly cap\nbers also agreed that their assessments would take into\nand Treasury bills to the extent that coupon\naccount a wide range of information, including readings\nprincipal payments are less than the\non labor market conditions, inflation pressures and inmonthly cap.\nflation expectations, and financial and international developments. • Reinvest into agency mortgage-backed securities (MBS) the amount of principal payMembers agreed that their postmeeting statement\nments from the Federal Reserve’s holdings\nshould acknowledge the slowing of economic activity\nof agency debt and agency MBS received in\nfrom its strong pace in the third quarter as well as the\neach calendar month that exceeds a cap of\nfact that inflation had eased over the past year but re-\n$35 billion per month.\nmained elevated. Members also agreed to modify the\nsentence in their postmeeting statement discussing the • Allow modest deviations from stated\nconsiderations relevant for future policy actions to indi- amounts for reinvestments, if needed for\ncate that the Committee would determine “the extent of operational reasons.\nany additional policy firming that may be appropriate to\nreturn inflation to 2 percent over time.” Members gen-\n\n_P _ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\n• Engage in dollar roll and coupon swap In assessing the appropriate stance of monetary\ntransactions as necessary to facilitate settle- policy, the Committee will continue to monitor\nment of the Federal Reserve’s agency MBS the implications of incoming information for\ntransactions.” the economic outlook. The Committee would\nbe prepared to adjust the stance of monetary\nThe vote also encompassed approval of the statement\npolicy as appropriate if risks emerge that could\nbelow for release at 2:00 p.m.:\nimpede the attainment of the Committee’s\n“Recent indicators suggest that growth of eco- goals. The Committee’s assessments will take\nnomic activity has slowed from its strong pace into account a wide range of information, inin the third quarter. Job gains have moderated cluding readings on labor market conditions, insince earlier in the year but remain strong, and flation pressures and inflation expectations, and\nthe unemployment rate has remained low. In- financial and international developments.”\nflation has eased over the past year but remains\nVoting for this action: Jerome H. Powell, John C.\nelevated. Williams, Michael S. Barr, Michelle W. Bowman, Lisa D. The U.S. banking system is sound and resilient. Cook, Austan D. Goolsbee, Patrick Harker, Philip N. Tighter financial and credit conditions for Jefferson, Neel Kashkari, Adriana D. Kugler, Lorie K.\nhouseholds and businesses are likely to weigh Logan, and Christopher J. Waller.\non economic activity, hiring, and inflation. The\nVoting against this action: None.\nextent of these effects remains uncertain. The\nCommittee remains highly attentive to inflation Consistent with the Committee’s decision to leave the\nrisks. target range for the federal funds rate unchanged, the\nBoard of Governors of the Federal Reserve System\nThe Committee seeks to achieve maximum emvoted unanimously to maintain the interest rate paid on\nployment and inflation at the rate of 2 percent\nreserve balances at 5.4 percent, effective December 14,\nover the longer run. In support of these goals,\n2023. The Board of Governors of the Federal Reserve\nthe Committee decided to maintain the target\nSystem voted unanimously to approve the establishment\nrange for the federal funds rate at 5¼ to\nof the primary credit rate at the existing level of 5.5 per5½ percent. The Committee will continue to\ncent, effective December 14, 2023.\nassess additional information and its implications for monetary policy. In determining the It was agreed that the next meeting of the Committee\nextent of any additional policy firming that may would be held on Tuesday–Wednesday, January 30–31,\nbe appropriate to return inflation to 2 percent 2024. The meeting adjourned at 10:15 a.m. on Decemover time, the Committee will take into account ber 13, 2023.\nthe cumulative tightening of monetary policy,\nNotation Vote\nthe lags with which monetary policy affects ecoBy notation vote completed on November 20, 2023, the\nnomic activity and inflation, and economic and\nCommittee unanimously approved the minutes of the\nfinancial developments. In addition, the ComCommittee meeting held on October 31–November 1,\nmittee will continue reducing its holdings of\n2023. Treasury securities and agency debt and agency\nmortgage-backed securities, as described in its\npreviously announced plans. The Committee is\nstrongly committed to returning inflation to its\n_______________________\n2 percent objective. Joshua Gallin\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20231213.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that the current rate is likely at or near its peak for this tightening cycle, but left the door open for further hikes if inflation data warrants it. Future decisions will be data-dependent, with policy expected to remain restrictive for some time to ensure inflation sustainably returns to 2%.",
+    "key_economic_factors": [
+      "Inflation has eased over the past year but remains elevated, particularly in core services and housing",
+      "Job gains have moderated but remain strong, with the unemployment rate steady at 3.7%",
+      "Recent data showed slowing GDP growth from a strong third quarter",
+      "Tighter financial conditions and restrictive monetary policy are weighing on demand and inflation"
+    ],
+    "economic_outlook": "The Fed expects real GDP growth to slow notably in the fourth quarter of 2023 and remain below potential over the next two years. The unemployment rate is projected to remain stable through 2026 as labor market imbalances gradually ease. Inflation is expected to continue declining toward 2% by 2026, supported by past policy tightening and better supply-demand balance, though risks remain skewed to the upside.",
+    "market_impact": "Markets should expect a pause in rate hikes but not an imminent pivot to cuts. Businesses and consumers will continue to face high borrowing costs, while investors may see continued volatility as the Fed maintains a restrictive stance. Equity markets could remain supported by easing inflation and stable economic conditions, but bond yields may stay elevated until inflation shows sustained progress."
+  },
+  {
+    "date": "2023-11-01",
+    "title": "FOMC Meeting 2023-11-01",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nOctober 31–November 1, 2023\nA joint meeting of the Federal Open Market Committee Roberto Perli, Manager, System Open Market Account\nand the Board of Governors of the Federal Reserve SysJulie Ann Remache, Deputy Manager, System Open\ntem was held in the offices of the Board of Governors\nMarket Account\non Tuesday, October 31, 2023, at 10:00 a.m. and continued on Wednesday, November 1, 2023, at 9:00 a.m.1 Stephanie R. Aaronson, Senior Associate Director,\nDivision of Research and Statistics, Board\nAttendance\nJerome H. Powell, Chair Jose Acosta, Senior System Administrator II, Division\nJohn C. Williams, Vice Chair of Information Technology, Board\nMichael S. Barr\nAlyssa Arute,3 Manager, Division of Reserve Bank\nMichelle W. Bowman\nOperations and Payment Systems, Board\nLisa D. Cook\nAustan D. Goolsbee Kartik B. Athreya, Executive Vice President, Federal\nPatrick Harker Reserve Bank of Richmond\nPhilip N. Jefferson\nPenelope A. Beattie,4 Section Chief, Office of the\nNeel Kashkari\nSecretary, Board\nAdriana D. Kugler\nLorie K. Logan David Bowman, Senior Associate Director, Division of\nChristopher J. Waller Monetary Affairs, Board\nYao-Chin Chao, Deputy Associate Secretary, Office of\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly,2\nthe Secretary, Board\nLoretta J. Mester, and Sushmita Shukla, Alternate\nMembers of the Committee Satyajit Chatterjee, Vice President, Federal Reserve\nBank of Philadelphia\nSusan M. Collins and Jeffrey R. Schmid, Presidents of\nthe Federal Reserve Banks of Boston and Kansas Juan C. Climent, Special Adviser to the Board, Division\nCity, respectively of Board Members, Board\nKathleen O’Neill Paese, Interim President of the Stephanie E. Curcuru, Deputy Director, Division of\nFederal Reserve Bank of St. Louis International Finance, Board\nJoshua Gallin, Secretary Ryan Decker, Special Adviser to the Board, Division of\nMatthew M. Luecke, Deputy Secretary Board Members, Board\nBrian J. Bonis, Assistant Secretary\nCynthia L. Doniger, Principal Economist, Division of\nMichelle A. Smith, Assistant Secretary\nMonetary Affairs, Board\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel Rochelle M. Edge, Deputy Director, Division of\nTrevor A. Reeve, Economist Monetary Affairs, Board\nStacey Tevlin, Economist\nMatthew J. Eichner,3 Director, Division of Reserve\nBeth Anne Wilson, Economist\nBank Operations and Payment Systems, Board\nShaghil Ahmed, James A. Clouse, Brian M. Doyle,\nEric C. Engstrom, Associate Director, Division of\nAnna Paulson, Andrea Raffo, Chiara Scotti, and\nMonetary Affairs, Board\nWilliam Wascher, Associate Economists\n1 The Federal Open Market Committee is referenced as the 3 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 4 Attended through the discussion of the economic and fithe “Board” in these minutes. nancial situation.\n2 Attended Wednesday’s session only.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nJon Faust, Senior Special Adviser to the Chair, Division Kenneth C. Montgomery, First Vice President, Federal\nof Board Members, Board Reserve Bank of Boston\nRon Feldman, First Vice President, Federal Reserve Norman J. Morin, Deputy Associate Director, Division\nBank of Minneapolis of Research and Statistics, Board\nAndrew Figura, Associate Director, Division of Michelle M. Neal, Head of Markets, Federal Reserve\nResearch and Statistics, Board Bank of New York\nGlenn Follette, Associate Director, Division of Fernanda Nechio, Vice President, Federal Reserve\nResearch and Statistics, Board Bank of San Francisco\nJenn Gallagher, Assistant to the Board, Division of Matthias Paustian, Assistant Director, Division of\nBoard Members, Board Research and Statistics, Board\nMichael S. Gibson, Director, Division of Supervision Argia Sbordone, Research Department Head, Federal\nand Regulation, Board Reserve Bank of New York\nChristine Graham,4 Special Adviser to the Board, Nitish Ranjan Sinha, Special Adviser to the Board,\nDivision of Board Members, Board Division of Board Members, Board\nJoseph W. Gruber, Executive Vice President, Federal Ellis W. Tallman, Executive Vice President, Federal\nReserve Bank of Kansas City Reserve Bank of Cleveland\nMichael Hendley,3 Associate Director, Federal Reserve Robert J. Tetlow, Senior Adviser, Division of Monetary\nBank of New York Affairs, Board\nValerie S. Hinojosa, Section Chief, Division of Skander Van den Heuvel, Associate Director, Division\nMonetary Affairs, Board of Financial Stability, Board\nMatteo Iacoviello, Senior Associate Director, Division Francisco Vazquez-Grande, Group Manager, Division\nof International Finance, Board of Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Clara Vega, Special Adviser to the Board, Division of\nBoard Members, Board Board Members, Board\nMichael T. Kiley, Deputy Director, Division of David C. Wheelock, Senior Vice President, Federal\nFinancial Stability, Board Reserve Bank of St. Louis\nDon H. Kim, Senior Adviser, Division of Monetary Randall A. Williams, Group Manager, Division of\nAffairs, Board Monetary Affairs, Board\nChristopher Kurz, Assistant Director and Chief, Jonathan Willis, Vice President, Federal Reserve Bank\nDivision of Research and Statistics, Board of Atlanta\nSylvain Leduc, Director of Research, Federal Reserve Paul R. Wood, Special Adviser to the Board, Division\nBank of San Francisco of Board Members, Board\nAndreas Lehnert, Director, Division of Financial Egon Zakrajsek, Executive Vice President, Federal\nStability, Board Reserve Bank of Boston\nKurt F. Lewis, Special Adviser to the Chair, Division of Rebecca Zarutskie, Special Adviser to the Board,\nBoard Members, Board Division of Board Members, Board\nLaura Lipscomb, Special Adviser to the Board, Andrei Zlate, Group Manager, Division of Monetary\nDivision of Board Members, Board Affairs, Board\nJoshua Louria, Group Manager, Division of Monetary Developments in Financial Markets and Open\nAffairs, Board Market Operations\nThe manager turned first to a review of developments in\nAndrew Meldrum, Assistant Director, Division of\nfinancial markets over the intermeeting period. FinanMonetary Affairs, Board\ncial conditions continued to tighten, driven by higher\n\n________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ O__c_to_b_e_r_ 3_1_–_N__o_v_em__b_e_r _1_, _2_0_2_3___________________P_a_g_e_ _3\nyields on Treasury securities as well as by lower equity Treasury bill issuance and appeared to increase investprices and a stronger dollar, which themselves partly re- ment in the private market for repurchase agreements\nflected higher interest rates. Because earnings expecta- (repos) as well. Overall, the reduced usage of the\ntions had held up well in recent months, the effect of ON RRP facility released more reserves than the reduchigher interest rates on equity prices likely took place tion in Federal Reserve assets and the increase in the\nlargely through valuations. Treasury General Account absorbed. On net, reserves\nexpanded over the period, and available indicators\nThe rise since July in yields on longer-dated nominal\npointed to them remaining abundant. Primary dealers\nTreasury securities was mostly attributable to increases\nindicated that reserves were projected to remain within\nin real yields. There were small increases in inflation\ntheir recent range for the next several quarters. The\ncompensation, but the levels of spot and forward rates\nmanager also noted that 23 banks, in addition to all priwere within historical ranges. The manager also noted\nmary dealers, were already counterparties to the standing\nthat survey measures pointed to generally stable inflation\nrepo facility (SRF) and that several more were in the\nexpectations, especially at longer horizons, and that inonboarding process. Together, these banks held the vast\nflation expectations remained well anchored.\nmajority of SRF-eligible securities in the banking system. Staff analysis and responses from the Open Market The SRF, in addition to the discount window, may thereDesk’s Survey of Primary Dealers and Survey of Market fore prove helpful for supplying liquidity to the banking\nParticipants suggested that the bulk of the increase since system should funding pressures emerge. July in the 10-year nominal Treasury yield could be atBy unanimous vote, the Committee ratified the Desk’s\ntributed to a higher term premium, though higher policy\ndomestic transactions over the intermeeting period.\nexpectations at longer horizons could also have played a\nThere were no intervention operations in foreign currenrole. The manager also noted that liquidity conditions in\ncies for the System’s account during the intermeeting pethe Treasury market had not changed materially since\nriod. July, suggesting that Treasury market liquidity had not\nbeen an important driver of the increase in yields. Staff Review of the Economic Situation\nThe data available at the time of the October 31–NoThe manager turned next to expectations for monetary\nvember 1 meeting indicated that U.S. real gross domestic\npolicy. Both market pricing and responses to the Desk’s\nproduct (GDP) had expanded at a strong pace in the\nsurveys implied that market participants expected that\nthird quarter. Labor market conditions remained tight,\nthe federal funds rate was at or near its peak and would\nwith continued strong job gains and a low unemploybe held there at least until the June 2024 FOMC meeting;\nment rate. Consumer price inflation remained elevated.\nthere was a roughly 30 percent probability of a 25 basis\npoint increase at either the December or January FOMC Labor demand and supply were slowly moving into betmeeting. Regarding balance sheet policy, the surveys ter alignment. Easing labor market imbalances were apshowed that respondents had pushed out the date they parent in the wage data, with the 12-month changes in\nexpected balance sheet runoff to stop, perhaps partly in average hourly earnings and the employment cost index\nresponse to policymakers’ communications that balance each below their year-earlier levels. Although total nonsheet runoff could continue even after the Committee farm payroll employment rose at a faster pace in Sepbegins to reduce the target range for the federal funds tember than in previous months, the unemployment rate\nrate. was unchanged at 3.8 percent; the labor force participation rate and the employment-to-population ratio were\nThe manager then turned to developments in money\nalso unchanged in September. The unemployment rate\nmarkets and Desk operations. Balance sheet runoff confor African Americans rose, while the jobless rate for\ntinued to proceed smoothly over the intermeeting period\nHispanics declined; both rates were higher than the nathrough reduced holdings of Treasury securities, agency\ntional average.\ndebt, and agency mortgage-backed securities. The continued repayment by the Federal Deposit Insurance Cor- Consumer price inflation remained elevated but continporation of discount window loans extended to banks ued to show signs of slowing. The price index for total\nthat were placed into receivership also contributed to re- personal consumption expenditures (PCE) increased\nduced Federal Reserve assets. On the liabilities side of 3.4 percent over the 12 months ending in September,\nthe balance sheet, usage of the overnight reverse repur- while core PCE price inflation, which excludes changes\nchase agreement (ON RRP) facility declined further, as in energy prices and many consumer food prices, was\nmoney market mutual funds continued to absorb new 3.7 percent over the same period; both total and core\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nPCE price inflation were well below their year-earlier high. Meanwhile, equity prices decreased, and spreads\nlevels. The trimmed mean measure of 12-month PCE on investment- and speculative-grade corporate bonds\nprice inflation constructed by the Federal Reserve Bank widened. Financing conditions tightened further, and\nof Dallas was 3.8 percent in September, also down from borrowing costs continued to rise.\nthe level posted a year ago. Survey measures of consumThe market-implied path for the federal funds rate\ners’ short-run inflation expectations remained above\nthrough 2024 declined slightly over the intermeeting petheir pre-pandemic levels. In contrast, survey measures\nriod. Beyond 2024, the policy rate path implied by overof medium- to longer-term inflation expectations renight index swap quotes increased, likely reflecting, in\nmained in the range seen in the decade before the panpart, higher term premiums. The rise in longer-term\ndemic.\nnominal Treasury yields was driven by real yields. ShortAccording to the advance estimate, real GDP posted a term inflation compensation fluctuated notably over the\nstrong gain in the third quarter. Private domestic final intermeeting period, largely following the changes in enpurchases, which includes PCE and private fixed invest- ergy prices, but ended the period modestly lower.\nment and often provides a better signal than GDP of\nBroad stock price indexes declined over the intermeeting\nunderlying economic momentum, posted a smaller but\nperiod. Equity prices in interest rate–sensitive sectors,\nstill-solid increase.\nsuch as real estate and utilities, underperformed the\nReal exports and imports of goods and services grew at broader market. Stock prices of banks also declined\na robust pace in the third quarter after falling sharply in more than broader equity indexes. The one-month opthe second quarter, reflecting broad-based strength tion-implied volatility on the S&P 500 index increased\nacross categories. Net exports made a slightly negative notably over the intermeeting period but remained becontribution to U.S. GDP growth in the third quarter, low the peaks observed in the first quarter of 2023.\nwhile the nominal trade deficit narrowed somewhat. Over the intermeeting period, foreign asset prices were\nForeign economic growth remained subdued in the third largely driven by spillovers from the rise in longer-term\nquarter. Monetary policy restraint weighed on activity U.S. Treasury yields. Longer-term sovereign bond yields\nabroad, especially in Europe, where euro-area GDP for advanced foreign economies rose, foreign equity\ngrowth registered a small decline and the latest Euro- prices declined, foreign credit spreads generally widened,\npean Central Bank lending survey pointed to a contrac- and investors continued to withdraw from emerging\ntion in credit from a year ago. Although GDP growth market economy funds. Stronger-than-expected U.S.\nin China improved in the third quarter, supported by an data on economic activity and widening interest rate difincrease in industrial production, Chinese retail sales ferentials between the U.S. and the rest of the world concontinued to be held back by low consumer confidence tributed to an increase in the staff’s broad dollar index.\nand weakness in the residential property sector. The Bank of Japan increased the flexibility of its yield\ncurve control framework, which contributed to the rise\nInflation abroad remained elevated. While core inflation\nin longer-term Japanese government bond yields. The\ncontinued to ease amid slowing aggregate demand, enarmed conflict between Israel and Hamas left a limited\nergy price inflation increased in many foreign econonet imprint on foreign financial markets over this period.\nmies. With inflation still high, most major foreign central banks, while keeping their policy rates unchanged, Conditions in short-term funding markets remained staindicated their intentions to hold these rates at suffi- ble over the intermeeting period. Take-up in the\nciently restrictive levels to bring inflation back to target ON RRP facility continued to decline over the period.\nrates. That decline primarily reflected money market funds reducing their usage of the facility and increasing their\nStaff Review of the Financial Situation\nholdings of Treasury bills and private market repos in\nOver the intermeeting period, longer-term Treasury\nresponse to slightly more attractive rates on these alteryields rose notably, while shorter-term yields were little\nnative investments. Banks’ total deposit levels were\nchanged, and the market-implied path for the federal\nroughly unchanged over the intermeeting period, as outfunds rate through 2024 declined slightly. The increase\nflows of core deposits were about offset by inflows of\nin longer-term Treasury yields appeared to be mostly atlarge time deposits, which tend to be more expensive\ntributable to higher term premiums, as stronger-than-exsources of funding. Wholesale borrowing by large banks\npected economic data seemed to increase the uncertainty\nincreased over the intermeeting period.\nregarding how long policy rates might need to remain\n\n________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ O__c_to_b_e_r_ 3_1_–_N__o_v_em__b_e_r _1_, _2_0_2_3___________________P_a_g_e_ _5\nIn domestic credit markets, borrowing costs for busi- August, while auto credit continued to grow at a modest\nnesses, households, and municipalities continued to rise pace. However, respondents to the October SLOOS refrom already elevated levels over the intermeeting pe- ported tighter standards for all consumer loan categories\nriod, primarily reflecting increases in longer-term Treas- in the third quarter. Meanwhile, outstanding student\nury yields. Interest rates on commercial and industrial loan balances declined significantly in August, driven by\n(C&I) loans and small business loans increased, as did the cancellation of student loan debt for certain borrowrates on loans to households, including for 30-year con- ers.\nforming residential mortgages, new auto loans, and\nThe credit quality of businesses, households, and municcredit cards. Rates also moved up on a broad array of\nipalities continued to show signs of deterioration in most\nfixed-income securities, including residential and comsectors, as delinquency rates rose. The credit quality of\nmercial mortgage-backed securities, municipal bonds,\nnonfinancial firms borrowing in the corporate bond\nand corporate bonds. Yields on corporate bonds rose\nmarket remained sound overall, albeit with pockets of\nmore than Treasury yields, particularly for speculativedeterioration. The credit quality of C&I and CRE loans\ngrade bonds.\non banks’ balance sheets remained generally stable\nCredit continued to be generally available to businesses, through August. However, delinquency rates for nonhouseholds, and municipalities. Total core loans on farm nonresidential CRE loans recently picked up. In\nbanks’ books continued to increase in the third quarter, the October SLOOS, banks frequently cited concerns\nalthough at a slower pace than earlier in the year. How- about credit quality, including for both C&I and\never, smaller firms were finding it harder to obtain credit, CRE loans, as reasons for tightening standards over the\nwith the share of small firms reporting in September that third quarter.\nit was more difficult to obtain credit compared with\nThe staff provided an update on its assessment of the\nthree months earlier rising from an already elevated level.\nstability of the financial system and, on balance, judged\nCapital market financing continued to be available, althat the financial vulnerabilities of the U.S. financial systhough issuance in most markets was below typical levtem were notable. The staff characterized asset valuaels.\ntion pressures as notable. In particular, the staff noted\nIn the October Senior Loan Officer Opinion Survey on that valuations in equities, housing, and CRE were high. Bank Lending Practices (SLOOS), banks reported tight- The forward price-to-earnings ratio for S&P 500 firms\nening standards and terms on C&I loans to firms of all increased to the upper quartile of its historical distribusizes in the third quarter. The most frequently cited rea- tion. House prices increased to the upper end of their\nsons for tightening C&I standards and terms included historical range, relative to fundamentals, despite tight\nconcerns about the economic outlook, a less favorable credit conditions in the mortgage market. While CRE\nor more uncertain economic outlook, and the effects of prices declined, valuations remained stretched, with cappotential legislative changes, supervisory actions, or italization rates remaining near historical lows. Fundachanges in accounting standards. Banks also reported mentals in the office sector remained weak given the\nthat demand for C&I loans weakened in the third quar- shift toward telework in many industries, especially for\nter, with the most frequently cited reasons being de- central business districts and coastal cities. Delinquency\ncreased investment in plant or equipment and decreased rates on commercial mortgage-backed securities moved\ninventory financing needs. Similarly, banks indicated up as office and retail loan performance deteriorated.\nthat commercial real estate (CRE) loan standards contin- Vulnerabilities associated with business and household\nued to tighten and demand weakened further in the third debt were characterized as moderate.\nquarter. Leverage in the financial sector was characterized as noCredit in the residential mortgage market remained easily table. In the banking sector, holdings of liquid assets\navailable for high-credit-score borrowers who met remained high, and regulatory risk-based capital ratios\nstandard conforming loan criteria. However, in the Oc- indicated ample loss-bearing capacity in the banking systober SLOOS, banks reported tighter standards and tem. However, the fair value of banks’ longer-term\nweaker demand for almost all categories of residential fixed-rate assets, including loans, decreased in the third\nreal estate loans in the third quarter. quarter as longer-term interest rates rose. Hedge fund\nleverage remained above historical averages, particularly\nConsumer credit remained readily available for most\nfor the largest funds. Funding risks were also characterborrowers, although there were signs of tightening\nized as notable. Reliance on uninsured deposits declined\nstandards. Credit card balances grew at a strong pace in\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nin the aggregate but remained high for some banks, and Participants assessed that while labor market conditions\nshort-term nondeposit funding had increased. remained tight, they had eased since earlier in the year,\npartly as a result of recent increases in labor supply. ParStaff Economic Outlook\nticipants judged that the current stance of monetary polThe economic forecast prepared by the staff for the Ocicy was restrictive and was putting downward pressure\ntober–November meeting was similar to the September\non economic activity and inflation. In addition, they\nprojection. The staff expected fourth-quarter GDP\nnoted that financial conditions had tightened signifigrowth to slow markedly from its third-quarter rate. All\ncantly in recent months. Participants noted that inflation\ntold, however, average GDP growth over the second\nhad moderated over the past year but stressed that curhalf of the year was projected to be a little faster than the\nrent inflation remained unacceptably high and well\nfirst half’s pace. The staff also expected output in the\nabove the Committee’s longer-run goal of 2 percent.\nfourth quarter to be temporarily restrained by the autoThey also stressed that further evidence would be reworkers’ strike before being boosted in the first quarter\nquired for them to be confident that inflation was clearly\nas lost production begins to be made up. The size and\non a path to the Committee’s 2 percent objective. Partiming of these effects were highly uncertain, however.\nticipants continued to view a period of below-potential\nWith the lagged effects of monetary policy actions exgrowth in real GDP and some further softening in labor\npected to restrain activity, real GDP was projected to rise\nmarket conditions as likely to be needed to reduce inflamore slowly than the staff’s estimate of potential over\ntion pressures sufficiently to return inflation to 2 percent\nthe next two years before rising in line with potential in\nover time.\n2026. The unemployment rate was expected to be\nroughly flat through 2026 as the effects of below-poten- In their discussion of the household sector, participants\ntial output growth were offset by the effects of further observed that the incoming data on consumer spending\nimprovements in labor market functioning. had again surprised to the upside, likely supported by a\nstrong labor market and by generally solid household\nTotal PCE price inflation was expected to be close to\nbalance sheets. Nevertheless, some participants re3.0 percent by the end of this year, and core PCE inflamarked that the finances of some households—espetion was expected to be around 3.5 percent. Inflation\ncially those in the low- and moderate-income categowas projected to move lower in coming years as demand\nries—were increasingly coming under pressure amid\nand supply in product and labor markets moved into\nhigh prices for food and other essentials as well as tight\nbetter alignment; in 2026, total and core PCE price incredit conditions. Several participants added that delinflation rates were expected to be close to 2 percent.\nquencies on auto loans and credit cards had risen for\nThe staff continued to view the uncertainty around the these households. Some participants commented that\nbaseline projection as elevated. Risks around the infla- their District contacts reported a somewhat weaker piction forecast were seen as skewed to the upside, given ture of consumer demand than indicated by the incomthe possibility that inflation might prove to be more per- ing aggregate data. Several participants, however, noted\nsistent than expected or that additional adverse shocks that repeated upside surprises in the aggregate spending\nto supply conditions might occur. The risks to the fore- data could indicate that considerable momentum could\ncast for real activity were viewed to be skewed to the be sustained. A couple of these participants commented\ndownside. Moreover, the additional monetary policy that the aggregate household sector may have more fitightening that would be necessitated by higher or more nancial resources than previously thought, which could\npersistent inflation, and the potential for a greater tight- help account for the strength in spending. A few particening of financial conditions, represented a downside ipants observed that activity in the housing sector had\nrisk to the projection for real activity. flattened out in recent months, likely reflecting the effects of further increases in mortgage rates from already\nParticipants’ Views on Current Conditions and the\nelevated levels. Economic Outlook\nParticipants noted that real GDP had expanded at an un- Business fixed investment was flat in the third quarter,\nexpectedly strong pace in the third quarter, boosted by a and participants observed that conditions reported by\nsurge in consumer spending. Nevertheless, participants their business contacts varied across industries and Disjudged that aggregate demand and aggregate supply con- tricts. Some participants noted that businesses were\ntinued to come into better balance, as a result of the cur- benefiting from an increased ability to hire and retain\nrent restrictive stance of monetary policy and the con- workers, better-functioning supply chains, or reduced\ntinued normalization of aggregate supply conditions. input cost pressures. A few participants commented\n\n________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ O__c_to_b_e_r_ 3_1_–_N__o_v_em__b_e_r _1_, _2_0_2_3___________________P_a_g_e_ _7\nthat their business contacts had reported that cost in- recent months, as well as the continued gradual decline\ncreases could not be easily passed on to customers. Sev- in housing services inflation. However, participants also\neral participants commented that the apparent resolu- noted that there had been only limited progress in bringtion of the United Auto Workers strike would reduce ing down inflation in core services excluding housing.\nbusiness-sector uncertainty. Several participants noted Participants noted that longer-term inflation expectathat an increasing number of District businesses were re- tions remained well anchored. Participants observed\nporting that higher interest rates were affecting their that, notwithstanding the moderation of inflation so far,\nbusinesses or that firms were increasingly cutting or de- inflation remained well above the Committee’s 2 percent\nlaying their investment plans because of higher borrow- longer-run objective and that elevated inflation was coning costs and tighter bank lending conditions. A few tinuing to harm businesses and households, particularly\nparticipants noted that the tighter financial and credit low-income households. Participants stressed that they\nconditions could be particularly challenging for small would need to see more data indicating that inflation\nbusinesses. A few participants observed that higher in- pressures were abating to be more confident that inflaterest rates were also affecting the agricultural sector, tion was on course to return to 2 percent over time.\nwith their contacts noting that high financing costs were\nParticipants noted that in recent months, financial conlikely weighing on purchases of heavy agricultural equipditions had tightened significantly because of a substanment. Regarding the energy sector, a few participants\ntial run-up in longer-term Treasury yields, among other\nobserved that energy markets had calmed after signififactors. Higher Treasury yields contributed to an incant volatility at the start of the current armed conflict\ncrease in 30-year mortgage rates to levels not seen in\nbetween Israel and Hamas.\nmany years and led to higher corporate borrowing rates. Participants observed that the labor market remained Many participants observed that a range of measures\ntight. Payroll growth was unexpectedly strong in Sep- suggested that the rise in longer-term yields had been\ntember, and the unemployment rate remained low. Nev- driven primarily or substantially by a rise in the term preertheless, participants assessed that labor supply and la- miums on Treasury securities. Participants generally\nbor demand were continuing to come into better bal- viewed factors such as a fiscal outlook that suggested\nance. Measures of labor supply had moved up, with the greater future supply of Treasury securities than previlabor force participation rate for prime-age workers ris- ously thought and increased uncertainty about the ecoing this year, especially for women, and immigration also nomic and policy outlooks as likely having contributed\nboosting labor supply. A few participants expressed to the rise in the term premiums. Some participants\nconcern that the recent pace of increases in labor supply noted that the rise in longer-term yields may also have\nmight not be sustainable in light of challenges regarding been driven by expectations for a higher path of the fedthe availability of childcare and the uncertainty regarding eral funds rate in light of the surprising resilience of the\nthe extent to which immigration would continue to economy or a possible rise in the neutral policy rate. Parboost the growth of labor supply. Regarding labor de- ticipants highlighted that longer-term yields could be\nmand, various measures appeared to indicate some eas- volatile and that the factors behind the recent increase,\ning, including a downward trend in job openings, a lower as well as their persistence, were uncertain. However,\nquits rate, and reduced wage premiums offered to job they also noted that, whatever the source of the rise in\nswitchers. Consistent with the gradual rebalancing of la- longer-term yields, persistent changes in financial condibor market conditions, participants commented that the tions could have implications for the path of monetary\npace of nominal wage increases had continued to mod- policy and that it would therefore be important to conerate. A few participants noted, however, that nominal tinue to monitor market developments closely.\nwages were still rising at rates above levels generally asParticipants generally noted a high degree of uncertainty\nsessed to be consistent with the sustained achievement\nsurrounding the economic outlook. As upside risks to\nof the Committee’s 2 percent inflation objective, given\neconomic activity, participants noted that the factors becurrent estimates of trend productivity growth.\nhind the resilience in spending could persist longer than\nParticipants observed that inflation had continued to expected. As downside risks, participants cited the posmoderate since the middle of last year. Both the 6- and sibility that the effects on households and businesses of\n12-month change measures of core PCE price inflation the cumulative policy tightening and tighter financial\nhad come down somewhat in recent months, despite a conditions could be larger than expected, disruptions\nless favorable monthly reading in September. Partici- from a potential government shutdown, and the possipants pointed to the softening of core goods prices in bility that the resumption of student loan repayments\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ncould weigh on household spending by more than was or other factors. Amid these economic conditions, all\nexpected. As upside risks to inflation, participants cited participants judged it appropriate to maintain the target\nthe possibility that progress on disinflation stalls or in- range for the federal funds rate at 5¼ to 5½ percent at\nflation reaccelerates because of continued momentum in this meeting. Participants judged that maintaining this\neconomic activity. A potential for a broadening of the restrictive stance of policy at this meeting would support\narmed conflict in the Middle East was seen as presenting further progress toward the Committee’s goals while alupside risk to inflation through its potential effect on oil lowing more time to gather additional information to\nprices as well as downside risk to economic activity. evaluate this progress. All participants agreed that it was\nappropriate to continue the process of reducing the FedIn their discussion of financial stability, participants oberal Reserve’s securities holdings, as described in the preserved that the banking system was sound and resilient\nviously announced Plans for Reducing the Size of the\nand that banking stresses had subsided. However, many\nFederal Reserve’s Balance Sheet.\nparticipants commented that unrealized losses on assets\nresulting from the rise in longer-term interest rates, sig- In discussing the policy outlook, participants continued\nnificant reliance by some banks on uninsured deposits, to judge that it was critical that the stance of monetary\nand increased funding costs at banks warranted moni- policy be kept sufficiently restrictive to return inflation\ntoring. Many participants also commented on risks as- to the Committee’s 2 percent objective over time. All\nsociated with a potential sharp decline in CRE valua- participants agreed that the Committee was in a position\ntions, which could adversely affect some banks and to proceed carefully and that policy decisions at every\nother financial institutions. Several participants noted meeting would continue to be based on the totality of\npotential cyber risks and emphasized the importance of incoming information and its implications for the ecofirms, particularly providers of critical infrastructure, be- nomic outlook as well as the balance of risks. Particiing prepared to recover from such threats. A few par- pants noted that further tightening of monetary policy\nticipants also discussed the importance of monitoring would be appropriate if incoming information indicated\nTreasury market functioning and potential vulnerabili- that progress toward the Committee’s inflation objective\nties posed by the amount of leverage being used by was insufficient. Participants expected that the data arhedge funds in this market. In addition, several partici- riving in coming months would help clarify the extent to\npants emphasized the need for banks to establish readi- which the disinflation process was continuing, aggregate\nness to use Federal Reserve liquidity facilities and for the demand was moderating in the face of tighter financial\nFederal Reserve to ensure its own readiness to provide and credit conditions, and labor markets were reaching\nliquidity during periods of stress. a better balance between demand and supply. Participants noted the importance of continuing to communiIn their consideration of appropriate monetary policy accate clearly about the Committee’s data-dependent aptions at this meeting, participants noted that economic\nproach and its firm commitment to bring inflation down\nactivity expanded at a strong pace in the third quarter\nto 2 percent.\nand had been resilient. While the labor market remained\ntight, job gains had moderated, on balance, since earlier All participants judged that it would be appropriate for\nin the year, and there were continuing signs that supply policy to remain at a restrictive stance for some time unand demand in the labor market were coming into better til inflation is clearly moving down sustainably toward\nbalance. While inflation had moderated since the middle the Committee’s objective. Participants also observed\nof last year, it remained well above the Committee’s that the continuing process of reducing the size of the\nlonger-run goal of 2 percent, and participants remained Federal Reserve’s balance sheet was an important part of\nresolute in their commitment to bring inflation down to the overall approach to achieving their macroeconomic\nthe Committee’s 2 percent objective. Participants also objectives. A few participants noted that the process of\nnoted that tighter financial and credit conditions facing balance sheet runoff could continue for some time, even\nhouseholds and businesses would likely weigh on eco- after the Committee begins to reduce the target range\nnomic activity, hiring, and inflation, although the extent for the federal funds rate. Several participants comof these effects remained uncertain. Participants com- mented on the recent decline in the use of the ON RRP\nmented on the significant tightening in financial condi- facility, noting that the use of the facility had been retions in recent months, driven by higher longer-term sponsive to market conditions.\nyields, with many noting that it was uncertain whether\nthis tightening of financial conditions would persist and\nto what extent it reflected expectations for tighter policy\n\n________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ O__c_to_b_e_r_ 3_1_–_N__o_v_em__b_e_r _1_, _2_0_2_3___________________P_a_g_e_ _9\nParticipants discussed several risk-management consid- continue to reduce the Federal Reserve’s holdings of\nerations that could bear on future policy decisions. Par- Treasury securities and agency debt and mortgageticipants generally judged that, with the stance of mone- backed securities, as described in its previously antary policy in restrictive territory, risks to the achieve- nounced plans. All members affirmed that they are\nment of the Committee’s goals had become more two strongly committed to returning inflation to their 2 persided. But with inflation still well above the Committee’s cent objective.\nlonger-run goal and the labor market remaining tight,\nMembers agreed that, in assessing the appropriate stance\nmost participants continued to see upside risks to inflaof monetary policy, they would continue to monitor the\ntion. These risks included the possibility that the imbalimplications of incoming information for the economic\nance of aggregate demand and supply could persist\noutlook. They would be prepared to adjust the stance of\nlonger than expected and slow the progress on inflation,\nmonetary policy as appropriate if risks emerge that could\ngeopolitical tensions and risks emanating from global oil\nimpede the attainment of the Committee’s goals. Memmarkets, the effects of a tight housing market on shelter\nbers also agreed that their assessments would take into\ninflation, and the potential for more limited declines in\naccount a wide range of information, including readings\ngoods prices. Many participants commented that even\non labor market conditions, inflation pressures and inthough economic activity had been resilient and the laflation expectations, and financial and international debor market had continued to be strong, downside risks\nvelopments.\nto economic activity remained. Such risks included potentially larger-than-expected effects of the tightening in At the conclusion of the discussion, the Committee\nfinancial and credit conditions on aggregate demand and voted to direct the Federal Reserve Bank of New York,\non bank, business, and household balance sheets; con- until instructed otherwise, to execute transactions in the\ntinued weakness in the CRE sector; and potential disrup- System Open Market Account in accordance with the\ntions to global oil markets. following domestic policy directive, for release at\n2:00 p.m.:\nCommittee Policy Actions\nIn their discussion of monetary policy for this meeting, “Effective November 2, 2023, the Federal\nmembers agreed that economic activity had expanded at Open Market Committee directs the Desk to:\na strong pace in the third quarter, job gains had moder-\n• Undertake open market operations as necated since earlier in the year but remained strong, and\nessary to maintain the federal funds rate in\nthe unemployment rate had remained low. Inflation had\na target range of 5¼ to 5½ percent.\nremained elevated.\n• Conduct standing overnight repurchase\nMembers concurred that the U.S. banking system was\nagreement operations with a minimum bid\nsound and resilient. They also agreed that tighter finanrate of 5.5 percent and with an aggregate\ncial and credit conditions for households and businesses\noperation limit of $500 billion.\nwere likely to weigh on economic activity, hiring, and inflation but that the extent of these effects was uncertain. • Conduct standing overnight reverse repurMembers agreed that they remained highly attentive to chase agreement operations at an offering\ninflation risks. rate of 5.3 percent and with a per-counterparty limit of $160 billion per day. In support of the Committee’s objectives to achieve\nmaximum employment and inflation at the rate of 2 per- • Roll over at auction the amount of principal\ncent over the longer run, members agreed to maintain payments from the Federal Reserve’s holdthe target range for the federal funds rate at 5¼ to ings of Treasury securities maturing in each\n5½ percent. They also agreed that they would continue calendar month that exceeds a cap of\nto assess additional information and its implications for $60 billion per month. Redeem Treasury\nmonetary policy. In determining the extent of additional coupon securities up to this monthly cap\npolicy firming that may be appropriate to return inflation and Treasury bills to the extent that coupon\nto 2 percent over time, members concurred that they principal payments are less than the\nwould take into account the cumulative tightening of monthly cap.\nmonetary policy, the lags with which monetary policy af-\n• Reinvest into agency mortgage-backed sefects economic activity and inflation, and economic and\ncurities (MBS) the amount of principal payfinancial developments. In addition, members agreed to\nments from the Federal Reserve’s holdings\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nof agency debt and agency MBS received in strongly committed to returning inflation to its\neach calendar month that exceeds a cap of 2 percent objective.\n$35 billion per month. In assessing the appropriate stance of monetary\n• Allow modest deviations from stated policy, the Committee will continue to monitor\namounts for reinvestments, if needed for the implications of incoming information for\noperational reasons. the economic outlook. The Committee would\nbe prepared to adjust the stance of monetary\n• Engage in dollar roll and coupon swap\npolicy as appropriate if risks emerge that could\ntransactions as necessary to facilitate settleimpede the attainment of the Committee’s\nment of the Federal Reserve’s agency MBS\ngoals. The Committee’s assessments will take\ntransactions.”\ninto account a wide range of information, inThe vote also encompassed approval of the statement cluding readings on labor market conditions, inbelow for release at 2:00 p.m.: flation pressures and inflation expectations, and\nfinancial and international developments.”\n“Recent indicators suggest that economic activity expanded at a strong pace in the third quar- Voting for this action: Jerome H. Powell, John C.\nter. Job gains have moderated since earlier in Williams, Michael S. Barr, Michelle W. Bowman, Lisa D.\nthe year but remain strong, and the unemploy- Cook, Austan D. Goolsbee, Patrick Harker, Philip N.\nment rate has remained low. Inflation remains Jefferson, Neel Kashkari, Adriana D. Kugler, Lorie K.\nelevated. Logan, and Christopher J. Waller. The U.S. banking system is sound and resilient. Voting against this action: None. Tighter financial and credit conditions for\nConsistent with the Committee’s decision to leave the\nhouseholds and businesses are likely to weigh\ntarget range for the federal funds rate unchanged, the\non economic activity, hiring, and inflation. The\nBoard of Governors of the Federal Reserve System\nextent of these effects remains uncertain. The\nvoted unanimously to maintain the interest rate paid on\nCommittee remains highly attentive to inflation\nreserve balances at 5.4 percent, effective Novemrisks.\nber 2, 2023. The Board of Governors of the Federal ReThe Committee seeks to achieve maximum em- serve System voted unanimously to approve the estabployment and inflation at the rate of 2 percent lishment of the primary credit rate at the existing level of\nover the longer run. In support of these goals, 5.5 percent, effective November 2, 2023.\nthe Committee decided to maintain the target\nIt was agreed that the next meeting of the Committee\nrange for the federal funds rate at 5¼ to\nwould be held on Tuesday–Wednesday, December 12–\n5½ percent. The Committee will continue to\n13, 2023. The meeting adjourned at 10:05 a.m. on Noassess additional information and its implicavember 1, 2023.\ntions for monetary policy. In determining the\nextent of additional policy firming that may be Notation Vote\nappropriate to return inflation to 2 percent over By notation vote completed on October 10, 2023, the\ntime, the Committee will take into account the Committee unanimously approved the minutes of the\ncumulative tightening of monetary policy, the Committee meeting held on September 19–20, 2023.\nlags with which monetary policy affects economic activity and inflation, and economic and\nfinancial developments. In addition, the Committee will continue reducing its holdings of\n_______________________\nTreasury securities and agency debt and agency\nJoshua Gallin\nmortgage-backed securities, as described in its\nSecretary\npreviously announced plans. The Committee is",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20231101.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that it will keep rates at a restrictive level for some time and emphasized a data-dependent approach, with future decisions based on incoming economic information. Further rate hikes could be possible if inflation progress stalls.",
+    "key_economic_factors": [
+      "Elevated inflation remaining above 2% target",
+      "Tight labor market with strong job gains and low unemployment",
+      "Resilient economic growth in Q3 2023",
+      "Significant tightening in financial conditions due to higher long-term yields"
+    ],
+    "economic_outlook": "The Fed sees real GDP growth slowing in the near term but remaining above potential in the second half of the year. Inflation is expected to gradually decline toward 2% by 2026, though risks remain skewed to the upside. The labor market is tight but showing signs of rebalancing, with wage growth moderating but still above levels consistent with 2% inflation.",
+    "market_impact": "Businesses and consumers should expect borrowing costs to remain high, with further rate hikes possible if inflation doesn't cool. Financial markets may remain volatile as investors assess the persistence of higher yields and the Fed's 'higher for longer' stance."
+  },
+  {
+    "date": "2023-09-20",
+    "title": "FOMC Meeting 2023-09-20",
+    "full_text": "_ _______________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nSeptember 19–20, 2023\nA joint meeting of the Federal Open Market Committee Chiara Scotti, and William Wascher, Associate\nand the Board of Governors of the Federal Reserve Sys- Economists\ntem was held in the offices of the Board of Governors\nRoberto Perli, Manager, System Open Market Account\non Tuesday, September 19, 2023, at 10:30 a.m. and continued on Wednesday, September 20, 2023, at 9:00 a.m.1 Julie Ann Remache, Deputy Manager, System Open\nMarket Account\nAttendance\nJerome H. Powell, Chair Stephanie R. Aaronson, Senior Associate Director,\nJohn C. Williams, Vice Chair Division of Research and Statistics, Board\nMichael S. Barr\nJose Acosta, Senior System Administrator II, Division\nMichelle W. Bowman\nof Information Technology, Board\nLisa D. Cook\nAustan D. Goolsbee Andrea Ajello, Section Chief, Division of Monetary\nPatrick Harker Affairs, Board\nPhilip N. Jefferson\nPenelope A. Beattie,4 Section Chief, Office of the\nNeel Kashkari\nSecretary, Board\nAdriana D. Kugler\nLorie K. Logan Ellen J. Bromagen, First Vice President, Federal\nChristopher J. Waller Reserve Bank of Chicago\nMark A. Carlson, Adviser, Division of Monetary\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly,\nAffairs, Board\nand Loretta J. Mester, Alternate Members of the\nCommittee Daniel Cooper, Vice President, Federal Reserve Bank\nof Boston\nSusan M. Collins and Jeffrey R. Schmid, Presidents of\nthe Federal Reserve Banks of Boston and Kansas Daniel M. Covitz, Deputy Director, Division of\nCity, respectively Research and Statistics, Board\nKathleen O’Neill Paese, Interim President of the Stephanie E. Curcuru, Deputy Director, Division of\nFederal Reserve Bank of St. Louis International Finance, Board\nJoshua Gallin, Secretary Rochelle M. Edge, Deputy Director, Division of\nMatthew M. Luecke, Deputy Secretary Monetary Affairs, Board\nBrian J. Bonis, Assistant Secretary\nMatthew J. Eichner,5 Director, Division of Reserve\nMichelle A. Smith, Assistant Secretary\nBank Operations and Payment Systems, Board\nMark E. Van Der Weide, General Counsel\nRichard Ostrander, Deputy General Counsel Eric C. Engstrom, Associate Director, Division of\nTrevor A. Reeve, Economist Monetary Affairs, Board\nStacey Tevlin, Economist\nJon Faust, Senior Special Adviser to the Chair, Division\nBeth Anne Wilson, Economist\nof Board Members, Board\nShaghil Ahmed,2 Roc Armenter, James A. Clouse,\nCharles A. Fleischman, Adviser, Division of Research\nBrian M. Doyle, Eric M. Engen,3 Andrea Raffo,\nand Statistics, Board\n1 The Federal Open Market Committee is referenced as the 3 Attended Tuesday’s session only.\n“FOMC” and the “Committee” in these minutes; the Board 4 Attended through the discussion of the economic and finanof Governors of the Federal Reserve System is referenced as cial situation.\nthe “Board” in these minutes. 5 Attended through the discussion of developments in finan2 Attended Wednesday’s session only. cial markets and open market operations.\n\n_P _ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nGlenn Follette, Associate Director, Division of Raven Molloy, Deputy Associate Director, Division of\nResearch and Statistics, Board Research and Statistics, Board\nJennifer Gallagher, Assistant to the Board, Division of Michelle M. Neal, Head of Markets, Federal Reserve\nBoard Members, Board Bank of New York\nCarlos Garriga, Senior Vice President, Federal Reserve Anna Orlik, Principal Economist, Division of\nBank of St. Louis Monetary Affairs, Board\nMichael S. Gibson, Director, Division of Supervision Damjan Pfajfar, Group Manager, Division of Monetary\nand Regulation, Board Affairs, Board\nJoseph W. Gruber, Executive Vice President, Federal Pierre-Daniel G. Sarte, Senior Advisor, Federal Reserve\nReserve Bank of Kansas City Bank of Richmond\nValerie S. Hinojosa, Section Chief, Division of Nitish Ranjan Sinha, Special Adviser to the Board,\nMonetary Affairs, Board Division of Board Members, Board\nMatteo Iacoviello,3 Senior Associate Director, Division Dafina Stewart, Special Adviser to the Board, Division\nof International Finance, Board of Board Members, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Clara Vega, Special Adviser to the Board, Division of\nBoard Members, Board Board Members, Board\nMichael T. Kiley, Deputy Director, Division of Jeffrey D. Walker,5 Associate Director, Division of\nFinancial Stability, Board Reserve Bank Operations and Payment Systems,\nBoard\nDon H. Kim,5 Senior Adviser, Division of Monetary\nAffairs, Board Min Wei, Special Adviser to the Board, Division of\nBoard Members, Board\nEdward S. Knotek II, Senior Vice President, Federal\nReserve Bank of Cleveland Jonathan Willis, Vice President, Federal Reserve Bank\nof Atlanta\nSpencer Krane, Senior Vice President, Federal Reserve\nBank of Chicago Donielle A. Winford, Information Manager, Division\nof Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial\nStability, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nPaul Lengermann, Assistant Director, Division of\nResearch and Statistics, Board Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nKurt F. Lewis, Special Adviser to the Board, Division\nof Board Members, Board Andrei Zlate, Group Manager, Division of Monetary\nAffairs, Board\nDan Li, Assistant Director, Division of Monetary\nAffairs, Board Developments in Financial Markets and Open\nMarket Operations\nLaura Lipscomb, Special Adviser to the Board,\nThe manager turned first to a review of developments in\nDivision of Board Members, Board\nfinancial markets over the intermeeting period. U.S. data\nZheng Liu, Vice President, Federal Reserve Bank of releases generally pointed to greater economic resilience\nSan Francisco than previously thought, and the reaction in market pricing implied both a higher expected trajectory for the polDavid López-Salido, Senior Associate Director,\nicy rate at longer horizons and higher term premiums. Division of Monetary Affairs, Board\nPolicy-sensitive rates rose moderately, and longer-dated\nJonathan P. McCarthy, Economic Research Advisor, forward rates displayed larger increases. Ten-year TreasFederal Reserve Bank of New York ury yields ended the period more than 40 basis points\nhigher, and broad measures of equity prices fell. Bank\nAnn E. Misback, Secretary, Office of the Secretary,\nequity prices underperformed over the period, but taking\nBoard\na somewhat longer view, investor sentiment toward the\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 1_9_–_2_0_, _2_0_2_3______________________P_a_g_e_ _3\nbanking sector appeared to have largely stabilized, with ued to decline over the intermeeting period, largely reless differentiation of equity price movements across flecting reduced participation by government and prime\nbank types. The dollar broadly appreciated against ad- money market funds even as these funds continued to\nvanced-economy currencies over the period, as stronger see inflows. Increased supply of money market instruU.S. data supported moderately increased yield differen- ments, especially Treasury bills, contributed to a slight\ntials against these economies amid perceptions that pol- increase in money market rates, which appeared to inicy rates were at or near their peaks. In China, signs of duce money funds to shift away from ON RRP toward\nstrain in the property sector increased, and optimism other instruments. However, the ON RRP facility conabout growth diminished further, on net, although tinued to provide an effective floor for the federal funds\nbroader markets, including global commodity markets, rate. With ON RRP balances falling more than Federal\ndid not appear to show elevated concern about China- Reserve assets, reserve balances grew over the period.\nrelated risks. U.S. financial conditions tightened, with At more than $3.3 trillion, reserves remained abundant.\nhigher longer-term rates, lower equity prices, and a In the September Survey of Primary Dealers, respondstronger dollar contributing roughly equally to the in- ents generally saw a lower path for ON RRP participacrease in various financial conditions indexes. tion and a higher path for reserves, compared with the\nJuly survey. In addressing the increase in nominal yields on longerrun Treasury securities over the intermeeting period, the By unanimous vote, the Committee ratified the Desk’s\nmanager noted that the rise in real yields exceeded that domestic transactions over the intermeeting period.\nof nominal yields over the period, implying a small de- There were no intervention operations in foreign currencline in inflation compensation. Inflation expectations cies for the System’s account during the intermeeting peappeared to remain very well anchored. Market partici- riod.\npants cited various factors for the rise in longer-term\nStaff Review of the Economic Situation\nnominal yields, including stronger-than-expected ecoThe data available at the time of the September 19–20\nnomic data, a possible increase in the neutral policy rate,\nmeeting suggested that real gross domestic product\ngreater economic and policy uncertainty, and larger-\n(GDP) was rising at a solid pace in the third quarter. The\nthan-expected borrowing by the Treasury.\nlabor market continued to be tight, with the unemployHousehold and corporate borrowing rates increased ment rate low and job gains slowing but remaining\nover the period, generally rising in line with Treasury strong. Consumer price inflation was still elevated.\nyields. Still, market participants noted that, with houseThe imbalance between labor demand and supply aphold and corporate borrowers having a limited need to\npeared to be easing. Total nonfarm payroll employment\nrefinance debt in the near term, it could take more time\nincreased at a slower pace over July and August than in\nfor past monetary policy actions to fully pass through to\nthe second quarter. The private-sector job openings rate\nthese sectors.\nand the quits rate, both measured by the Job Openings\nRegarding expectations for the September FOMC meet- and Labor Turnover Survey, moved down further\ning, the manager noted that responses to the Open Mar- through July. Over July and August, the unemployment\nket Desk’s Survey of Primary Dealers and Survey of rate edged up, on net, and stood at 3.8 percent in August,\nMarket Participants and market pricing all pointed to a and both the labor force participation rate (LFPR) and\nvirtual certainty of no change in the policy rate. In addi- the employment-to-population ratio rose slightly. The\ntion, modal expectations for the policy rate from the sur- unemployment rate for African Americans declined,\nveys were that the current target range would be main- while the jobless rate for Hispanics rose, and both rates\ntained until the May 2024 FOMC meeting, compared were still above the national average. The easing of labor\nwith March in the previous survey, with a roughly one- market imbalances was also evident in the recent wage\nin-three chance of a 25 basis point increase by the No- data, with the 12-month changes in average hourly earnvember FOMC meeting. For horizons beyond the mid- ings and the employment cost index, and the four-quardle of next year, the modal path from the surveys was ter change in business-sector compensation per hour all\nnotably lower than the market-implied path. lower than their year-earlier levels. The manager turned next to developments in money Consumer price inflation remained elevated but continmarkets and Desk operations. Usage of the overnight ued to show signs of slowing. The total price index for\nreverse repurchase agreement (ON RRP) facility contin- personal consumption expenditures (PCE) increased\n3.3 percent over the 12 months ending in July, and core\n\n_P _ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nPCE price inflation, which excludes changes in energy Staff Review of the Financial Situation\nprices and many consumer food prices, was 4.2 percent Over the intermeeting period, generally robust ecoover the same period; both total and core PCE price in- nomic data led to moderate increases in the marketflation were lower than a year earlier. The trimmed implied path of the federal funds rate and yields on\nmean measure of 12-month PCE price inflation con- shorter-term Treasury securities. Yields on mediumstructed by the Federal Reserve Bank of Dallas was and longer-term nominal Treasury securities rose more\n4.1 percent in July, down from its level earlier in the year. substantially, mainly reflecting higher term premiums\nIn August, the 12-month change in the consumer price and higher real yields. Stock prices declined somewhat,\nindex (CPI) was 3.7 percent, while core CPI inflation but spreads on investment- and speculative-grade corwas 4.3 percent over the same period, and both total and porate bonds were little changed. Financing conditions\ncore CPI inflation were well below their year-earlier lev- tightened somewhat, and borrowing costs increased\nels. Survey measures of consumers’ short-term inflation moderately.\nexpectations had moved down alongside actual inflation\nMarket participants pointed to a range of factors that\nbut remained above pre-pandemic levels. In contrast,\nmay have contributed to the increase in longer-term forsurvey measures of medium- to longer-term inflation exward rates, including higher term premiums and upward\npectations remained in the range seen in the decade berevisions to market views of the likely path of Treasury\nfore the pandemic.\ndebt over time. Real yields increased almost as much as\nAvailable indicators suggested that real GDP was ex- or a little more than nominal yields, leaving implied\npanding at a solid pace in the third quarter. Private do- measures of inflation compensation modestly changed.\nmestic final purchases—which includes PCE, residential The market-implied path for the federal funds rate in the\ninvestment, and business fixed investment (BFI) and of- near term was up slightly since the July FOMC meeting,\nten provides a better signal of underlying economic mo- and the expected path further out, implied by overnight\nmentum than does GDP—also looked to be rising sol- index swap contracts, rose moderately.\nidly, led by gains in both PCE and BFI. Broad equity price indexes declined somewhat, and the\nAfter falling in the second quarter, real goods exports one-month option-implied volatility on the S&P 500 inincreased in July, supported by higher exports of auto- dex edged up slightly, on net, and stood near the\nmotive products. Real goods imports also rose, as im- 25th percentile of its historical distribution.\nports of consumer goods and capital goods partially reConditions in domestic short-term funding markets recovered from their declines in recent months. The nommained stable over the intermeeting period. Both prime\ninal U.S. international trade deficit widened, as growth in\nand government money market funds experienced modimports of goods and services outpaced that of exports.\nerate inflows since the July FOMC meeting. Against a\nForeign economic growth slowed in the second quarter, backdrop of heavy issuance of Treasury bills and the\nas troubles in the property sector weighed on economic modest associated upward pressure on Treasury bill\nactivity in China and monetary policy restraint contrib- yields, take-up in the ON RRP facility continued to deuted to the slowing in economic growth in Europe. cline over the period and fell below $1.5 trillion late in\nAvailable data for the third quarter, such as purchasing the period.\nmanagers indexes and measures of business confidence,\nOver the intermeeting period, the dollar appreciated, as\npointed to a continued subdued pace of economic activU.S. economic data came in stronger than expected,\nity abroad.\nwhile foreign data suggested slowing economic growth\nForeign headline inflation continued to fall but remained abroad. Long-term yields in AFEs ended the period\nelevated. In several economies, though, energy prices higher, reflecting spillovers from higher U.S. yields and,\nturned up again. In the context of still-high core infla- to a lesser extent, the increase in Japanese yields followtion, some central banks in advanced foreign economies ing the decision by the Bank of Japan to effectively\n(AFEs) raised their policy rates, despite a slowdown in widen its target range for the 10-year Japanese yield.\neconomic activity, and indicated their intention to hold Global equity prices declined moderately, reflecting\nthese rates at sufficiently restrictive levels to bring infla- higher long-term yields and increased concerns about\ntion back to target rates. In contrast, central banks of the foreign economic outlook. Bond and equity funds\nemerging market economies largely remained on hold, focused on emerging markets saw moderate outflows.\nand some even began to cut rates amid easing inflationary pressures.\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 1_9_–_2_0_, _2_0_2_3______________________P_a_g_e_ _5\nIn domestic credit markets, borrowing rates for busi- up to the pandemic. The fraction of potential borrowers\nnesses, households, and municipalities increased moder- with a prime credit score expanded through the second\nately over the intermeeting period, mostly reflecting a quarter, moving further above its pre-pandemic level.\npass-through of higher yields on longer-maturity Treas- The trailing default rates for investment- and speculaury securities to those borrowing rates. Interest rates on tive-grade corporate bonds increased in July but renewly originated bank loans to businesses and house- mained at historically low levels. The trailing default rate\nholds increased over the second quarter, interest rates on for leveraged loans was little changed, on net, but downcredit card offers increased in July, and interest rates on grades of leveraged loans surpassed upgrades in July and\nauto loans increased in July and August. August. Bank credit conditions appeared to tighten somewhat In contrast to many other types of loans, the payment\nover the intermeeting period, but credit to businesses performance of home mortgages improved. Delinand households remained generally accessible. Com- quency rates of Federal Housing Administration and\nmercial and industrial loan balances contracted, but out- Department of Veterans Affairs loans in July were lower\nstanding commercial real estate (CRE) loans increased than levels seen earlier this year, and delinquency rates\nfrom July through late August, though at a slower pace of conventional loans remained at historical lows. Credit\nthan earlier in the year. Within the category of CRE quality was also strong for municipal borrowers.\nloans, nonfarm nonresidential loans contracted over the\nStaff Economic Outlook\nsummer for the first time since March 2022. Bank fundThe economic forecast prepared by the staff for the Seping conditions were generally stable. Core deposits detember FOMC meeting was stronger than the July proclined but were offset by inflows of large time deposits.\njection, as consumer and business spending appeared to\nCredit was available for most consumers. Credit card be more resilient to tight financial conditions than prebalances grew in the second quarter through late August. viously expected. The staff assumed that GDP growth\nFor residential real estate borrowers, credit availability for the rest of this year would be damped a bit by the\nwas little changed. Credit conditions for small busi- autoworkers’ strike, with these effects unwound by a\nnesses were also fairly stable. The PayNet Small Busi- small boost to GDP growth next year. The size and timness Lending Index indicated that loan originations ing of these effects were highly uncertain. In all, the staff\nedged up in July and stood above the median of its pre- projected that real GDP growth in 2024 through 2026\npandemic level. Credit was generally accessible through would be slower, on average, than this year and would\ncapital markets, although issuance was subdued. Issu- run below the staff’s estimate of potential output\nance of nonfinancial investment- and speculative-grade growth, restrained over the next couple of years by the\nbonds was muted in July but picked up modestly in Au- lagged effects of monetary policy actions. The unemgust, and issuance of municipal bonds was weak in July. ployment rate was projected to remain roughly flat\nNew issuance of leveraged loans was subdued in July, through 2026, as upward pressure from below-potential\nand issuance of agency and non-agency commercial output growth was offset by downward pressure from\nmortgage-backed securities (CMBS) was soft in July and further improvements in labor market functioning. August. Total and core PCE price inflation were forecast to be\nCredit quality deteriorated a little further across many around 3.5 percent at the end of this year, and inflation\nsectors in recent months but remained broadly solid. In was projected to move lower in coming years, as demand\nthe CRE sector, delinquency rates on nonfarm nonresi- and supply in product and labor markets continued to\ndential CRE bank loans rose over the second quarter, move into better alignment. Total and core PCE price\nwhile delinquency rates on construction, land develop- inflation were expected to be close to 2 percent in 2026.\nment, and multifamily loans were roughly unchanged. The staff continued to view the uncertainty around the\nDelinquency rates of loans in CMBS pools increased,\nbaseline projection as considerable. Risks around the indriven by the office and retail sectors. The office delinflation forecast were seen as skewed to the upside, given\nquency rate rose more than 2 percentage points since\nthe possibility that inflation could prove to be more perJanuary but remained below its pre-pandemic average.\nsistent than expected or that further adverse shocks to\nThe delinquency rate for small business loans ticked up\nsupply conditions might occur. Should these upside inin June and July. Delinquency rates for credit cards and\nflation risks materialize, the response of monetary policy\nauto loans increased further in the second quarter and\ncould, if coupled with an adverse reaction in financial\nstood a bit above their average levels in the years leading\n\n_P _ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nmarkets, tilt the risks around the forecast for economic was seen as generally strong, a few participants noted risactivity to the downside. ing delinquency rates on some types of consumer credit. A couple of participants also remarked that households\nParticipants’ Views on Current Conditions and the\nwere becoming increasingly price sensitive. Some parEconomic Outlook\nticipants noted that housing demand was resilient deIn conjunction with this FOMC meeting, participants\nspite higher interest rates; new home construction was\nsubmitted their projections of the most likely outcomes\nsolid, in part reflecting the limited inventory of homes\nfor real GDP growth, the unemployment rate, and inflaavailable for sale.\ntion for each year from 2023 through 2026 and over the\nlonger run. The projections were based on their individ- Regarding the business sector, participants noted that\nual assessments of appropriate monetary policy, includ- activity continued to be solid, though several pointed to\ning the path of the federal funds rate. The longer-run signs of softening conditions. Many participants noted\nprojections represented each participant’s assessment of improved business conditions from an increased ability\nthe rate to which each variable would be expected to to hire and retain workers, better-functioning supply\nconverge, over time, under appropriate monetary policy chains, or reduced input cost pressures. A few particiand in the absence of further shocks to the economy. A pants commented that their business contacts had reSummary of Economic Projections (SEP) was released ported difficulties passing on cost increases to customto the public following the conclusion of the meeting. ers. Several participants judged that, over coming quarters, business activity would be restrained by tighter fiRegarding the economic outlook, participants assessed\nnancial conditions, such as higher interest rates and\nthat real GDP had been expanding at a solid pace and\nmore constrained access to bank credit. Several particihad been more resilient than expected. Nevertheless,\npants noted, however, that the tightening of credit conparticipants also noted that they expected that real GDP\nditions resulting from the banking stresses earlier in the\ngrowth would slow in the near term. Participants judged\nyear was likely to be less severe than they previously exthat the current stance of monetary policy was restrictive\npected. A number of participants expressed concerns\nand that it broadly appeared to be restraining the econabout vulnerabilities in the CRE sector. Many particiomy as intended. Participants stressed that current inpants commented that they expected that the autoworkflation remained unacceptably high while acknowledging\ners’ strike would, in the near term, result in a slowdown\nthat it had moderated somewhat over the past year.\nin production of motor vehicles and parts and possibly\nThey also noted that further evidence would be required\nput upward pressure on automobile prices, but that these\nfor them to be confident that inflation was clearly on a\neffects would be temporary. With respect to the agriculpath to the Committee’s 2 percent objective. Particitural sector, a few participants noted that conditions\npants continued to view a period of below-trend growth\nwere mixed, as crop prices had declined amid higher proin real GDP and some softening in labor market condiduction estimates and as supply and demand imbalances\ntions as likely to be needed to bring aggregate demand\npushed up the prices of some types of livestock and held\nand aggregate supply into better balance and reduce indown the prices of others.\nflation pressures sufficiently to return inflation to 2 percent over time. Participants observed that the labor market was tight but\nthat supply and demand conditions were continuing to\nIn their discussion of the household sector, participants\ncome into better balance. Most participants remarked\nobserved that aggregate consumer spending had continthat a range of indicators of labor demand were easing—\nued to exhibit considerable strength, supported by the\nas could be seen by declines in job openings, a narrowing\nstrong labor market and by generally strong household\nof the jobs-to-workers gap, lower quits rates, and a rebalance sheets. However, many participants remarked\nduction in average weekly hours worked to levels at or\nthat the finances of some households were coming unbelow those seen before the pandemic. However, sevder pressure amid high inflation and declining savings\neral participants noted that labor markets remained very\nand that there had been an increasing reliance on credit\ntight in some sectors of the economy, such as healthto finance expenditures. In addition, tighter credit concare services and education. Many participants also obditions, waning fiscal support for families, and a resumpserved that measures of labor supply, especially the\ntion of student loan payments were viewed by several\nLFPR, had moved up. Some participants commented\nparticipants as having the potential to weigh on the\nthat the increase in the LFPR for women had been pargrowth of consumption. While household credit quality\nticularly notable, although they expressed concern that\nchallenges regarding the availability of childcare could\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 1_9_–_2_0_, _2_0_2_3______________________P_a_g_e_ _7\naffect the sustainability of this increase in participation. if the domestic banking sector experienced further\nSeveral participants noted that immigration had also strains; the possibility that the economic slowdown in\nbeen boosting labor supply. Some participants observed China could result in a drag on global economic growth;\nthat payroll growth remained strong but had slowed in or that an extended U.S. government shutdown could\nrecent months to a pace closer to that consistent with have negative, albeit temporary, consequences for\nmaintaining a constant unemployment rate over time. growth. Some participants remarked that an upside risk\nMost participants commented that the pace of nominal to their projections for economic activity was that the\nwage increases had moderated, and a few also mentioned unexpected resilience that the economy had demonthat the wage premium for job switchers had come strated so far could persist. Several participants comdown. They noted, however, that nominal wages were mented that a government shutdown might result in the\nstill rising at rates above levels generally assessed to be delayed release of some economic data and that this outconsistent with the sustained achievement of the Com- come would make it more difficult to assess economic\nmittee’s 2 percent inflation objective, given current esti- conditions. A few participants observed that there were\nmates of trend productivity growth. challenges in assessing the state of the economy because\nsome data continued to be volatile and subject to large\nParticipants noted that the data received over the past\nrevisions.\nseveral months generally suggested that inflation was\nslowing. Even with these favorable developments, they In their consideration of appropriate monetary policy acemphasized that further progress was needed to get in- tions at this meeting, participants concurred that ecoflation sustainably to 2 percent. Participants pointed to nomic activity had been expanding at a solid pace and\nthe softening of price inflation for goods amid improv- had been resilient. While the labor market remained\ning supply conditions and to declining housing services tight, job gains had slowed, and there were continuing\ninflation. Several participants remarked that, despite the signs that supply and demand in the labor market were\nrecent rise in energy prices, food and energy prices over coming into better balance. Participants also noted that\nthe past year had contributed to a decline in overall in- tighter credit conditions facing households and busiflation. However, participants also noted that significant nesses were a source of headwinds for the economy and\nprogress in reducing inflation had yet to become appar- would likely weigh on economic activity, hiring, and inent in the prices of core services excluding housing. Par- flation. However, the extent of these effects remained\nticipants noted that longer-term inflation expectations uncertain. Although inflation had moderated since the\nremained well anchored and that shorter-term inflation middle of last year, it remained well above the Commitexpectations had been moving down from elevated lev- tee’s longer-run goal of 2 percent, and participants reels. Participants observed that, notwithstanding recent mained resolute in their commitment to bring inflation\nfavorable developments, inflation remained well above down to the Committee’s 2 percent objective. Amid\nthe Committee’s 2 percent longer-run objective and that these economic conditions, and in consideration of the\nelevated inflation was continuing to harm businesses and significant cumulative tightening in the stance of monehouseholds—particularly low-income households. Par- tary policy and the lags with which policy affects ecoticipants stressed that they would need to see more data nomic activity and inflation, almost all participants\nindicating that inflation pressures were abating to be judged it appropriate to maintain the target range for the\nmore confident that inflation was on course to return to federal funds rate at 5¼ to 5½ percent at this meeting.\n2 percent over time. Participants judged that maintaining this restrictive\nstance of policy would support further progress toward\nParticipants generally noted there was still a high degree\nthe Committee’s goals while allowing the Committee\nof uncertainty surrounding the economic outlook. One\ntime to gather additional data to evaluate this progress.\nnew source of uncertainty was that associated with the\nAll participants agreed that it was appropriate to conautoworkers’ strike, and many participants observed that\ntinue the process of reducing the Federal Reserve’s sean intensification of the strike posed both an upside risk\ncurities holdings, as described in its previously anto inflation and a downside risk to activity. A majority\nnounced Plans for Reducing the Size of the Federal Reof participants pointed to upside risks to inflation from\nserve’s Balance Sheet.\nrising energy prices that could undo some of the recent\ndisinflation or to the risk that inflation would prove In discussing the policy outlook, participants continued\nmore persistent than expected. Various participants to judge that it was critical that the stance of monetary\nnoted downside risks to economic activity, including policy be kept sufficiently restrictive to return inflation\nthat credit conditions might tighten more than expected\n\n_P _ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nto the Committee’s 2 percent objective over time. A ma- the extent of additional policy firming that may be apjority of participants judged that one more increase in propriate.\nthe target federal funds rate at a future meeting would\nParticipants discussed several risk-management considlikely be appropriate, while some judged it likely that no\nerations that could bear on future policy decisions. Parfurther increases would be warranted. All participants\nticipants generally judged that, with the stance of moneagreed that the Committee was in a position to proceed\ntary policy in restrictive territory, risks to the achievecarefully and that policy decisions at every meeting\nment of the Committee’s goals had become more two\nwould continue to be based on the totality of incoming\nsided. But with inflation still well above the Committee’s\ninformation and its implications for the economic outlonger-run goal and the labor market remaining tight,\nlook as well as the balance of risks. Participants expected\nmost participants continued to see upside risks to inflathat the data arriving in coming months would help clartion. These risks included the imbalance of aggregate\nify the extent to which the disinflation process was condemand and supply persisting longer than expected, as\ntinuing and labor markets were reaching a better balance\nwell as risks emanating from global oil markets, the pobetween demand and supply. This information would\ntential for upside shocks to food prices, the effects of a\nbe valuable in determining the extent of additional policy\nstrong housing market on shelter inflation, and the pofirming that may be appropriate to return inflation to\ntential for more limited declines in goods prices. Many\n2 percent over time. Some participants also emphasized\nparticipants commented that even though economic acthe importance of continuing to communicate clearly to\ntivity had been resilient and the labor market had rethe public about the Committee’s data-dependent apmained strong, there continued to be downside risks to\nproach to policy and its firm commitment to bring inflaeconomic activity and upside risks to the unemployment\ntion down to 2 percent.\nrate. Such risks included larger-than-anticipated lagged\nAll participants agreed that policy should remain restric- macroeconomic effects from the tightening in financial\ntive for some time until the Committee is confident that conditions, the effect of labor union strikes, slowing\ninflation is moving down sustainably toward its objec- global growth, and continued weakness in the CRE sective. A few participants noted that the pace at which tor. Participants generally noted that it was important to\ninflation was returning to the Committee’s 2 percent balance the risk of overtightening against the risk of ingoal would influence their views of the sufficiently re- sufficient tightening.\nstrictive level of the policy rate and how long to keep\nCommittee Policy Actions\npolicy restrictive. Several participants commented that,\nIn their discussion of monetary policy for this meeting,\nwith the policy rate likely at or near its peak, the focus of\nmembers agreed that economic activity had been exmonetary policy decisions and communications should\npanding at a solid pace, and, accordingly, that the correshift from how high to raise the policy rate to how long\nsponding language in the postmeeting statement should\nto hold the policy rate at restrictive levels. A few particbe changed from “moderate” to “solid.” They also conipants noted that it would be important to monitor the\ncurred that job gains had slowed in recent months but\nreal federal funds rate in gauging the stance of monetary\nremained strong, and the unemployment rate had repolicy over time. Most participants observed that\nmained low. Inflation had remained elevated.\npostmeeting communications, including the SEP, would\nhelp clarify to the public how participants assessed the Members concurred that the U.S. banking system was\nlikely evolution of the stance of monetary policy. Par- sound and resilient. They also agreed that tighter credit\nticipants observed that the continuing process of reduc- conditions for households and businesses were likely to\ning the size of the Federal Reserve’s balance sheet was weigh on economic activity, hiring, and inflation but that\nan important part of the overall approach to achieving the extent of these effects was uncertain. Members also\ntheir macroeconomic objectives. Several participants concurred that they remained highly attentive to inflanoted that the process of balance sheet runoff could tion risks.\ncontinue for some time, even after the Committee beIn support of the Committee’s objectives to achieve\ngins to reduce the target range for the federal funds rate.\nmaximum employment and inflation at the rate of 2 perA vast majority of participants continued to judge the cent over the longer run, members agreed to maintain\nfuture path of the economy as highly uncertain. Many the target range for the federal funds rate at 5¼ to\nnoted data volatility and potential data revisions, or the 5½ percent. They also agreed that they would continue\ndifficulty of estimating the neutral policy rate, as sup- to assess additional information and its implications for\nporting the case for proceeding carefully in determining monetary policy. In determining the extent of additional\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 1_9_–_2_0_, _2_0_2_3______________________P_a_g_e_ _9\npolicy firming that may be appropriate to return inflation and Treasury bills to the extent that coupon\nto 2 percent over time, members concurred that they principal payments are less than the\nwould take into account the cumulative tightening of monthly cap.\nmonetary policy, the lags with which monetary policy af-\n Reinvest into agency mortgage-backed sefects economic activity and inflation, and economic and\ncurities (MBS) the amount of principal payfinancial developments. In addition, members agreed to\nments from the Federal Reserve’s holdings\ncontinue to reduce the Federal Reserve’s holdings of\nof agency debt and agency MBS received in\nTreasury securities and agency debt and mortgageeach calendar month that exceeds a cap of\nbacked securities, as described in its previously an-\n$35 billion per month.\nnounced plans. All members affirmed that they are\nstrongly committed to returning inflation to their 2 per-  Allow modest deviations from stated\ncent objective. amounts for reinvestments, if needed for\noperational reasons. Members agreed that, in assessing the appropriate stance\nof monetary policy, they would continue to monitor the  Engage in dollar roll and coupon swap\nimplications of incoming information for the economic transactions as necessary to facilitate settleoutlook. They would be prepared to adjust the stance of ment of the Federal Reserve’s agency MBS\nmonetary policy as appropriate if risks emerge that could transactions.”\nimpede the attainment of the Committee’s goals. MemThe vote also encompassed approval of the statement\nbers also agreed that their assessments will take into acbelow for release at 2:00 p.m.:\ncount a wide range of information, including readings on\nlabor market conditions, inflation pressures and inflation “Recent indicators suggest that economic activexpectations, and financial and international develop- ity has been expanding at a solid pace. Job gains\nments. have slowed in recent months but remain\nstrong, and the unemployment rate has reAt the conclusion of the discussion, the Committee\nmained low. Inflation remains elevated.\nvoted to direct the Federal Reserve Bank of New York,\nuntil instructed otherwise, to execute transactions in the The U.S. banking system is sound and resilient. System Open Market Account in accordance with the Tighter credit conditions for households and\nfollowing domestic policy directive, for release at businesses are likely to weigh on economic ac2:00 p.m.: tivity, hiring, and inflation. The extent of these\neffects remains uncertain. The Committee re-\n“Effective September 21, 2023, the Federal\nmains highly attentive to inflation risks. Open Market Committee directs the Desk to:\nThe Committee seeks to achieve maximum em-\n Undertake open market operations as necployment and inflation at the rate of 2 percent\nessary to maintain the federal funds rate in\nover the longer run. In support of these goals,\na target range of 5¼ to 5½ percent.\nthe Committee decided to maintain the target\n Conduct standing overnight repurchase range for the federal funds rate at 5¼ to\nagreement operations with a minimum bid 5½ percent. The Committee will continue to\nrate of 5.5 percent and with an aggregate assess additional information and its implicaoperation limit of $500 billion. tions for monetary policy. In determining the\nextent of additional policy firming that may be\n Conduct standing overnight reverse repurappropriate to return inflation to 2 percent over\nchase agreement operations at an offering\ntime, the Committee will take into account the\nrate of 5.3 percent and with a per-countercumulative tightening of monetary policy, the\nparty limit of $160 billion per day.\nlags with which monetary policy affects eco-\n Roll over at auction the amount of principal nomic activity and inflation, and economic and\npayments from the Federal Reserve’s hold- financial developments. In addition, the Comings of Treasury securities maturing in each mittee will continue reducing its holdings of\ncalendar month that exceeds a cap of Treasury securities and agency debt and agency\n$60 billion per month. Redeem Treasury mortgage-backed securities, as described in its\ncoupon securities up to this monthly cap previously announced plans. The Committee is\n\n_P _ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nstrongly committed to returning inflation to its voted unanimously to maintain the interest rate paid on\n2 percent objective. reserve balances at 5.4 percent, effective September 21, 2023. The Board of Governors of the Federal\nIn assessing the appropriate stance of monetary\nReserve System voted unanimously to approve the espolicy, the Committee will continue to monitor\ntablishment of the primary credit rate at the existing level\nthe implications of incoming information for\nof 5.5 percent, effective September 21, 2023.\nthe economic outlook. The Committee would\nbe prepared to adjust the stance of monetary It was agreed that the next meeting of the Committee\npolicy as appropriate if risks emerge that could would be held on Tuesday–Wednesday, October 31–\nimpede the attainment of the Committee’s November 1, 2023. The meeting adjourned at\ngoals. The Committee’s assessments will take 10:10 a.m. on September 20, 2023.\ninto account a wide range of information, inNotation Vote\ncluding readings on labor market conditions, inBy notation vote completed on August 15, 2023, the\nflation pressures and inflation expectations, and\nCommittee unanimously approved the minutes of the\nfinancial and international developments.”\nCommittee meeting held on July 25–26, 2023. Voting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman, Lisa D. Cook, Austan D. Goolsbee, Patrick Harker, Philip N. Jefferson, Neel Kashkari, Adriana D. Kugler, Lorie K.\n_______________________\nLogan, and Christopher J. Waller. Joshua Gallin\nVoting against this action: None. Secretary\nConsistent with the Committee’s decision to leave the\ntarget range for the federal funds rate unchanged, the\nBoard of Governors of the Federal Reserve System",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230920.pdf",
+    "action": "Maintained",
+    "rate": "5.25%-5.50%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that one more rate hike could be appropriate in the future, but emphasized a data-dependent approach, keeping policy restrictive until inflation sustainably moves toward the 2% target. Communication will now focus more on how long to hold rates at current levels rather than how much higher to go.",
+    "key_economic_factors": [
+      "The economy showed solid and resilient growth in the third quarter",
+      "Labor market remains tight but signs of easing—slower job gains, declining job openings, and rising unemployment slightly to 3.8%",
+      "Inflation remains elevated but is showing signs of slowing, particularly in goods and housing services",
+      "Credit conditions have tightened, which may weigh on future economic activity"
+    ],
+    "economic_outlook": "The Fed sees real GDP expanding at a solid pace, though growth is expected to slow in the coming quarters due to restrictive monetary policy and tighter credit conditions. The labor market remains strong but is gradually rebalancing, with supply and demand coming into better alignment. Inflation is still well above the 2% target, but the Fed expects further progress toward disinflation, assuming no further supply shocks.",
+    "market_impact": "Markets should expect rates to remain high for an extended period, supporting stronger dollar and higher yields on bonds. Businesses and consumers will face sustained borrowing costs, which may delay investment and big-ticket purchases. Equities may remain volatile as investors assess the risk of further tightening versus economic resilience."
+  },
+  {
+    "date": "2023-07-26",
+    "title": "FOMC Meeting 2023-07-26",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJuly 25–26, 2023\nA joint meeting of the Federal Open Market Committee Julie Ann Remache, Deputy Manager, System Open\nand the Board of Governors of the Federal Reserve Sys- Market Account\ntem was held in the offices of the Board of Governors\nDavid Altig, Executive Vice President, Federal Reserve\non Tuesday, July 25, 2023, at 10:00 a.m. and continued\nBank of Atlanta\non Wednesday, July 26, 2023, at 9:00 a.m.1\nPenelope A. Beattie,2 Section Chief, Office of the\nAttendance\nSecretary, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Brent Bundick, Senior Research and Policy Advisor,\nMichael S. Barr Federal Reserve Bank of Kansas City\nMichelle W. Bowman\nJuan C. Climent, Special Adviser to the Board, Division\nLisa D. Cook\nof Board Members, Board\nAustan D. Goolsbee\nPatrick Harker Stephanie E. Curcuru,3 Deputy Director, Division of\nPhilip N. Jefferson International Finance, Board\nNeel Kashkari\nRochelle M. Edge, Deputy Director, Division of\nLorie K. Logan\nMonetary Affairs, Board\nChristopher J. Waller\nMatthew J. Eichner,4 Director, Division of Reserve\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly,\nBank Operations and Payment Systems, Board\nand Loretta J. Mester, Alternate Members of the\nEric C. Engstrom, Associate Director, Division of\nCommittee\nMonetary Affairs and Division of Research and\nSusan M. Collins, President of the Federal Reserve\nStatistics, Board\nBank of Boston\nHuberto M. Ennis, Group Vice President, Federal\nKelly J. Dubbert and Kathleen O’Neill Paese, Interim\nReserve Bank of Richmond\nPresidents of the Federal Reserve Banks of Kansas\nErin E. Ferris, Principal Economist, Division of\nCity and St. Louis, respectively\nMonetary Affairs, Board\nJoshua Gallin, Secretary\nGlenn Follette, Associate Director, Division of\nBrian J. Bonis, Assistant Secretary\nResearch and Statistics, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Jennifer Gallagher, Assistant to the Board, Division of\nRichard Ostrander, Deputy General Counsel Board Members, Board\nTrevor A. Reeve, Economist\nPeter M. Garavuso, Senior Information Manager,\nStacey Tevlin, Economist\nDivision of Monetary Affairs, Board\nBeth Anne Wilson, Economist\nCarlos Garriga, Senior Vice President, Federal Reserve\nShaghil Ahmed, James A. Clouse, Eric M. Engen, Anna\nBank of St. Louis\nPaulson, Andrea Raffo, and William Wascher,\nAssociate Economists Michael S. Gibson, Director, Division of Supervision\nand Regulation, Board\nRoberto Perli, Manager, System Open Market Account\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of the economic and finan-\n“FOMC” and the “Committee” in these minutes; the Board cial situation and all of Wednesday’s session.\nof Governors of the Federal Reserve System is referenced as 3 Attended Tuesday’s session only.\nthe “Board” in these minutes. 4 Attended through the discussion of developments in financial markets and open market operations.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nChristine Graham,5 Special Adviser to the Board, Paolo A. Pesenti, Director of Monetary Policy\nDivision of Board Members, Board Research, Federal Reserve Bank of New York\nLuca Guerrieri, Associate Director, Division of Damjan Pfajar, Group Manager, Division of Monetary\nInternational Finance, Board Affairs, Board\nChristopher J. Gust, Associate Director, Division of Samuel Schulhofer-Wohl, Senior Vice President,\nMonetary Affairs, Board Federal Reserve Bank of Dallas\nValerie S. Hinojosa, Section Chief, Division of Donald Keith Sill, Senior Vice President, Federal\nMonetary Affairs, Board Reserve Bank of Philadelphia\nJane E. Ihrig, Special Adviser to the Board, Division of Nitish Ranjan Sinha, Special Adviser to the Board,\nBoard Members, Board Division of Board Members, Board\nCallum Jones, Senior Economist, Division of Monetary Dafina Stewart, Special Adviser to the Board, Division\nAffairs, Board of Board Members, Board\nMichael T. Kiley, Deputy Director, Division of Gustavo A. Suarez, Assistant Director, Division of\nFinancial Stability, Board Research and Statistics, Board\nDavid E. Lebow, Senior Associate Director, Division Brett Takacs, Senior Communications Analyst,\nof Research and Statistics, Board Division of Information Technology, Board\nSylvain Leduc, Director of Research, Federal Reserve Jenny Tang, Vice President, Federal Reserve Bank of\nBank of San Francisco Boston\nAndreas Lehnert, Director, Division of Financial Willem Van Zandweghe, Assistant Vice President,\nStability, Board Federal Reserve Bank of Cleveland\nKurt F. Lewis, Special Adviser to the Board, Division Annette Vissing-Jørgensen, Senior Adviser, Division of\nof Board Members, Board Monetary Affairs, Board\nDan Li, Assistant Director, Division of Monetary Jeffrey D. Walker,4 Associate Director, Division of\nAffairs, Board Reserve Bank Operations and Payment Systems,\nBoard\nLaura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nDavid López-Salido, Senior Associate Director,\nDivision of Monetary Affairs, Board Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nAnn E. Misback, Secretary, Office of the Secretary,\nBoard Developments in Financial Markets and Open\nMarket Operations\nJuan M. Morelli, Economist, Division of Monetary\nThe manager turned first to a review of developments in\nAffairs, Board\nfinancial markets over the intermeeting period. Market\nNorman J. Morin, Deputy Associate Director, Division participants interpreted data releases as generally\nof Research and Statistics, Board demonstrating economic resilience and a further easing\nof inflation pressures. The market-implied peak for the\nMichelle M. Neal, Head of Markets, Federal Reserve\nfederal funds rate rose in response to data pointing to a\nBank of New York\nrobust economy but retraced part of that move after the\nEdward Nelson, Senior Adviser, Division of Monetary June consumer price index (CPI) release was interpreted\nAffairs, Board by market participants as softer than anticipated. Even\nas market prices shifted to indicate a slightly more re5 Attended through the discussion of the economic and financial situation.\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_5_–_2_6_,_ 2_0_2_3_________________________P_a_g_e_ _3\nstrictive expected policy path, broader financial condi- decline in ON RRP balances for the period. A further\ntions eased a bit, reflecting in large part gains in equity decline in ON RRP balances was deemed probable amid\nprices and tighter credit spreads. Notably, share prices sustained projected Treasury bill issuance, further reducfor bank equity also appreciated over the intermeeting tions in the size of the Federal Reserve’s balance sheet\nperiod as concerns about the banking sector continued in accordance with the previously announced Plans for\nto dissipate. Spot and forward measures of inflation Reducing the Size of the Federal Reserve’s Balance\ncompensation based on Treasury Inflation-Protected Sheet, and a possible further reduction in policy uncerSecurities were little changed over the intermeeting pe- tainty that could incentivize money funds to extend the\nriod at levels broadly consistent with the Committee’s duration of their portfolios. In the July Desk Survey of\n2 percent longer-run goal, and longer-term survey- and Primary Dealers, respondents expected lower ON RRP\nmarket-based measures continued to point to inflation balances and higher bank reserves by the end of the year,\nexpectations being firmly anchored. Market-implied compared with the June survey.\npeak policy rates in most advanced foreign economies\nBy unanimous vote, the Committee ratified the Desk’s\n(AFEs) rose further this period, and the dollar deprecidomestic transactions over the intermeeting period.\nated modestly. There were no intervention operations in foreign currenRespondents to the Open Market Desk’s Survey of Pri- cies for the System’s account during the intermeeting pemary Dealers and Survey of Market Participants in July riod.\ncontinued to place significant probability of a recession\nStaff Review of the Economic Situation\noccurring by the end of 2024. However, the timing of a\nThe information available at the time of the July 25–26\nrecession expected by survey respondents was again\nmeeting suggested that real gross domestic product\npushed later, and the probability of avoiding a recession\n(GDP) rose at a moderate pace over the first half of the\nthrough 2024 grew noticeably. Survey respondents anyear. The labor market remained very tight, though the\nticipated that both headline and core personal consumpimbalance between demand and supply in the labor martion expenditures (PCE) inflation will decline to 2 perket was gradually diminishing. Consumer price inflacent by the end of 2025.\ntion—as measured by the 12-month percent change in\nThere was a strong anticipation, evident in both market- the price index for PCE—remained elevated in May, and\nbased measures and responses to the Desk’s surveys, available information suggested that inflation declined\nthat the Committee would raise the target range 25 basis but remained elevated in June.\npoints at the July FOMC meeting. Most survey respondIn the second quarter, total nonfarm payroll employents had a modal expectation that a July rate hike would\nment posted its slowest average monthly increase since\nbe the last of this tightening cycle, although most rethe recovery began in mid-2020, though payroll gains respondents also perceived that additional monetary polmained robust compared with those seen before the\nicy tightening after the July FOMC meeting was possible.\npandemic. Similarly, the private-sector job openings\nAs inferred from their responses, survey respondents exrate, as measured by the Job Openings and Labor Turnpected real rates to increase through the first half of 2024\nover Survey, fell in May to its lowest level since March\nand to remain above their expectations for the long-run\n2021 but remained well above pre-pandemic levels. The\nneutral levels for a few years.\nunemployment rate edged down to 3.6 percent in June,\nThe manager then turned to money market develop- while the labor force participation rate and the employments and policy implementation. The overnight re- ment-to-population ratio were both unchanged. The\nverse repurchase agreement (ON RRP) facility contin- unemployment rates for African Americans and Hispanued to work as intended over the intermeeting period ics, however, both rose and were well above the national\nand had been instrumental in providing an effective average. Average hourly earnings rose 4.4 percent over\nfloor under the federal funds rate and supporting other the 12 months ending in June, compared with a yearmoney market rates; those rates remained stable over the earlier increase of 5.4 percent.\nperiod. Following the suspension of the debt ceiling in\nConsumer price inflation continued to show signs of\nearly June, the Treasury Department issued securities,\neasing but remained elevated. Total PCE price inflation\nnotably Treasury bills, to replenish the Treasury General\nwas 3.8 percent over the 12 months ending in May, and\nAccount (TGA). The resulting greater availability of\ncore PCE price inflation, which excludes changes in enTreasury bills, which were priced at rates slightly above\nergy prices and many consumer food prices, was 4.6 perthe current and expected ON RRP rates, induced a net\ncent over the same period. The trimmed mean measure\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nof 12-month PCE price inflation constructed by the hold, and some indicated that a rate cut is possible at\nFederal Reserve Bank of Dallas was 4.6 percent in May. their next meeting. In June, the 12-month change in the CPI was 3.0 perStaff Review of the Financial Situation\ncent, while core CPI inflation was 4.8 percent over the\nOver the intermeeting period, market participants intersame period. Measures of short-term inflation expectapreted domestic economic data releases as indicating\ntions had moved down alongside actual inflation but recontinued resilience of economic activity and some easmained above pre-pandemic levels. In contrast,\ning of inflationary pressures, and they viewed monetary\nmeasures of medium- to longer-term inflation expectapolicy communications as pointing to somewhat more\ntions were in the range seen in the decade before the\nrestrictive policy than expected. The market-implied\npandemic.\npath for the federal funds rate rose modestly, and nomAvailable indicators suggested that real GDP rose in the inal Treasury yields increased somewhat at shorter masecond quarter at a pace similar to the one posted in the turities. Meanwhile, broad equity prices increased, and\nfirst quarter. However, private domestic final pur- spreads on investment- and speculative-grade corporate\nchases—which includes PCE, residential investment, bonds narrowed moderately. Financing conditions conand business fixed investment and which often provides tinued to be generally restrictive, and borrowing costs\na better signal of underlying economic momentum than remained elevated.\ndoes GDP—appeared to have decelerated in the second\nOver the intermeeting period, the market-implied path\nquarter. Manufacturing output rose in the second quarfor the federal funds rate rose modestly, while the timing\nter, supported by a robust increase in motor vehicle proof the path’s slightly higher peak moved a little later, to\nduction.\njust after the November meeting. Beyond this year, the\nAfter falling sharply in April, real exports of goods policy rate path implied by overnight index swap (OIS)\npicked up in May, led by higher exports of industrial sup- quotes ended the period modestly higher. Yields on\nplies and automotive products. Real goods imports fell, Treasury securities increased modestly at shorter maturas lower imports of consumer goods and industrial sup- ities but only a bit at longer maturities. Measures of inplies more than offset higher imports of capital goods. flation compensation rose only slightly for near-term\nThe nominal U.S. international trade deficit narrowed, as and longer maturities. Measures of uncertainty about\na sharp decline in nominal imports of goods and services the path of the policy rate derived from interest rate opoutpaced a decline in exports. The available data sug- tions remained very elevated by historical standards.\ngested that net exports subtracted from U.S. GDP\nBroad stock price indexes increased and spreads on ingrowth in the second quarter.\nvestment- and speculative-grade corporate bonds narIndicators of economic activity, such as purchasing man- rowed moderately over the intermeeting period. The\nagers indexes (PMIs), pointed to a step-down in the pace VIX—the one-month option-implied volatility on the\nof foreign growth in the second quarter, reflecting fading S&P 500—edged down and ended the period near the\nof the impetus from China’s reopening, continued ane- 25th percentile of its historical distribution. Bank equity\nmic growth in Europe, some weakening of activity in prices increased and outperformed the S&P 500 modCanada and Mexico, as well as weak external demand estly. Stock prices for the largest banks fully recovered\nand the slump in the high-tech industry weighing on from their declines in the immediate wake of the failure\nmany Asian economies. Incoming data also indicated of Silicon Valley Bank, while those for regional banks\nthat global manufacturing activity remained weak during remained below the levels seen in early March.\nthe intermeeting period. Short-term interest rates in the AFEs increased modForeign headline inflation continued to fall, reflecting, in estly, on net, over the intermeeting period as foreign cenpart, the pass-through of previous declines in commod- tral banks continued to raise policy rates and signal the\nity prices to retail energy and food prices. Core inflation potential for further tightening. Increases in yields were\nedged down in many countries but generally remained tempered, however, by downside surprises to both inflahigh. In this context, and amid tight labor market con- tion and PMIs from some economies. Risk sentiment in\nditions, many AFE central banks raised policy rates and foreign markets improved somewhat, with most foreign\nunderscored the need to raise rates further, or hold them equity indexes increasing and foreign corporate and\nat sufficiently restrictive levels, to bring inflation in their emerging market sovereign bond spreads narrowing.\ncountries back to their targets. In contrast, central banks The staff’s trade-weighted broad dollar index declined\nof emerging market economies largely remained on moderately, with the largest moves following releases of\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_5_–_2_6_,_ 2_0_2_3_________________________P_a_g_e_ _5\nweaker-than-expected U.S. labor market data and lower- May. Commercial and industrial (C&I) loan balances\nthan-expected U.S. inflation data. contracted modestly in the second quarter, and commercial real estate (CRE) loan growth on banks’ books conConditions in domestic short-term funding markets retinued to moderate.\nmained generally stable over the intermeeting period. Spreads in unsecured markets narrowed modestly amid In the July Senior Loan Officer Opinion Survey on Bank\nslight increases in OIS rates. Following the suspension Lending Practices (SLOOS), banks reported having\nof the debt limit, the Treasury Department partly replen- tightened standards and terms on C&I loans to firms of\nished the TGA via a large net increase in bill issuance. all sizes in the second quarter. The most cited reason\nAuctions of Treasury bills were met with robust demand, for tightening C&I standards and terms continued to be\nas shorter-term bill yields increased relative to other concerns about the economic outlook. Banks also remoney market rates. Money market funds increased ported expecting to tighten C&I standards further over\ntheir holdings of Treasury bills and reduced their invest- the remainder of the year.\nments with the ON RRP facility. ON RRP take-up deThe July SLOOS also indicated that standards across all\nclined notably—about $390 billion—over the intermeetCRE loan categories tightened further in the second\ning period, reflecting more attractive rates on some alquarter and that banks expected to tighten CRE standternatives to investing in the ON RRP facility. Despite\nards further over the second half of the year. Meanwhile,\nreduced ON RRP take-up, money funds maintained relCMBS issuance picked up a bit in May and then ticked\natively high asset allocations in overnight repurchase\ndown in June after recording low volumes earlier in the\nagreement investments amid still-elevated uncertainty\nyear.\nabout the future path of policy. Credit in the residential mortgage market remained\nIn domestic credit markets, borrowing costs for busibroadly available for high-credit-score borrowers who\nnesses, households, and municipalities were little\nmet standard conforming loan criteria. Only modest\nchanged over the intermeeting period and remained elenet percentages of banks in the July SLOOS reported\nvated by historical standards. Yields on agency commertightening standards for mortgage loans eligible to be\ncial mortgage-backed securities (CMBS) were little\npurchased by government-sponsored enterprises, while\nchanged.\na moderate net percentage of banks reported expecting\nThe banking sector’s ability to fund loans to businesses to tighten lending standards further for these loans over\nand consumers was generally stable during the inter- the second half of the year. Meanwhile, the availability\nmeeting period. Core deposit volumes at both large and of mortgage credit remained tighter for households with\nother domestic banks held steady at the levels that they lower credit scores, at levels close to those prevailing bereached in early May, after having declined sharply in fore the pandemic. Banks reported in the SLOOS that\nMarch and April amid the banking-sector turmoil. they had tightened standards for certain categories of\nBanks continued to attract inflows of large time depos- residential real estate loans to be held on their balance\nits, reflecting higher interest rates offered on new certif- sheets, such as jumbo loans and home equity lines of\nicates of deposit. Meanwhile, wholesale borrowing— credit. In addition, banks reported expecting to tighten\nwhich primarily consists of advances from Federal standards for jumbo loans during the remainder of 2023. Home Loan Banks, loans from the Bank Term Funding\nConditions remained generally accommodative in conProgram, and other credit extended by the Federal Resumer credit markets, with credit available for most borserve—had fallen since May by domestic banks of all\nrowers. Credit card balances increased in the second\nsizes, partially reversing the surge at the onset of the\nquarter, though at a somewhat slower pace than in prebank turmoil in March.\nvious months. In the July SLOOS, banks reported exCredit availability for businesses appeared to tighten pecting to continue tightening lending standards for\nsomewhat in recent months. Credit from capital mar- credit card loans.\nkets was somewhat subdued but overall remained accesOverall, the credit quality of most businesses and housesible for larger corporations. Issuance of leveraged loans\nholds remained solid. While there were signs of deteriremained limited, reflecting low levels of leveraged buyoration in credit quality in some sectors, such as the ofout and merger and acquisition activity as well as weak\nfice segment of CRE, delinquency rates generally reinvestor demand. In the municipal bond market, gross\nmained near their pre-pandemic lows. The credit quality\nissuance was solid in June, as both refundings and new\ncapital issuance picked up from a somewhat subdued\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nof C&I and CRE loans on banks’ balance sheets re- recession toward the end of the year. However, the staff\nmained sound as of the end of the first quarter of 2023. continued to expect that real GDP growth in 2024 and\nHowever, in the July SLOOS, banks frequently cited 2025 would run below their estimate of potential output\nconcerns about the credit quality of both CRE and other growth, leading to a small increase in the unemployment\nloans as reasons for expecting to tighten their lending rate relative to its current level.\nstandards over the remainder of the year. Aggregate deThe staff continued to project that total and core PCE\nlinquency rates on pools of commercial mortgages backprice inflation would move lower in coming years. Much\ning CMBS increased in May and June.\nof the step-down in core inflation was expected to occur\nThe staff provided an update on its assessment of the over the second half of 2023, with forward-looking indistability of the financial system and, on balance, charac- cators pointing to a slowing in the rate of increase of\nterized the financial vulnerabilities of the U.S. financial housing services prices and with core nonhousing sersystem as notable. The staff judged that asset valuation vices prices and core goods prices expected to decelerate\npressures remained notable. In particular, measures of over the remainder of 2023. Inflation was anticipated to\nvaluations in both residential and commercial property ease further over 2024 as demand–supply imbalances\nmarkets remained high relative to fundamentals. House continued to resolve; by 2025, total PCE price inflation\nprices, while having cooled earlier this year, started to was expected to be 2.2 percent, and core inflation was\nrise again, and price-to-rent ratios remained at elevated expected to be 2.3 percent.\nlevels and near those seen in the mid-2000s. Although\nThe staff continued to judge that the risks to the baseline\ncommercial property prices moved down, developments\nprojection for real activity were tilted to the downside.\nin the CRE sector following the pandemic may have proRisks to the staff’s baseline inflation forecast were seen\nduced a permanent shift away from traditional working\nas skewed to the upside, given the possibility that inflapatterns. If so, fundamentals in the sector could decline\ntion dynamics would prove to be more persistent than\nnotably and contribute to a deterioration in credit qualexpected or that further adverse shocks to supply condiity.\ntions might occur. Moreover, the additional monetary\nThe staff assessed that vulnerabilities associated with policy tightening that would be necessitated by higher or\nhousehold and nonfinancial business leverage remained more persistent inflation represented a downside risk to\nmoderate overall. Aggregate household debt growth re- the projection for real activity.\nmained in line with income growth. While nonfinancial\nParticipants’ Views on Current Conditions and the\nbusinesses remained highly leveraged and thus vulneraEconomic Outlook\nble to shocks, firms’ debt growth has been relatively subIn their discussion of current economic conditions, pardued recently, and their ability to service that debt has\nticipants noted that economic activity had been expandbeen quite high, even among lower-rated firms. Levering at a moderate pace. Job gains had been robust in\nage in the financial sector was characterized as notable.\nrecent months, and the unemployment rate remained\nIn the banking sector, regulatory risk-based capital ratios\nlow. Inflation remained elevated. Participants agreed\nshowed the system remained well capitalized. However,\nthat the U.S. banking system was sound and resilient.\nwhile the overall banking system retained ample lossThey commented that tighter credit conditions for\nbearing capacity, some banks experienced sizable dehouseholds and businesses were likely to weigh on ecoclines in the fair value of their assets as a consequence of\nnomic activity, hiring, and inflation. However, particirising interest rates. Vulnerabilities associated with\npants agreed that the extent of these effects remained\nfunding risks were also characterized as notable. Aluncertain. Against this background, the Committee rethough a small number of banks saw notable outflows\nmained highly attentive to inflation risks.\nof deposits late in the first quarter and early in the second\nquarter, deposit flows later stabilized. In assessing the economic outlook, participants noted\nthat real GDP growth had continued to exhibit resilience\nStaff Economic Outlook\nin the first half of the year and that the economy had\nThe economic forecast prepared by the staff for the July\nbeen showing considerable momentum. A gradual slowFOMC meeting was stronger than the June projection.\ndown in economic activity nevertheless appeared to be\nSince the emergence of stress in the banking sector in\nin progress, consistent with the restraint placed on demid-March, indicators of spending and real activity had\nmand by the cumulative tightening of monetary policy\ncome in stronger than anticipated; as a result, the staff\nsince early last year and the associated effects on finanno longer judged that the economy would enter a mild\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_5_–_2_6_,_ 2_0_2_3_________________________P_a_g_e_ _7\ncial conditions. Participants remarked on the uncer- judged that, over coming quarters, firms would reduce\ntainty about the lags in the effects of monetary policy on the pace of their investment spending and hiring in rethe economy and discussed the extent to which the ef- sponse to tight financial conditions and the slowing of\nfects on the economy stemming from the tightening that economic activity.\nthe Committee had undertaken had already materialized. Participants remarked that the labor market continued\nParticipants commented that monetary policy tightening\nto be very tight but pointed to signs that demand and\nappeared to be working broadly as intended and that a\nsupply were coming into better balance. They noted evcontinued gradual slowing in real GDP growth would\nidence that labor demand was easing—including dehelp reduce demand–supply imbalances in the economy.\nclines in job openings, lower quits rates, more part-time\nParticipants assessed that the ongoing tightening of\nwork, slower growth in hours worked, higher unemploycredit conditions in the banking sector, as evidenced in\nment insurance claims, and more moderate rates of\nthe most recent surveys of banks, also would likely weigh\nnominal wage growth. In addition, they remarked on\non economic activity in coming quarters. Participants\nindications of increasing labor supply, including a furnoted the recent reduction in total and core inflation\nther rise in the prime-age participation rate to a postrates. However, they stressed that inflation remained\npandemic high. Participants also observed, however,\nunacceptably high and that further evidence would be\nthat although growth in payrolls had slowed recently, it\nrequired for them to be confident that inflation was\ncontinued to exceed values consistent over time with an\nclearly on a path toward the Committee’s 2 percent obunchanged unemployment rate, and that nominal wages\njective. Participants continued to view a period of bewere still rising at rates above levels assessed to be conlow-trend growth in real GDP and some softening in lasistent with the sustained achievement of the Commitbor market conditions as needed to bring aggregate suptee’s 2 percent inflation objective. Participants judged\nply and aggregate demand into better balance and reduce\nthat further progress toward a balancing of demand and\ninflation pressures sufficiently to return inflation to\nsupply in the labor market was needed, and they ex2 percent over time.\npected that additional softening in labor market condiParticipants noted that consumer spending had recently tions would take place over time.\nexhibited considerable resilience, underpinned by, in agParticipants cited a number of tentative signs that inflagregate, strong household balance sheets, robust job and\ntion pressures could be abating. These signs included\nincome gains, a low unemployment rate, and rising consome softening in core goods prices, lower online prices,\nsumer confidence. Nevertheless, tight financial condievidence that firms were raising prices by smaller\ntions, primarily reflecting the cumulative effect of the\namounts than previously, slower increases in shelter\nCommittee’s shift to a restrictive policy stance, were exprices, and recent declines in survey estimates of shorterpected to contribute to slower growth in consumption\nterm inflation expectations and of inflation uncertainty.\nin the period ahead. Participants cited other factors that\nVarious participants discussed the continued stability of\nwere likely leading to, or appeared consistent with, a\nlonger-term inflation expectations at levels consistent\nslowdown in consumption, including the declining stock\nwith 2 percent inflation over time and the role that the\nof excess savings, softening labor market conditions, and\nCommittee’s policy tightening had played in delivering\nincreased price sensitivity on the part of customers.\nthis outcome. Nonetheless, several participants comSome participants observed that recent increases in\nmented that significant disinflationary pressures had yet\nhome prices suggested that the housing sector’s reto become apparent in the prices of core services excludsponse to monetary policy restraint may have peaked.\ning housing. In their discussion of the business sector, participants\nParticipants observed that, notwithstanding recent facited various improvements in firms’ cost structures.\nvorable developments, inflation remained well above the\nThese included better-functioning supply chains, lower\nCommittee’s 2 percent longer-term objective and that elinput costs, and an increased ability to hire and retain\nevated inflation was continuing to harm businesses and\nworkers. Participants also discussed conditions that\nhouseholds—low-income families in particular. Particicould lead to higher economic activity—such as leaner\npants stressed that the Committee would need to see\ninventories and reduced expectations of a sharp ecomore data on inflation and further signs that aggregate\nnomic slowdown—and factors that could lead to lower\ndemand and aggregate supply were moving into better\neconomic activity—such as continuing economic uncerbalance to be confident that inflation pressures were\ntainty, the vulnerabilities of the CRE market, and the ongoing weakness of manufacturing output. Participants\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nabating and that inflation was on course to return to economic activity, hiring, and inflation. However, the\n2 percent over time. extent of these effects remained uncertain. Although inflation had moderated since the middle of last year, it\nParticipants generally noted a high degree of uncertainty\nremained well above the Committee’s longer-run goal of\nregarding the cumulative effects on the economy of past\n2 percent, and participants remained resolute in their\nmonetary policy tightening. Participants cited upside\ncommitment to bring inflation down to the Committee’s\nrisks to inflation, including those associated with scenar2 percent objective. Amid these economic conditions,\nios in which recent supply chain improvements and faalmost all participants judged it appropriate to raise the\nvorable commodity price trends did not continue or in\ntarget range for the federal funds rate to 5¼ to 5½ perwhich aggregate demand failed to slow by an amount\ncent at this meeting. Participants noted that this action\nsufficient to restore price stability over time, possibly\nwould put the stance of monetary policy further into releading to more persistent elevated inflation or an unanstrictive territory, consistent with reducing demand–supchoring of inflation expectations. In discussing downply imbalances in the economy and helping to restore\nside risks to economic activity and inflation, participants\nprice stability. A couple of participants indicated that\nconsidered the possibility that the cumulative tightening\nthey favored leaving the target range for the federal\nof monetary policy could lead to a sharper slowdown in\nfunds rate unchanged or that they could have supported\nthe economy than expected, as well as the possibility that\nsuch a proposal. They judged that maintaining the curthe effects of the tightening of bank credit conditions\nrent degree of restrictiveness at this time would likely recould prove more substantial than anticipated.\nsult in further progress toward the Committee’s goals\nIn their discussion of financial stability, participants ob- while allowing the Committee time to further evaluate\nserved that the banking system was sound and resilient this progress. All participants agreed that it was approand that banking stress had calmed in recent months. priate to continue the process of reducing the Federal\nParticipants also noted that the most recent stress-test Reserve’s securities holdings, as described in its previresults indicated that large banks appeared to be well po- ously announced Plans for Reducing the Size of the Fedsitioned to withstand a severe recession. Various partic- eral Reserve’s Balance Sheet. A number of participants\nipants commented on risks that could affect some banks, noted that balance sheet runoff need not end when the\nincluding unrealized losses on assets resulting from ris- Committee eventually begins to reduce the target range\ning interest rates, significant reliance on uninsured de- for the federal funds rate.\nposits, and increased funding costs. Participants also\nIn discussing the policy outlook, participants continued\ncommented on risks associated with a potential sharp\nto judge that it was critical that the stance of monetary\ndecline in CRE valuations that could adversely affect\npolicy be sufficiently restrictive to return inflation to the\nsome banks and other financial institutions, such as inCommittee’s 2 percent objective over time. They noted\nsurance companies, that are heavily exposed to CRE.\nthat uncertainty about the economic outlook remained\nSeveral participants noted the susceptibility of some\nelevated and agreed that policy decisions at future meetnonbank financial institutions, such as money market\nings should depend on the totality of the incoming infunds or digital asset entities, to runs or instability. In\nformation and its implications for the economic outlook\naddition, several participants emphasized the need for\nand inflation as well as for the balance of risks. Particibanks to establish readiness to use Federal Reserve lipants expected that the data arriving in coming months\nquidity facilities and for the Federal Reserve to ensure its\nwould help clarify the extent to which the disinflation\nown readiness to provide liquidity during periods of\nprocess was continuing and product and labor markets\nstress.\nwere reaching a better balance between demand and supIn their consideration of appropriate monetary policy ac- ply. This information would be valuable in determining\ntions at this meeting, participants concurred that eco- the extent of additional policy firming that may be apnomic activity had been expanding at a moderate pace. propriate to return inflation to 2 percent over time. ParThe labor market remained very tight, with robust job ticipants also emphasized the importance of communigains in recent months and the unemployment rate still cating as clearly as possible about the Committee’s datalow, but there were continuing signs that supply and de- dependent approach to policy and its firm commitment\nmand in the labor market were coming into better bal- to bring inflation down to its 2 percent objective.\nance. Participants also noted that tighter credit condiParticipants discussed several risk-management considtions facing households and businesses were a source of\nerations that could bear on future policy decisions. With\nheadwinds for the economy and would likely weigh on\ninflation still well above the Committee’s longer-run goal\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_5_–_2_6_,_ 2_0_2_3_________________________P_a_g_e_ _9\nand the labor market remaining tight, most participants Members agreed that, in assessing the appropriate stance\ncontinued to see significant upside risks to inflation, of monetary policy, they would continue to monitor the\nwhich could require further tightening of monetary pol- implications of incoming information for the economic\nicy. Some participants commented that even though outlook. They would be prepared to adjust the stance of\neconomic activity had been resilient and the labor mar- monetary policy as appropriate if risks emerge that could\nket had remained strong, there continued to be down- impede the attainment of the Committee’s goals. Memside risks to economic activity and upside risks to the bers also agreed that their assessments will take into acunemployment rate; these included the possibility that count a wide range of information, including readings on\nthe macroeconomic effects of the tightening in financial labor market conditions, inflation pressures and inflation\nconditions since the beginning of last year could prove expectations, and financial and international developmore substantial than anticipated. A number of partici- ments.\npants judged that, with the stance of monetary policy in\nAt the conclusion of the discussion, the Committee\nrestrictive territory, risks to the achievement of the Comvoted to direct the Federal Reserve Bank of New York,\nmittee’s goals had become more two sided, and it was\nuntil instructed otherwise, to execute transactions in the\nimportant that the Committee’s decisions balance the\nSystem Open Market Account in accordance with the\nrisk of an inadvertent overtightening of policy against\nfollowing domestic policy directive, for release at\nthe cost of an insufficient tightening.\n2:00 p.m.:\nCommittee Policy Actions\n“Effective July 27, 2023, the Federal Open MarIn their discussion of monetary policy for this meeting,\nket Committee directs the Desk to:\nmembers agreed that economic activity had been expanding at a moderate pace. They also concurred that • Undertake open market operations as necjob gains had been robust in recent months, and the un- essary to maintain the federal funds rate in\nemployment rate had remained low. Inflation had re- a target range of 5¼ to 5½ percent.\nmained elevated.\n• Conduct standing overnight repurchase\nMembers concurred that the U.S. banking system was agreement operations with a minimum bid\nsound and resilient. They also agreed that tighter credit rate of 5.5 percent and with an aggregate\nconditions for households and businesses were likely to operation limit of $500 billion.\nweigh on economic activity, hiring, and inflation but that\n• Conduct standing overnight reverse repurthe extent of these effects was uncertain. Members also\nchase agreement operations at an offering\nconcurred that they remained highly attentive to inflarate of 5.3 percent and with a per-countertion risks.\nparty limit of $160 billion per day. In support of the Committee’s objectives to achieve\n• Roll over at auction the amount of principal\nmaximum employment and inflation at the rate of 2 perpayments from the Federal Reserve’s holdcent over the longer run, members agreed to raise the\nings of Treasury securities maturing in each\ntarget range for the federal funds rate to 5¼ to 5½ percalendar month that exceeds a cap of\ncent. They also agreed that they would continue to as-\n$60 billion per month. Redeem Treasury\nsess additional information and its implications for moncoupon securities up to this monthly cap\netary policy. In determining the extent of additional poland Treasury bills to the extent that coupon\nicy firming that may be appropriate to return inflation to\nprincipal payments are less than the\n2 percent over time, members concurred that they will\nmonthly cap.\ntake into account the cumulative tightening of monetary\npolicy, the lags with which monetary policy affects eco- • Reinvest into agency mortgage-backed senomic activity and inflation, and economic and financial curities (MBS) the amount of principal paydevelopments. In addition, members agreed to continue ments from the Federal Reserve’s holdings\nto reduce the Federal Reserve’s holdings of Treasury se- of agency debt and agency MBS received in\ncurities and agency debt and agency mortgage-backed each calendar month that exceeds a cap of\nsecurities, as described in its previously announced $35 billion per month.\nplans. All members affirmed that they are strongly committed to returning inflation to their 2 percent objective.\n• Allow modest deviations from stated\namounts for reinvestments, if needed for\noperational reasons.\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\n• Engage in dollar roll and coupon swap the implications of incoming information for\ntransactions as necessary to facilitate settle- the economic outlook. The Committee would\nment of the Federal Reserve’s agency MBS be prepared to adjust the stance of monetary\ntransactions.” policy as appropriate if risks emerge that could\nimpede the attainment of the Committee’s\nThe vote also encompassed approval of the statement\ngoals. The Committee’s assessments will take\nbelow for release at 2:00 p.m.:\ninto account a wide range of information, in-\n“Recent indicators suggest that economic activ- cluding readings on labor market conditions, inity has been expanding at a moderate pace. Job flation pressures and inflation expectations, and\ngains have been robust in recent months, and financial and international developments.”\nthe unemployment rate has remained low. InVoting for this action: Jerome H. Powell, John C.\nflation remains elevated. Williams, Michael S. Barr, Michelle W. Bowman, Lisa D. The U.S. banking system is sound and resilient. Cook, Austan D. Goolsbee, Patrick Harker, Philip N. Tighter credit conditions for households and Jefferson, Neel Kashkari, Lorie K. Logan, and\nbusinesses are likely to weigh on economic ac- Christopher J. Waller.\ntivity, hiring, and inflation. The extent of these\nVoting against this action: None.\neffects remains uncertain. The Committee remains highly attentive to inflation risks. To support the Committee’s decision to raise the target\nrange for the federal funds rate, the Board of Governors\nThe Committee seeks to achieve maximum emof the Federal Reserve System voted unanimously to\nployment and inflation at the rate of 2 percent\nraise the interest rate paid on reserve balances to 5.4 perover the longer run. In support of these goals,\ncent, effective July 27, 2023. The Board of Governors\nthe Committee decided to raise the target range\nof the Federal Reserve System voted unanimously to apfor the federal funds rate to 5¼ to 5½ percent.\nprove a ¼ percentage point increase in the primary\nThe Committee will continue to assess addicredit rate to 5.5 percent, effective July 27, 2023.6\ntional information and its implications for monetary policy. In determining the extent of addi- It was agreed that the next meeting of the Committee\ntional policy firming that may be appropriate to would be held on Tuesday–Wednesday, September 19–\nreturn inflation to 2 percent over time, the 20, 2023. The meeting adjourned at 10:05 a.m. on\nCommittee will take into account the cumula- July 26, 2023.\ntive tightening of monetary policy, the lags with\nNotation Vote\nwhich monetary policy affects economic activity\nBy notation vote completed on July 3, 2023, the Comand inflation, and economic and financial develmittee unanimously approved the minutes of the Comopments. In addition, the Committee will conmittee meeting held on June 13–14, 2023.\ntinue reducing its holdings of Treasury securities and agency debt and agency mortgagebacked securities, as described in its previously\nannounced plans. The Committee is strongly\ncommitted to returning inflation to its 2 percent _______________________\nobjective. Joshua Gallin\nSecretary\nIn assessing the appropriate stance of monetary\npolicy, the Committee will continue to monitor\n6 In taking this action, the Board approved requests to estab- effective on the later of July 27, 2023, or the date such Reserve\nlish that rate submitted by the Boards of Directors of the Fed- Banks inform the Secretary of the Board of such a request.\neral Reserve Banks of Boston, Philadelphia, Cleveland, Rich- (Secretary’s note: Subsequently, the Federal Reserve Banks of\nmond, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, New York and Atlanta were informed of the Board’s approval\nand San Francisco. The vote also encompassed approval by of their establishment of a primary credit rate of 5.5 percent,\nthe Board of Governors of the establishment of a 5.5 percent effective July 27, 2023.)\nprimary credit rate by the remaining Federal Reserve Banks,",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230726.pdf",
+    "action": "Raised",
+    "rate": "5.25%-5.50%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled that future rate decisions will depend on incoming data, with no commitment to further hikes. Officials emphasized they are prepared to adjust policy if risks emerge, but will remain restrictive until inflation sustainably moves toward 2%.",
+    "key_economic_factors": [
+      "Inflation remains elevated, though showing signs of moderating",
+      "Strong labor market with robust job gains and low unemployment",
+      "Tighter credit conditions weighing on economic activity",
+      "Resilient economic growth despite previous rate hikes"
+    ],
+    "economic_outlook": "The Fed sees economic activity expanding at a moderate pace, with inflation still well above its 2% target. While labor market conditions are gradually improving, with some signs of easing demand and supply balance, inflation needs further cooling. The staff expects real GDP growth to slow in 2024 and 2025, with inflation reaching 2.2%–2.3% by 2025.",
+    "market_impact": "Higher rates will increase borrowing costs for businesses and consumers, particularly for loans and mortgages. Financial markets may see continued volatility as investors assess whether this is the last hike in the cycle, with potential relief if inflation continues to ease."
+  },
+  {
+    "date": "2023-06-14",
+    "title": "FOMC Meeting 2023-06-14",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJune 13–14, 2023\nA joint meeting of the Federal Open Market Committee Julie Ann Remache, Deputy Manager, System Open\nand the Board of Governors of the Federal Reserve Sys- Market Account\ntem was held in the offices of the Board of Governors\nJose Acosta, Senior Communications Analyst, Division\non Tuesday, June 13, 2023, at 10:30 a.m. and continued\nof Information Technology, Board\non Wednesday, June 14, 2023, at 9:00 a.m.1\nGianni Amisano, Assistant Director, Division of\nAttendance\nResearch and Statistics, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Philippe Andrade, Senior Economist and Policy\nMichael S. Barr Advisor, Federal Reserve Bank of Boston\nMichelle W. Bowman\nAlyssa Arute,2 Manager, Division of Reserve Bank\nLisa D. Cook\nOperations and Payment Systems, Board\nAustan D. Goolsbee\nPatrick Harker Penelope A. Beattie,3 Section Chief, Office of the\nPhilip N. Jefferson Secretary, Board\nNeel Kashkari\nCarol C. Bertaut, Senior Adviser, Division of\nLorie K. Logan\nInternational Finance, Board\nChristopher J. Waller\nJennifer J. Burns, Deputy Director, Division of\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly,\nSupervision and Regulation, Board\nand Loretta J. Mester, Alternate Members of the\nMarco Cagetti, Assistant Director, Division of Research\nCommittee\nand Statistics, Board\nJames Bullard and Susan M. Collins, Presidents of the\nMark A. Carlson, Adviser, Division of Monetary\nFederal Reserve Banks of St. Louis and Boston,\nAffairs, Board\nrespectively\nJuan C. Climent, Special Adviser to the Board, Division\nKelly J. Dubbert, Interim President of the Federal\nof Board Members, Board\nReserve Bank of Kansas City\nDaniel M. Covitz, Deputy Director, Division of\nJoshua Gallin, Secretary\nResearch and Statistics, Board\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary Stephanie E. Curcuru, Deputy Director, Division of\nMichelle A. Smith, Assistant Secretary International Finance, Board\nMark E. Van Der Weide, General Counsel\nAhmet Degerli, Economist, Division of Monetary\nRichard Ostrander, Deputy General Counsel\nAffairs, Board\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist Cynthia L. Doniger, Principal Economist, Division of\nBeth Anne Wilson, Economist Monetary Affairs, Board\nRoc Armenter, James A. Clouse, Brian M. Doyle, Rochelle M. Edge, Deputy Director, Division of\nBeverly J. Hirtle, Andrea Raffo, Chiara Scotti, and Monetary Affairs, Board\nWilliam Wascher, Associate Economists\nJon Faust, Senior Special Adviser to the Chair, Division\nRoberto Perli, Manager, System Open Market Account of Board Members, Board\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 3 Attended through the discussion of the economic and finanthe “Board” in these minutes. cial situation and all of Wednesday’s session.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nErin E. Ferris, Principal Economist, Division of Michelle M. Neal, Head of Markets, Federal Reserve\nMonetary Affairs, Board Bank of New York\nJonas Fisher, Senior Vice President, Federal Reserve Edward Nelson, Senior Adviser, Division of Monetary\nBank of Chicago Affairs, Board\nGlenn Follette, Associate Director, Division of Nicolas Petrosky-Nadeau, Vice President, Federal\nResearch and Statistics, Board Reserve Bank of San Francisco\nJennifer Gallagher, Assistant to the Board, Division of Achilles Sangster II, Senior Information Manager,\nBoard Members, Board Division of Monetary Affairs, Board\nCarlos Garriga, Senior Vice President, Federal Reserve Zeynep Senyuz, Deputy Associate Director, Division\nBank of St. Louis of Monetary Affairs, Board\nDavid Glancy,4 Principal Economist, Division of Margie Shanks, Deputy Secretary, Office of the\nMonetary Affairs, Board Secretary, Board\nChristopher J. Gust, Associate Director, Division of Nitish Ranjan Sinha, Special Adviser to the Board,\nMonetary Affairs, Board Division of Board Members, Board\nValerie S. Hinojosa, Section Chief, Division of A. Lee Smith, Senior Vice President, Federal Reserve\nMonetary Affairs, Board Bank of Kansas City\nJane E. Ihrig, Special Adviser to the Board, Division of Hiroatsu Tanaka,5 Senior Economist, Division of\nBoard Members, Board Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Mary H. Tian, Group Manager, Division of Monetary\nFinancial Stability, Board Affairs, Board\nDon H. Kim,2 Senior Adviser, Division of Monetary Robert L. Triplett III, First Vice President, Federal\nAffairs, Board Reserve Bank of Dallas\nEdward S. Knotek II, Senior Vice President, Federal Clara Vega, Special Adviser to the Board, Division of\nReserve Bank of Cleveland Board Members, Board\nAndreas Lehnert, Director, Division of Financial Daniel J. Vine, Principal Economist, Division of\nStability, Board Research and Statistics, Board\nPaul Lengermann, Assistant Director, Division of Jeffrey D. Walker,2 Associate Director, Division of\nResearch and Statistics, Board Reserve Bank Operations and Payment Systems,\nBoard\nKurt F. Lewis, Special Adviser to the Board, Division\nof Board Members, Board Fabian Winkler, Principal Economist, Division of\nMonetary Affairs, Board\nGeng Li, Assistant Director, Division of Research and\nStatistics, Board Alexander L. Wolman, Vice President, Federal Reserve\nBank of Richmond\nLaura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nBrent Meyer, Assistant Vice President, Federal Reserve\nBank of Atlanta Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nBernardo C. Morais, Principal Economist, Division of\nInternational Finance, Board\n4 Attended Tuesday’s session only. 5 Attended from the discussion of the economic and financial\nsituation through the end of Tuesday’s session.\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_3_–_1_4,_ 2_0_2_3_________________________P_a_g_e_ _3\nDevelopments in Financial Markets and Open penditures (PCE) inflation in the second and third quarMarket Operations ters of this year, while projections for later quarters were\nThe manager turned first to a review of developments in little changed.\nfinancial markets. Policy-sensitive rates increased over\nThe manager then turned to money market developthe intermeeting period, reflecting indications of continments and policy implementation. The median respondued resilience in the economy, persistently elevated core\nent to the Desk surveys expected the three-month bill\ninflation, and reduced downside tail risks following the\nyield to increase slightly relative to the similar-maturity\nresolution of the debt limit. The shift in policy expectaovernight index swap (OIS) rate and to remain above it\ntions contributed significantly to higher Treasury yields.\ninto the fourth quarter. This expectation likely reflected\nThe increase in nominal yields primarily reflected higher\na combination of rising net supply of bills as part of the\nreal rates rather than inflation compensation. Broad eqTreasury Department’s plan to rebuild the Treasury\nuity prices rose, although the outperformance was conGeneral Account (TGA) following the resolution of the\ncentrated in a handful of companies with a large market\ndebt limit and expectations for healthy investor demand\ncapitalization. Cyclical sectors fared better than sectors\nfor bills. The overnight reverse repurchase agreement\nthat tend to appreciate in a downturn, suggesting some\n(ON RRP) facility, which continued to support effective\nreduced investor concern about downside risks to\npolicy implementation and control over the federal\ngrowth. Investor sentiment about the banking sector\nfunds rate, saw somewhat lower participation since the\nimproved as perceived tail risks regarding regional banks\nresolution of the debt limit, consistent with the historical\nappeared to have receded. Equity prices for regional\nexperience that ON RRP participation is typically rebanks rose over the intermeeting period but were still\nsponsive to changes in money market conditions. The\nwell below early March levels. Financial conditions inmedian respondent to the Desk’s Survey of Primary\ndexes were roughly unchanged, as higher rates and a\nDealers expected ON RRP participation to trend lower\nstronger dollar were offset by higher equity prices and\nover the rest of this year. The staff assessed that the\nnarrower credit spreads.\nreplenishment of the TGA and the ongoing balance\nThe vast majority of respondents to the Open Market sheet runoff, among other factors, were likely to subtract\nDesk’s Surveys of Primary Dealers and Market Partici- from reserves more than the decline in ON RRP particpants expected no rate change at this meeting. While the ipation would add to them. On net, the staff judged that\nmedian path from the surveys pointed to no rate changes reserves at the end of the year were likely to remain\nthrough early 2024, there was significant dispersion abundant. Uncertainty surrounding the outlooks for\nacross respondents, and respondents saw a clear proba- both reserves and ON RRP participation was substanbility of additional tightening at coming meetings. Re- tial.\nspondents’ average probability distribution for the level\nBy unanimous vote, the Committee ratified the Desk’s\nof the peak policy rate shifted higher since the May meetdomestic transactions over the intermeeting period.\ning and respondents on average assigned about 60 perThere were no intervention operations in foreign currencent probability to the peak being above the current tarcies for the System’s account during the intermeeting peget range. The market-implied path for the policy rate\nriod.\ncontinued to show some decline this year but less so\nthan it had in recent months. Measures of uncertainty Staff Review of the Economic Situation\nabout the path of the policy rate derived from options The information available at the time of the June 13–14\nremained very elevated, though they came down some meeting suggested that real gross domestic product\nover the intermeeting period. (GDP) was expanding at a modest pace in the second\nquarter. Labor market conditions remained tight in reDesk survey respondents still saw a recession occurring\ncent months, as job gains were robust and the unemin the near term as quite likely, but the expected timing\nployment rate was low. Consumer price inflation—as\nwas again pushed later, as economic data pointed to the\nmeasured by the 12-month percent change in the price\ncontinued resilience of economic activity. Overall, reindex for PCE—continued to be elevated in April.\nspondents generally continued to expect that any downturn would be neither deep nor prolonged. With regard Labor market conditions remained tight in April and\nto inflation expectations, respondents marked up their May. Total nonfarm payroll employment increased at a\nprojections for quarterly core personal consumption ex- robust pace during those two months. The unemployment rate edged up, on net, but was still at a low level of\n3.7 percent in May. On balance, the unemployment rate\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nfor African Americans moved up to 5.6 percent, while panding more slowly in the second quarter than its rothe jobless rate for Hispanics moved down to 4.0 per- bust first-quarter pace. For the first half as a whole,\ncent. In aggregate, the labor force participation rate held PDFP growth seemed to be more resilient than in the\nsteady in April and May, and the employment-to- second half of last year.\npopulation ratio ticked down. The private-sector job\nThe annual revisions to international trade statistics sugopenings rate in April—as measured by the Job Opengested that net exports contributed positively to U.S. real\nings and Labor Turnover Survey—was unchanged from\nGDP growth in the first quarter, with real exports reits relatively high first-quarter average, though it was\nbounding more strongly than real imports following\nlower than a year earlier.\ntheir fourth-quarter declines. In April, however, the\nRecent measures of nominal wage growth continued to nominal trade deficit widened notably, as nominal exbe elevated, although lower than their highs last year. ports decreased and nominal imports rose further. Over the 12 months ending in May, average hourly earnForeign economic growth rebounded in the first quarter,\nings for all employees increased 4.3 percent, below its\nreflecting in part the reopening of China’s economy\npeak of 5.9 percent early last year. Over the year ending\nfrom its COVID-19-related shutdowns and strong\nin the first quarter, compensation per hour in the busiservices-sector activity in other Asian countries, Canada,\nness sector increased 3.2 percent, down from 5.5 percent\nand Mexico. In the euro area, however, real GDP cona year earlier.\ntracted modestly for a second consecutive quarter amid\nConsumer price inflation remained elevated. Total PCE a pullback in consumer spending. Indicators pointed to\nprice inflation had eased since the middle of last year, a step-down in the pace of foreign economic growth in\nreflecting declines in consumer energy prices and soften- the second quarter, with the impetus from China’s reoing consumer food price inflation, but recent readings pening dissipating and global manufacturing activity refor core PCE price inflation—which excludes changes maining weak.\nin consumer energy prices and most consumer food\nGlobal prices for energy and agricultural commodities\nprices and usually provides a better signal about future\nwere little changed, on net, over the intermeeting period,\ninflation than the more volatile total inflation measure—\nwhile prices for metals fell further. Declines in retail enwere little changed. Total PCE price inflation was\nergy prices since the beginning of the year contributed\n4.4 percent over the 12 months ending in April, and core\nto a notable easing in headline consumer price inflation\nPCE price inflation was 4.7 percent—the same as the\nin the foreign economies. By contrast, core inflation had\n12-month percent change recorded in January. In May,\nyet to materially decline from its recent highs in many\nthe 12-month change in the consumer price index (CPI)\neconomies. In this context, and with tight labor market\nwas 4.0 percent, and core CPI inflation was 5.3 perconditions, foreign central banks underscored the need\ncent—only slightly below its January reading. The\nto raise policy rates further or hold them at sufficiently\ntrimmed mean measure of 12-month PCE price inflarestrictive levels to bring inflation back to their respection constructed by the Federal Reserve Bank of Dallas\ntive targets and be well positioned in case inflation failed\nwas 4.8 percent in April. Survey-based measures of\nto decline as expected.\nlonger-term inflation expectations in May from the University of Michigan Surveys of Consumers and the Fed- Staff Review of the Financial Situation\neral Reserve Bank of New York’s Survey of Consumer Over the intermeeting period, market participants apExpectations remained within the range of their values peared to interpret incoming data as signaling, on balreported in the decade before the pandemic; near-term ance, more resilience in economic activity than previmeasures of inflation expectations from these surveys ously assumed and viewed communications from\nmoved down in May and continued to be below their FOMC participants overall as pointing to a tighter path\npeaks seen last year. for policy than expected. As a result, Treasury yields and\nthe expected future path for the federal funds rate\nReal GDP appeared to be increasing modestly in the secshifted upward significantly. Meanwhile, broad equity\nond quarter following its stronger first-quarter gain. Priprices also increased notably. Financing conditions revate domestic final purchases (PDFP)—which includes\nmained moderately restrictive, but credit availability genPCE, residential investment, and business fixed investerally remained solid.\nment and often provides a better signal of underlying\neconomic momentum than GDP—looked to be ex- The expected path of the policy rate implied by market\nquotes moved up notably over the intermeeting period.\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_3_–_1_4,_ 2_0_2_3_________________________P_a_g_e_ _5\nA straight read of federal funds futures rates suggested In domestic credit markets, borrowing costs for busithat market participants expected that the federal funds nesses, households, and municipalities increased notably\nrate would be roughly flat over the course of the rest of over the intermeeting period. Interest rates on newly\nthis year. The year-end expected rate was about 70 basis originated bank loans to businesses and households in\npoints higher than the year-end expectation before the the first quarter rose further above their peaks from the\nMay FOMC meeting. Beyond this year, the policy rate previous tightening cycle, and yields on leveraged loans\npath implied by OIS quotes also moved up, to about also rose, reaching levels close to their peak at the onset\n3.7 percent by the end of 2024. Similarly, nominal of the pandemic. Rates also moved up on a broad array\nTreasury yields rose significantly. The rise in nominal of fixed-income securities, including investment- and\nyields mostly reflected an increase in real yields, as speculative-grade corporate bonds, municipal bonds,\nmeasures of inflation compensation were little changed, both agency and non-agency commercial mortgageon net, amid somewhat mixed news on inflation. backed securities (CMBS), and agency residential\nMeasures of uncertainty about the path of interest rates mortgage-backed securities. The increases in yields on\nremained very elevated by historical standards. these instruments over the intermeeting period were\ngenerally in line with, or less than, the changes in their\nThe S&P 500 stock price index increased sizably, on net,\nTreasury benchmarks. Small businesses and households\nover the intermeeting period, led by technology-related\nsaw continued increases in their borrowing costs. Rates\nstocks. The VIX—the one-month option-implied volaon 30-year conforming residential mortgages stepped\ntility on the S&P 500 index—edged down, on balance,\nup, broadly in line with increases in comparable-duration\nand ended the period near the 30th percentile of its hisTreasury yields. Interest rates on credit card offers contorical distribution. Bank equity price indexes moved up\ntinued to rise through April, and auto loan interest rates\nnotably, on net, over the intermeeting period. Stock\nmoved sideways during the intermeeting period. Both\nprices for large banks were only somewhat below their\ncredit card and auto loan interest rates stood at, or near,\nlevels before the failure of Silicon Valley Bank (SVB),\ntheir highest levels since the Global Financial Crisis.\nwhile those for regional banks remained below their levels in early March. Banks’ ability to fund loans to businesses and consumers\nappeared to have stabilized in recent weeks but remained\nMarket-based policy rate expectations rose notably in\nsomewhat strained relative to before the closure of SVB\nmost advanced foreign economies, as core inflation data\nin March. Although banks continued to experience outsurprised to the upside in some countries and central\nflows of core deposits, the pace of those outflows modbank communications were perceived as pointing to\nerated substantially relative to March, suggesting some\nmore restrictive policy than expected. Notwithstanding\neasing of bank funding pressures. Banks also continued\nthe rise in global yields, foreign equity prices, credit\nto attract inflows of large time deposits, reflecting higher\nspreads, and risk sentiment in foreign markets were little\ninterest rates on new certificates of deposit. Total bank\nchanged over the intermeeting period. The staff’s tradeassets were little changed, on net, over the intermeeting\nweighted broad dollar index was also little changed, on\nperiod.\nnet, but the exchange value of the dollar appreciated significantly against the Chinese renminbi amid increased In capital markets, funding had generally been resilient.\ninvestor concerns over China’s economic growth pro- Issuance of nonfinancial investment-grade corporate\nspects. bonds rose at a robust pace in May after slowing in April,\npartly due to the “earnings blackout” period. SpeculaConditions in overnight bank funding and repurchase\ntive-grade issuance increased in late April and in May but\nagreement markets remained generally stable over the inremained subdued by historical standards. Gross issutermeeting period. The 25 basis point increase in adminance of municipal bonds was solid in April and May.\nistered rates at the May FOMC meeting fully passed\nthrough to overnight money market rates. Spreads and Conditions in the leveraged loan and CMBS markets\nissuance volumes in unsecured short-term funding mar- were somewhat more strained. Leveraged loan issuance\nkets stayed within their typical ranges. In May, yields of remained subdued, reflecting weak investor demand\nTreasury bills maturing in June and thus potentially af- amid concerns over the credit worthiness of borrowers.\nfected by the federal debt limit rose sharply before Both agency and non-agency CMBS issuance volumes\nlargely retracing those increases after an agreement was were low in May relative to pre-pandemic levels. In adreached to suspend the debt limit. dition, for small businesses, credit availability continued\nto show signs of tightening.\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nCredit remained easily available in the residential mort- and further moderation in food price inflation, total ingage market for high credit score borrowers who met flation was projected to run below core inflation this year\nstandard conforming loan criteria. For borrowers with and the next. In 2025, both total and core PCE price\nlower scores, credit availability tightened slightly in April inflation were expected to be close to 2 percent.\nbut remained close to pre-pandemic levels. In consumer\nThe staff continued to judge that uncertainty around the\ncredit markets, conditions stayed generally accommodabaseline projection was considerable and still viewed the\ntive, with credit available for most borrowers.\nrisks as being influenced importantly by the potential\nThe credit quality of most businesses and households re- macroeconomic implications of banking-sector developmained solid, although market participants appeared to ments, which could end up being more, or less, negative\nexpect some deterioration in the coming quarters, which than assumed in the baseline. Given the continued\ncould weaken lender balance sheets and possibly weigh strength in labor market conditions and the resilience of\non credit availability. A measure of the May CMBS de- consumer spending, however, the staff saw the possibillinquency rate showed about a 50 basis point increase, ity of the economy continuing to grow slowly and avoiddriven by a sharp rise in the delinquency rate for office ing a downturn as almost as likely as the mild-recession\nbuildings. baseline. On balance, the staff saw the risks around the\nbaseline inflation forecast as tilted to the upside, as ecoStaff Economic Outlook\nnomic scenarios with higher inflation appeared more\nThe economic forecast prepared by the staff for the June\nlikely than scenarios with lower inflation and because inFOMC meeting continued to assume that the effects of\nflation could continue to be more persistent than exthe expected further tightening in bank credit condipected and inflation expectations could become unantions, amid already tight financial conditions, would lead\nchored after a long period of elevated inflation.\nto a mild recession starting later this year, followed by a\nmoderately paced recovery. Real GDP was projected to Participants’ Views on Current Conditions and the\ndecelerate in the current quarter and the next one before Economic Outlook\ndeclining modestly in both the fourth quarter of this year In conjunction with this FOMC meeting, participants\nand first quarter of next year. Real GDP growth over submitted their projections of the most likely outcomes\n2024 and 2025 was projected to be below the staff’s es- for real GDP growth, the unemployment rate, and inflatimate of potential output growth. The unemployment tion for each year from 2023 through 2025 and over the\nrate was forecast to increase this year, peak next year, longer run. The projections were based on their individand remain near that level through 2025. Current tight ual assessments of appropriate monetary policy, includresource utilization in both product and labor markets ing the path of the federal funds rate. The longer-run\nwas forecast to ease, with the level of real output moving projections represented each participant’s assessment of\nbelow the staff’s estimate of potential output in 2025 and the rate to which each variable would be expected to\nthe unemployment rate rising above the staff’s estimate converge, over time, under appropriate monetary policy\nof its natural rate at that time. and in the absence of further shocks to the economy. A\nSummary of Economic Projections (SEP) was released\nThe staff’s inflation forecast was little revised relative to\nto the public following the conclusion of the meeting.\nthe previous projection, and supply–demand imbalances\nin both goods markets and labor markets were still In their discussion of current economic conditions, parjudged to be easing only slowly. On a four-quarter ticipants noted that economic activity had continued to\nchange basis, total PCE price inflation was projected to expand at a modest pace. Nonetheless, job gains had\nbe 3.0 percent this year, with core inflation at 3.7 per- been robust in recent months, and the unemployment\ncent. Core goods inflation was forecast to move down rate had remained low. Inflation remained elevated.\nfurther this year and then remain subdued. Housing ser- Participants agreed that the U.S. banking system was\nvices inflation was considered to have about peaked and sound and resilient. They commented that tighter credit\nwas expected to move down over the rest of the year. conditions for households and businesses were likely to\nCore nonhousing services inflation was projected to weigh on economic activity, hiring, and inflation. Howslow gradually as nominal wage growth eased further. ever, participants agreed that the extent of these effects\nReflecting the effects of the easing in resource utilization remained uncertain. Against this background, particiover the projection, core inflation was forecast to slow pants concurred that they remained highly attentive to\nthrough next year but remain moderately above 2 per- inflation risks.\ncent. With expected declines in consumer energy prices\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_3_–_1_4,_ 2_0_2_3_________________________P_a_g_e_ _7\nIn assessing the economic outlook, most participants Regarding the business sector, various participants said\nnoted that real GDP growth had been resilient in recent that reports from their contacts were mixed, with some\nquarters. Participants generally judged that growth pointing to softening economic conditions and others\nwould be subdued over the remainder of this year. They indicating greater-than-expected strength. Many particassessed that the cumulative tightening of monetary pol- ipants noted that developments in the banking sector apicy over the past year had contributed significantly to peared to have had only a modest effect so far on credit\nmore restrictive financial conditions and lower demand availability for firms. Some participants remarked that\nin the most interest rate sensitive sectors of the econ- the effect of high interest rates on the housing sector apomy, especially housing and business investment. Par- peared to be bottoming out, with home sales, builder\nticipants also acknowledged uncertainty about the lags sentiment, and new construction all having improved a\nwith which monetary policy affects the economy and little since the start of the year.\ndiscussed the extent to which the full effects of moneIn their discussion of economic activity, several particitary tightening on the economy had been realized. While\npants pointed out that recent GDP readings had been\ntotal inflation had moderated over the past year, core instronger than expected earlier in the year, while gross\nflation had not shown a sustained easing since the begindomestic income (GDI) readings had been weak. Of\nning of the year. With inflation well above the Committhose who noted the discrepancy between GDP and\ntee’s longer-run 2 percent objective, participants exGDI, most suggested that economic momentum may\npected that a period of below-trend growth in real GDP\nnot be as strong as indicated by the GDP readings. In\nand some softening in labor market conditions would be\ndiscussing that possibility, a couple of these participants\nneeded to bring aggregate supply and aggregate demand\nalso cited the recent subdued growth in aggregate hours\ninto better balance and reduce inflationary pressures sufworked.\nficiently to return inflation to 2 percent over time. Participants noted that labor market conditions reParticipants generally noted that banking stresses had remained very tight, with robust payroll gains and the unceded and conditions in the banking sector were much\nemployment rate still near historically low levels. Nevimproved since early March. Participants generally conertheless, they noted some signs that supply and demand\ntinued to judge that a tightening in credit conditions\nin the labor market were coming into better balance,\nspurred by banking-sector stress earlier in the year would\nwith the prime-age labor force participation rate moving\nlikely weigh further on economic activity, but the extent\nup in recent months and further reductions in rates of\nremained uncertain. Several participants mentioned that\njob openings and quits, and declines in average weekly\ncredit conditions had not appeared to have tightened sighours. A couple of participants conveyed that they\nnificantly beyond what would be expected in response\nheard at a recent Fed Listens event that, in various parts\nto the monetary policy actions taken since early last year.\nof the country, the lack of affordable housing in the area\nSome participants judged that it was still too early to aswas preventing some lower-income workers from relosess with confidence the eventual effects of tighter bank\ncating to accept jobs. Similarly, a few participants noted\ncredit conditions on economic activity and noted that it\nthat their District contacts reported less difficulty in hirwould be important to monitor closely the potential efing and retaining workers, lower turnover rates, and\nfects of banking-sector developments on credit condisome layoffs. Some participants pointed out that payroll\ntions and economic activity.\ngains had remained robust but noted that some other\nIn their discussion of the household sector, participants measures of employment—such as those based on the\ngenerally noted that consumer spending so far this year Bureau of Labor Statistics’ household survey, the Quarhad been stronger than expected. Several participants terly Census of Employment and Wages, or the Board\nnoted that aggregate household wealth remained high, as staff’s measure of private employment using data from\nequity and home prices had not declined much from the payroll processing firm ADP—suggested that job\ntheir recent highs. A few participants mentioned that growth may have been weaker than indicated by payroll\nwhile, overall, the household sector still retained much employment. Participants anticipated that employment\nof the excess savings it had accumulated during the pan- growth would likely slow further, consistent with their\ndemic, there were signs that consumers were facing in- projections of below-trend economic growth. Particicreasingly tighter budget constraints, given high inflation pants noted that nominal wage growth had shown signs\nand, especially for low-income households, depleted sav- of easing but observed that it was still running at a pace\nings. that, given current estimates of trend productivity\ngrowth, was above what would be consistent over the\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nlonger run with the Committee’s 2 percent inflation ob- potentially contributing to a slowdown in economic acjective. Participants expected supply and demand con- tivity that reduces inflationary pressures.\nditions in the labor market to come into better balance\nIn their consideration of appropriate monetary policy acover time, easing pressures on wages and prices.\ntions at this meeting, participants concurred that while\nParticipants agreed that inflation was unacceptably high inflation had moderated since the middle of 2022, it reand noted that the data, including the CPI for May, indi- mained well above the Committee’s longer-run goal of\ncated that declines in inflation had been slower than they 2 percent. Economic activity had continued to expand\nhad expected. Participants observed that although core at a modest pace. The labor market remained very tight,\ngoods inflation had moderated since the middle of last with robust job gains in recent months and the unemyear, it had slowed less rapidly than expected in recent ployment rate still low, but there were some signs that\nmonths, despite data and reports from business contacts supply and demand in the labor market were coming\nindicating that supply chain constraints had continued to into better balance. The economy was facing headwinds\nease. Some participants noted the recent moderation in from tighter credit conditions, including higher interest\nhousing services inflation and expected this trend to rates, for households and businesses, which would likely\ncontinue. However, a few participants pointed to upside weigh on economic activity, hiring, and inflation, alrisks to the outlook for housing services inflation asso- though the extent of these effect remained uncertain.\nciated with near-record low inventories of homes for Against this backdrop, and in consideration of the sigsale, solid housing demand, and less-than-expected de- nificant cumulative tightening in the stance of monetary\nceleration recently in measures of rents for leases signed policy and the lags with which policy affects economic\nby new tenants. Additionally, some participants re- activity and inflation, almost all participants judged it apmarked that core nonhousing services inflation had propriate or acceptable to maintain the target range for\nshown few signs of slowing in the past few months. Sev- the federal funds rate at 5 to 5¼ percent at this meeting.\neral participants noted that longer-term measures of in- Most of these participants observed that leaving the tarflation expectations from surveys of households and get range unchanged at this meeting would allow them\nbusinesses remained well anchored. Participants empha- more time to assess the economy’s progress toward the\nsized that, with appropriate firming of monetary policy, Committee’s goals of maximum employment and price\nwell-anchored longer-term inflation expectations would stability. Some participants indicated that they favored\nsupport a return of inflation to the Committee’s 2 per- raising the target range for the federal funds rate 25 basis\ncent longer-run goal over time. points at this meeting or that they could have supported\nsuch a proposal. The participants favoring a 25 basis\nParticipants generally noted a high degree of uncertainty\npoint increase noted that the labor market remained very\nregarding the cumulative effects on the economy from\ntight, momentum in economic activity had been stronger\nboth already-enacted monetary policy tightening and the\nthan earlier anticipated, and there were few clear signs\npotential additional tightening in credit conditions stemthat inflation was on a path to return to the Committee’s\nming from recent banking-sector developments. Partic2 percent objective over time. All participants agreed\nipants noted that the full effects of monetary tightening\nthat it was appropriate to continue the process of reduchad likely yet to be observed, though several highlighted\ning the Federal Reserve’s securities holdings, as dethe possibility that much of the effect of past monetary\nscribed in its previously announced Plans for Reducing\npolicy tightening may have already been realized. Rethe Size of the Federal Reserve’s Balance Sheet.\ngarding downside risks to economic activity, participants\nnoted the possibility that the cumulative and rapid tight- In discussing the policy outlook, all participants continening of monetary policy would eventually affect eco- ued to anticipate that, with inflation still well above the\nnomic activity more than expected, and that the addi- Committee’s 2 percent goal and the labor market retional effects of the tightening of bank credit conditions maining very tight, maintaining a restrictive stance for\ncould prove more substantial than anticipated. Regard- monetary policy would be appropriate to achieve the\ning risks to inflation, with inflation remaining well above Committee’s objectives. Almost all participants noted\nthe Committee’s longer-run goal, some participants that in their economic projections that they judged that\nmentioned the possibility that longer-term inflation ex- additional increases in the target federal funds rate durpectations could become unanchored, particularly in ing 2023 would be appropriate. Most participants oblight of stronger-than-expected consumer demand and a served that uncertainty about the outlook for the econstill-tight labor market. Several participants cited the omy and inflation remained elevated and that additional\npossibility of delayed effects of tighter credit conditions\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_3_–_1_4,_ 2_0_2_3_________________________P_a_g_e_ _9\ninformation would be valuable for considering the ap- Committee Policy Actions\npropriate stance of monetary policy. Many also noted In their discussion of monetary policy for this meeting,\nthat, after rapidly tightening the stance of monetary pol- members agreed that economic activity had continued to\nicy last year, the Committee had slowed the pace of tight- expand at a modest pace. They also concurred that job\nening and that a further moderation in the pace of policy gains had been robust in recent months, and the unemfirming was appropriate in order to provide additional ployment rate had remained low. Inflation had remained\ntime to observe the effects of cumulative tightening and elevated.\nassess their implications for policy. Participants agreed\nMembers concurred that the U.S. banking system was\nthat their policy decisions at every meeting would consound and resilient. They also agreed that tighter credit\ntinue to be based on the totality of incoming information\nconditions for households and businesses were likely to\nand its implications for the economic outlook as well as\nweigh on economic activity, hiring, and inflation, but\nthe balance of risks. They also emphasized the imthat the extent of these effects was uncertain. Members\nportance of communicating to the public their dataalso concurred that they remained highly attentive to independent approach. Most participants observed that\nflation risks.\npostmeeting communications, including the SEP, would\nhelp clarify their assessment regarding the stance of Members agreed that the Committee seeks to achieve\nmonetary policy that is likely to be appropriate to bring maximum employment and inflation at the rate of 2 perinflation down to 2 percent over time. cent over the longer run. In support of these goals, the\nmembers agreed to maintain the target range for the fedParticipants also discussed several risk-management\neral funds rate at 5 to 5¼ percent. Members agreed that\nconsiderations that could bear on future policy deciholding the target range steady at this meeting allowed\nsions. Almost all participants stated that, with inflation\nthe Committee to assess additional information and its\nstill well above the Committee’s longer-run goal and the\nimplications for monetary policy. In determining the exlabor market remaining tight, upside risks to the inflation\ntent of additional policy firming that may be appropriate\noutlook or the possibility that persistently high inflation\nto return inflation to 2 percent over time, members conmight cause inflation expectations to become unancurred that they will take into account the cumulative\nchored remained key factors shaping the policy outlook.\ntightening of monetary policy, the lags with which monEven though economic activity had been resilient reetary policy affects economic activity and inflation, and\ncently and that the labor market remained strong, some\neconomic and financial developments. In addition,\nparticipants commented that there continued to be\nmembers agreed that the Committee will continue to redownside risks to economic growth and upside risks to\nduce the Federal Reserve’s holdings of Treasury securiunemployment. Despite the receding of the stresses in\nties and agency debt and agency mortgage-backed secuthe banking sector, some participants commented that it\nrities, as described in its previously announced plans. All\nwould be important to monitor whether developments\nmembers affirmed that they are strongly committed to\nin the banking sector lead to further tightening of credit\nreturning inflation to their 2 percent objective.\nconditions and weigh on economic activity. Some participants noted concerns about the potential risks stem- Members agreed that, in assessing the appropriate stance\nming from weakness in commercial real estate. of monetary policy, they would continue to monitor the\nimplications of incoming information for the economic\nA number of participants observed that the resolution\noutlook. They would be prepared to adjust the stance of\nof the federal government debt limit had removed one\nmonetary policy as appropriate if risks emerge that could\nsource of significant uncertainty for the economic outimpede the attainment of the Committee’s goals. Memlook. A few participants noted that there could be some\nbers also agreed that their assessments will take into acupward pressure on money market rates in the near term\ncount a wide range of information, including readings on\nas the Treasury issued more bills to meet expenditures\nlabor market conditions, inflation pressures and inflation\nand return the balance in the TGA to the Treasury’s preexpectations, and financial and international developferred level. Those participants observed that upward\nments.\npressure on money market rates relative to the rate offered on the ON RRP facility could lead to a decline in At the conclusion of the discussion, the Committee\nusage of the facility. voted to direct the Federal Reserve Bank of New York,\nuntil instructed otherwise, to execute transactions in the\nSystem Open Market Account in accordance with the\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nfollowing domestic policy directive, for release at businesses are likely to weigh on economic ac2:00 p.m.: tivity, hiring, and inflation. The extent of these\neffects remains uncertain. The Committee re-\n“Effective June 15, 2023, the Federal Open\nmains highly attentive to inflation risks. Market Committee directs the Desk to:\nThe Committee seeks to achieve maximum em-\n• Undertake open market operations as necployment and inflation at the rate of 2 percent\nessary to maintain the federal funds rate in\nover the longer run. In support of these goals,\na target range of 5 to 5¼ percent.\nthe Committee decided to maintain the target\n• Conduct standing overnight repurchase range for the federal funds rate at 5 to 5¼ peragreement operations with a minimum bid cent. Holding the target range steady at this\nrate of 5.25 percent and with an aggregate meeting allows the Committee to assess addioperation limit of $500 billion. tional information and its implications for monetary policy. In determining the extent of addi-\n• Conduct standing overnight reverse repurtional policy firming that may be appropriate to\nchase agreement operations at an offering\nreturn inflation to 2 percent over time, the\nrate of 5.05 percent and with a per-counterCommittee will take into account the cumulaparty limit of $160 billion per day.\ntive tightening of monetary policy, the lags with\n• Roll over at auction the amount of principal which monetary policy affects economic activity\npayments from the Federal Reserve’s hold- and inflation, and economic and financial develings of Treasury securities maturing in each opments. In addition, the Committee will concalendar month that exceeds a cap of tinue reducing its holdings of Treasury securi-\n$60 billion per month. Redeem Treasury ties and agency debt and agency mortgagecoupon securities up to this monthly cap backed securities, as described in its previously\nand Treasury bills to the extent that coupon announced plans. The Committee is strongly\nprincipal payments are less than the committed to returning inflation to its 2 percent\nmonthly cap. objective.\n• Reinvest into agency mortgage-backed se- In assessing the appropriate stance of monetary\ncurities (MBS) the amount of principal pay- policy, the Committee will continue to monitor\nments from the Federal Reserve’s holdings the implications of incoming information for\nof agency debt and agency MBS received in the economic outlook. The Committee would\neach calendar month that exceeds a cap of be prepared to adjust the stance of monetary\n$35 billion per month. policy as appropriate if risks emerge that could\nimpede the attainment of the Committee’s\n• Allow modest deviations from stated\ngoals. The Committee’s assessments will take\namounts for reinvestments, if needed for\ninto account a wide range of information, inoperational reasons.\ncluding readings on labor market conditions, in-\n• Engage in dollar roll and coupon swap flation pressures and inflation expectations, and\ntransactions as necessary to facilitate settle- financial and international developments.”\nment of the Federal Reserve’s agency MBS\nVoting for this action: Jerome H. Powell, John C.\ntransactions.”\nWilliams, Michael S. Barr, Michelle W. Bowman, Lisa D. The vote also encompassed approval of the statement Cook, Austan D. Goolsbee, Patrick Harker, Philip N.\nbelow for release at 2:00 p.m.: Jefferson, Neel Kashkari, Lorie K. Logan, and\nChristopher J. Waller.\n“Recent indicators suggest that economic activity has continued to expand at a modest pace. Voting against this action: None. Job gains have been robust in recent months,\nConsistent with the Committee’s decision to leave the\nand the unemployment rate has remained low.\ntarget range for the federal funds rate unchanged, the\nInflation remains elevated. Board voted unanimously to maintain the interest rate\nThe U.S. banking system is sound and resilient. paid on reserve balances at 5.15 percent, effective\nTighter credit conditions for households and June 15, 2023. The Board also voted unanimously to\n\n______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_3_–_1_4,_ 2_0_2_3________________________P__ag_e_ _1_1\napprove the establishment of the primary credit rate at\nthe existing level of 5.25 percent. It was agreed that the next meeting of the Committee\nwould be held on Tuesday–Wednesday, July 25–26,\n2023. The meeting adjourned at 10:20 a.m. on June 14,\n2023. Notation Vote\nBy notation vote completed on May 23, 2023, the Committee unanimously approved the minutes of the Committee meeting held on May 2–3, 2023.\n_______________________\nJoshua Gallin\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230614.pdf",
+    "action": "Maintained",
+    "rate": "5.00%-5.25%",
+    "magnitude": "No change",
+    "forward_guidance": "The Fed signaled that additional rate hikes in 2023 could be appropriate, as inflation remains well above target and the labor market is still tight. Holding rates steady at this meeting allows the Committee more time to assess incoming data before deciding on further tightening.",
+    "key_economic_factors": [
+      "Inflation remains elevated, particularly core inflation, which has shown few signs of sustained easing",
+      "Robust job gains and a tight labor market, with the unemployment rate at 3.7 percent",
+      "Recent banking sector stress has led to tighter credit conditions, which may weigh on economic activity",
+      "Economic growth has been modest but resilient, stronger than earlier expected"
+    ],
+    "economic_outlook": "The Fed sees economic activity expanding at a modest pace, with inflation still well above the 2% goal. Labor market conditions remain tight, though some signs suggest supply and demand are gradually balancing. The staff projects a mild recession later in the year, but recent data has increased uncertainty around that outlook, with risks to inflation judged as tilted to the upside.",
+    "market_impact": "Markets should expect a data-dependent path forward, with potential for further rate hikes if inflation does not cool. Businesses and consumers will continue to face high borrowing costs, while investors should remain prepared for volatility as the Fed balances inflation control against growth risks."
+  },
+  {
+    "date": "2023-05-03",
+    "title": "FOMC Meeting 2023-05-03",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nMay 2–3, 2023\nA joint meeting of the Federal Open Market Committee Julie Ann Remache, Deputy Manager, System Open\nand the Board of Governors of the Federal Reserve Sys- Market Account\ntem was held in the offices of the Board of Governors\nStephanie R. Aaronson,2 Senior Associate Director,\non Tuesday, May 2, 2023, at 10:00 a.m. and continued\nDivision of Research and Statistics, Board\non Wednesday, May 3, 2023, at 9:00 a.m.1\nJose Acosta, Senior Communications Analyst,\nAttendance\nDivision of Information Technology, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Andre Anderson, First Vice President, Federal Reserve\nMichael S. Barr Bank of Atlanta\nMichelle W. Bowman\nKartik B. Athreya, Executive Vice President, Federal\nLisa D. Cook\nReserve Bank of Richmond\nAustan D. Goolsbee\nPatrick Harker\nPenelope A. Beattie,2 Section Chief, Office of the\nPhilip N. Jefferson\nSecretary, Board\nNeel Kashkari\nLorie K. Logan Daniel O. Beltran, Deputy Associate Director,\nChristopher J. Waller Division of International Finance, Board\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly, Carol C. Bertaut, Senior Adviser, Division of\nLoretta J. Mester, and Sushmita Shukla, Alternate International Finance, Board\nMembers of the Committee\nMark A. Carlson,2 Adviser, Division of Monetary\nJames Bullard and Susan M. Collins, Presidents of the\nAffairs, Board\nFederal Reserve Banks of St. Louis and Boston,\nrespectively Michele Cavallo, Principal Economist, Division of\nMonetary Affairs, Board\nKelly J. Dubbert, Interim President of the Federal\nReserve Bank of Kansas City Juan C. Climent, Special Adviser to the Board,\nDivision of Board Members, Board\nJoshua Gallin, Secretary\nMatthew M. Luecke, Deputy Secretary Stephanie E. Curcuru, Deputy Director, Division of\nBrian J. Bonis, Assistant Secretary\nInternational Finance, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Ahmet Degerli, Economist, Division of Monetary\nRichard Ostrander, Deputy General Counsel Affairs, Board\nTrevor A. Reeve, Economist\nJohn C. Driscoll,2 Principal Economist, Division of\nStacey Tevlin, Economist\nResearch and Statistics, Board\nBeth Anne Wilson, Economist\nWendy E. Dunn,2 Adviser, Division of Research and\nShaghil Ahmed, James A. Clouse, Anna Paulson,\nStatistics, Board\nAndrea Raffo, Chiara Scotti, and William\nWascher, Associate Economists\nBurcu Duygan-Bump, Associate Director, Division of\nRoberto Perli, Manager, System Open Market Research and Statistics, Board\nAccount\nRochelle M. Edge, Deputy Director, Division of\nMonetary Affairs, Board\n1 The Federal Open Market Committee is referenced as the of Governors of the Federal Reserve System is referenced as\n“FOMC” and the “Committee” in these minutes; the Board the “Board” in these minutes.\n2 Attended Tuesday’s session only.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nMatthew J. Eichner,3 Director, Division of Reserve Andreas Lehnert, Director, Division of Financial\nBank Operations and Payment Systems, Board Stability, Board\nEric C. Engstrom, Associate Director, Division of Kurt F. Lewis, Special Adviser to the Board, Division\nMonetary Affairs, Board of Board Members, Board\nJon Faust, Senior Special Adviser to the Chair, Laura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Division of Board Members, Board\nGiovanni Favara, Assistant Director, Division of David López-Salido, Senior Associate Director,\nMonetary Affairs, Board Division of Monetary Affairs, Board\nGlenn Follette, Associate Director, Division of Kurt Lunsford, Senior Research Economist, Federal\nResearch and Statistics, Board Reserve Bank of Cleveland\nJennifer Gallagher, Assistant to the Board, Division of Patrick E. McCabe, Deputy Associate Director,\nBoard Members, Board Division of Research and Statistics, Board\nPeter M. Garavuso, Senior Information Manager, Davide Melcangi, Research Economist, Federal\nDivision of Monetary Affairs, Board Reserve Bank of New York\nCarlos Garriga, Senior Vice President, Federal Reserve Ann E. Misback, Secretary, Office of the Secretary,\nBank of St. Louis Board\nMichael S. Gibson, Director, Division of Supervision David Na, Lead Financial Institution and Policy\nand Regulation, Board Analyst, Division of Monetary Affairs, Board\nChristine Graham,2 Special Adviser to the Board, Makoto Nakajima, Vice President, Federal Reserve\nDivision of Board Members, Board Bank of Philadelphia\nJoseph W. Gruber, Executive Vice President, Federal Michelle M. Neal, Head of Markets, Federal Reserve\nReserve Bank of Kansas City Bank of New York\nValerie S. Hinojosa, Section Chief, Division of Giovanni Olivei, Senior Vice President, Federal\nMonetary Affairs, Board Reserve Bank of Boston\nJane E. Ihrig, Special Adviser to the Board, Division Michael G. Palumbo, Senior Associate Director,\nof Board Members, Board Division of Research and Statistics, Board\nGhada M. Ijam, System Chief Information Officer, Marcel A. Priebsch, Principal Economist, Division of\nFederal Reserve Bank of Richmond Monetary Affairs, Board\nMichael T. Kiley, Deputy Director, Division of Nitish Ranjan Sinha, Special Adviser to the Board,\nFinancial Stability, Board Division of Board Members, Board\nKyungmin Kim, Senior Economist, Division of John J. Stevens, Senior Associate Director, Division of\nMonetary Affairs, Board Research and Statistics, Board\nDavid E. Lebow, Senior Associate Director, Division Paula Tkac, Senior Vice President, Federal Reserve\nof Research and Statistics, Board Bank of Atlanta\nSylvain Leduc, Director of Research, Federal Reserve Clara Vega, Special Adviser to the Board, Division of\nBank of San Francisco Board Members, Board\n3 Attended through the discussion of developments in financial markets and open market operations.\n\n_______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _M_a_y_ _2–_3_,_ 2_0_2_3__________________________P_a_g_e_ _3\nAnnette Vissing-Jørgensen, Senior Adviser, Division Responses to the Open Market Desk’s Survey of Priof Monetary Affairs, Board mary Dealers and Survey of Market Participants suggest\nthat investors’ macroeconomic outlooks were little\nJeffrey D. Walker,3 Associate Director, Division of\nchanged from March despite ongoing focus on the imReserve Bank Operations and Payment Systems,\nplications of the expected tightening of credit. ReBoard spondents saw upside inflation risks, albeit less than in\nMarch. Min Wei,2 Senior Associate Director, Division of\nMonetary Affairs, Board Market participants broadly expected a 25 basis point\nrate increase at the May meeting and saw the resulting\nPaul R. Wood, Special Adviser to the Board, Division\nrate as the likely peak for the current tightening cycle.\nof Board Members, Board\nSurvey respondents assigned a much higher probability\nRebecca Zarutskie, Special Adviser to the Board, to the peak federal funds rate being between 5 and\nDivision of Board Members, Board 5.25 percent than they did in March. However, respondents still assigned a substantial probability that the\nDevelopments in Financial Markets and Open peak rate may turn out to be above 5.25 percent. ReMarket Operations spondents expected the peak rate to be maintained\nThe manager turned first to a review of developments through the January 2024 FOMC meeting.\nin financial markets. Asset prices were less volatile and\nRegarding the balance sheet and money markets, balfinancial market conditions eased somewhat over the\nance sheet runoff continued to proceed smoothly and\nintermeeting period as investor sentiment around the\novernight secured and unsecured rates continued to\nbanking system stabilized. On net, nominal Treasury\ntrade well within the target range for the federal funds\nyields declined, equities appreciated, credit spreads\nrate. Respondents to the Desk’s surveys generally extightened, and the trade-weighted value of the dollar depected that overnight reverse repurchase agreement\npreciated. Measures of implied volatility declined\n(ON RRP) balances will remain elevated in the near\nacross markets. Policy-sensitive rates, however, fluctuterm before declining later this year. The ON RRP faated a fair amount over the period, particularly in recility continued to support effective policy implementasponse to economic data but also because of market\ntion and control over the federal funds rate, providing\nperceptions of risk and liquidity conditions. Treasury\na strong floor for money market rates. Balances at the\nmarket liquidity improved somewhat over the period\nON RRP facility remained within their recent range, inbut remained challenged. Treasury cash and futures\ndicating that use of the facility was not an important\nmarkets continued to function in an orderly manner defactor driving outflows of deposits from the banking\nspite the lower-than-normal liquidity.\nsystem. Use of the ON RRP facility declined at times\nRegarding developments late in the intermeeting pe- over the intermeeting period in response to increases in\nriod, the closure and acquisition of First Republic Bank rates on overnight secured money market instruments\nwere seen as orderly, though investors remained fo- and on short-term Federal Home Loan Bank debt.\ncused on stresses in the banking sector. In addition, the\nThe Committee voted unanimously to renew the\nU.S. Treasury Department announced it may not be\nreciprocal currency arrangements with the Bank of\nable to fully satisfy the federal government’s obligations\nCanada and the Bank of Mexico; these arrangements\nas early as June 1 if the debt limit is not raised or susare associated with the Federal Reserve’s participation\npended, but that the actual date this event would occur\nin the North American Framework Agreement of 1994.\nmight come a number of weeks later. Yields on TreasIn addition, the Committee voted unanimously to\nury bills and coupon securities maturing in the first half\nrenew the dollar and foreign currency liquidity swap\nof June increased notably amid significant volatility.\narrangements with the Bank of Canada, the Bank of\nDeposit outflows from small and mid-sized banks England, the Bank of Japan, the European Central\nlargely stopped in late March and April. Although eq- Bank, and the Swiss National Bank. The votes to renew\nuity prices for regional banks fell further over the pe- the Federal Reserve’s participation in these standing\nriod, for the vast majority of banks these declines ap- arrangements occur annually at the April or May\npeared primarily to reflect expectations for lower prof- FOMC meeting.\nitability rather than solvency concerns. Market particiBy unanimous vote, the Committee ratified the Desk’s\npants remained alert to the possibility of another intendomestic transactions over the intermeeting period.\nsification of banking stress.\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nThere were no intervention operations in foreign measure of 12-month PCE price inflation constructed\ncurrencies for the System’s account during the by the Federal Reserve Bank of Dallas was 4.7 percent\nintermeeting period. in March. The latest survey-based measures of longerterm inflation expectations from the University of\nStaff Review of the Economic Situation\nMichigan Surveys of Consumers in April and the FedThe information available at the time of the\neral Reserve Bank of New York’s Survey of Consumer\nMay 2–3 meeting indicated that real gross domestic\nExpectations in March remained within the range of\nproduct (GDP) had expanded at a modest pace in the\ntheir values reported in recent months; near-term\nfirst quarter. Labor market conditions remained tight\nmeasures of inflation expectations from these surveys\nin March, as job gains were robust and the unemploymoved up but were still below their peaks seen last year.\nment rate was low. Consumer price inflation—as measured by the 12-month percent change in the price index Real GDP growth was modest in the first quarter, led\nfor personal consumption expenditures (PCE)—con- by an increase in PCE. Gains in consumer spending\ntinued to be elevated in March. Limited data were avail- picked up for the quarter as a whole, driven by a surge\nable on economic activity during the period after the in January that was followed by a small net decline over\nonset of banking-sector stress in mid-March, although February and March. Light motor vehicle sales, howseveral recent surveys—such as the Senior Loan Officer ever, picked up notably in April. Growth in business\nOpinion Survey on Bank Lending Practices (SLOOS) fixed investment slowed further in the first quarter, and\nin April, the National Federation of Independent Busi- new orders for nondefense capital goods excluding airness’s survey in March, and the Federal Reserve Bank craft continued to decline in March, pointing to weakof New York’s Survey of Consumer Expectations in ness in capital goods shipments in the near term. ResiMarch—indicated that bank credit conditions were dential investment declined further in the first quarter\ntightening further. but at a slower pace than last year. Net exports made a\nsmall positive contribution to GDP growth in the first\nThe pace of increases in total nonfarm payroll employquarter, as exports rebounded more strongly than imment slowed in March but was still robust, and the unports from their fourth-quarter declines. U.S. manufacemployment rate ticked down to 3.5 percent. The unturing output fell in March, and near-term indicators—\nemployment rate for African Americans fell to 5.0 persuch as national and regional indexes for new orders—\ncent, and the jobless rate for Hispanics dropped to\npointed to more softening in factory output in the com4.6 percent. The aggregate measures of both the labor\ning months.\nforce participation rate and the employment-to-population ratio edged up. The private-sector job openings Foreign economic activity rebounded in the first quarrate—as measured by the Job Openings and Labor ter, reflecting the reopening of China’s economy from\nTurnover Survey—moved down markedly during Feb- its COVID-19-related shutdowns, a pickup in the econruary and March but remained high. omies of Canada and Mexico, and the resilience of Europe’s economy to the energy price shock from Russia’s\nRecent measures of nominal wage growth continued to\nwar on Ukraine; a mild winter also helped reduce energy\nease from their peaks recorded last year but were still\ndemand in Europe. In contrast, economic growth elseelevated. Over the 12 months ending in March, average\nwhere in emerging Asia was weak in the first quarter\nhourly earnings for all employees rose 4.2 percent, well\nmainly due to a pronounced tech-cycle slowdown.\nbelow its peak of 5.9 percent a year earlier. Over the\nyear ending in March, the employment cost index (ECI) Oil prices edged down amid concerns about the global\nfor private-sector workers increased 4.8 percent, down economic outlook. A slowing of retail energy inflation\nfrom its peak of 5.5 percent over the year ending in June continued to contribute to an easing of headline conof last year. sumer price inflation in many advanced foreign economies (AFEs). Core inflation showed signs of easing in\nConsumer price inflation remained elevated in March\nsome foreign economies but remained persistently elebut continued to slow. Total PCE price inflation was\nvated amid tight labor markets. Accordingly, many for4.2 percent over the 12 months ending in March, and\neign central banks continued their monetary policy\ncore PCE price inflation—which excludes changes in\ntightening. That said, some central banks paused their\nconsumer energy prices and many consumer food\npolicy rate increases or altered their forward guidance\nprices—was 4.6 percent; the total inflation measure was\namid uncertainty about the global economic outlook\ndown markedly from its level in January, while the core\nmeasure was only slightly lower. The trimmed mean\n\n_______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _M_a_y_ _2–_3_,_ 2_0_2_3__________________________P_a_g_e_ _5\nand the recent banking-sector stress. Some also sig- AFE sovereign yields narrowed and global risk sentinaled a shift toward a more data-dependent approach ment improved. Outflows from funds dedicated to\nin future decisions. emerging markets slowed to near zero over the intermeeting period, while sovereign credit spreads for\nStaff Review of the Financial Situation\nemerging market economies were little changed on net. Market sentiment improved over the intermeeting period, with concerns about a sharp near-term decelera- U.S. markets for commercial paper (CP) and negotiable\ntion in economic activity appearing to recede as stress certificates of deposit (NCDs) stabilized over the interin the banking sector declined. The market-implied meeting period. Spreads for lower-rated nonfinancial\npath for the federal funds rate in 2023 increased mod- CP, which spiked following Silicon Valley Bank’s cloestly over the period. Broad equity price indexes in- sure, narrowed significantly. Outstanding levels of CP\ncreased, although equity prices of some regional banks and NCDs increased modestly over the intermeeting\nwere lower, and equity market volatility declined. Fi- period, while the share of short-maturity unsecured isnancing conditions continued to be restrictive, and bor- suance of CP and NCDs fell to normal levels, reflecting\nrowing costs remained elevated. a net easing of stress associated with regional banks. Over the intermeeting period, the market-implied path Conditions in overnight bank funding and repurchase\nfor the federal funds rate in 2023 rose modestly, par- agreement markets remained stable over the intermeettially unwinding the sharp decline observed in early ing period, and the increase of 25 basis points in the\nMarch due to the banking-sector stress. For 2024 and Federal Reserve’s administered rates following the\n2025, the implied policy path based on overnight index March FOMC meeting fully passed through to overswaps fluctuated amid mixed economic data releases, night money market rates. The effective federal funds\nand declined slightly on net. Yields on nominal Treas- rate printed at 4.83 percent every day during the period,\nury securities with maturities greater than one year while the Secured Overnight Financing Rate averaged\nmoved lower, and inflation compensation at medium- 4.81 percent—slightly above the offering rate at the\nand long-term horizons edged down slightly. Measures ON RRP facility. Daily take-up in the ON RRP facility\nof uncertainty about the path of interest rates declined remained elevated, reflecting continued significant usmodestly but remained substantially elevated by histor- age by money market mutual funds, ongoing uncerical standards. tainty around the policy path, and limited supply of alternative investments such as Treasury bills. Broad stock price indexes increased moderately, and the\nVIX—the one-month option-implied volatility on the In domestic credit markets, borrowing costs for busiS&P 500—decreased notably over the intermeeting pe- nesses and households eased modestly in some markets\nriod. However, market participants remained attentive but remained at elevated levels. Over the intermeeting\nto developments at regional banks. Equity prices at period, yields on corporate bonds declined moderately,\nsuch banks broadly declined over the intermeeting pe- and yields on agency residential mortgage-backed securiod in part because of higher funding costs, as well as rities and 30-year conforming residential mortgage rates\nconcerns about profitability and a possible deterioration moved a little lower. However, interest rates on shortin the performance of commercial real estate (CRE) term small business loans continued to rise through\nloans. March and reached their highest levels since the Global\nFinancial Crisis. Risk sentiment in foreign financial markets also improved, on net, over the intermeeting period amid re- Credit flows for businesses and households slowed\nduced investor concerns about the banking sector, lead- moderately, as high borrowing costs and market volatiling to moderate increases in broad equity indexes and ity amid stress in the banking sector appeared to weigh\ndeclines in option-implied measures of equity volatility. on financing volumes in some markets. While issuance\nThat said, equity prices for euro-area banks declined of nonfinancial corporate bonds and leveraged loans\nsomewhat, on net, and remained significantly lower slowed notably in mid-March amid stress in the banking\nthan their levels before the onset of banking stresses in sector, issuance normalized over the intermeeting peearly March. Market expectations of policy rates and riod as that stress abated later in the month and broader\nsovereign yields were little changed in most AFEs but market sentiment rebounded. In April, speculativerose notably in the U.K., in part because of higher-than- grade nonfinancial bond issuance was solid, while inexpected wage and inflation data. The dollar continued vestment-grade nonfinancial bond issuance was subits earlier depreciation as differentials between U.S. and\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ndued, in part due to seasonal factors. Growth in com- C&I and CRE loans on banks’ balance sheets remained\nmercial and industrial (C&I) loans on banks’ books was sound as of the end of the fourth quarter of last year.\nweak in the first quarter of 2023 relative to its pace in However, in the April SLOOS, banks frequently cited\n2022. concerns about a deterioration in the quality of their\nloan portfolios as a reason for expecting to tighten\nIn the April SLOOS, banks reported further tightening\nstandards over the remainder of the year.\nof standards for most loan categories over the past\nthree months, following widespread tightening in pre- The staff provided an update on its assessment of the\nvious quarters. Banks of all sizes expected their lending stability of the financial system. The staff judged that\nstandards to tighten further for the rest of 2023. The the banking system was sound and resilient despite conmost cited reason for tightening C&I standards and cerns about profitability at some banks. The staff\nterms was a less favorable or more uncertain economic judged that asset valuation pressures remained moderoutlook. Mid-sized banks—those that have total con- ate. In particular, the staff noted that the equity risk\nsolidated assets in the range of $50 billion to $250 bil- premium and corporate bond spreads declined over the\nlion—tightened C&I standards more than other banks past few months but remained near historical medians.\nand additionally reported that a deterioration in their Valuations in both residential and commercial property\ncurrent or expected liquidity position was an important markets remained elevated. Rising borrowing costs had\nreason for their tightening. Such banks account for a contributed to a moderation of price pressures in housbit over one-fourth of C&I lending. Banks of all sizes ing markets, and year-over-year house price increases\nexpected to tighten C&I standards further over the re- had decelerated. The staff noted that the CRE sector\nmainder of the year, with small and mid-sized banks remained vulnerable to large price declines. This possimore widely reporting this expectation. bility seemed particularly salient for office and downtown retail properties given the shift toward telework in\nAlthough CRE loan growth on banks’ balance sheets\nmany industries. The staff also noted analysis that\nremained robust in the first quarter, the April SLOOS\nfound that while losses to CRE debt holders could be\nindicated that loan standards across all CRE loan catemoderate in aggregate, some banks and the CMBS margories tightened further in the first quarter. The reket could experience stress should prices of these propported tightening in standards over the first quarter was\nerties decline significantly.\nparticularly widespread for mid-sized banks. Banks also\nreported that they expected to tighten CRE standards The staff assessed that vulnerabilities associated with\nfurther over the remainder of the year, with mid-sized household leverage remained at moderate levels. For\nbanks very broadly reporting this expectation. Mean- nonfinancial businesses, debt relative to nominal GDP\nwhile, commercial mortgage-backed securities (CMBS) declined some but continued to be near a historically\nissuance was very slow in February and March, amid high level. The ability of nonfinancial firms to service\nhigher spreads and volatility as well as tighter lending their debt kept pace with rising debt loads and interest\nstandards. rates. Credit remained broadly available in the residential In terms of financial-sector leverage, going into the pemortgage market for high-credit-score borrowers who riod of recent bank stress, banks of all sizes appeared\nmet standard conforming loan criteria, but credit avail- strong, with substantial loss-absorbing capacity as\nability for households with lower credit scores remained measured by regulatory capital ratios well above levels\ntight. In the April SLOOS, the net percentages of that prevailed before the Great Recession. However,\nbanks reporting tighter standards for all consumer loan the ratio of tangible common equity to total tangible ascategories during the first quarter were elevated relative sets at banks—excluding global systemically important\nto their historical range, and respondents expected that banks—had fallen sharply in recent quarters, partly bestandards would continue to tighten over the remainder cause of a substantial drop in the value of securities held\nof 2023. Even so, consumer loans grew at a robust pace in their portfolios. The majority of the banking system\nin the first quarter, with a continued strong expansion had been able to effectively manage this interest rate\nin revolving credit balances. risk exposure. However, the failure of three banks resulting from poor interest rate risk and liquidity risk\nOverall, the credit quality of most businesses and\nmanagement had put stress on some additional banks.\nhouseholds remained solid but deteriorated somewhat\nFor the nonbank sector, leverage at large hedge funds\nfor businesses with lower credit ratings and for houseremained somewhat elevated in the third quarter of\nholds with lower credit scores. The credit quality of\n\n_______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _M_a_y_ _2–_3_,_ 2_0_2_3__________________________P_a_g_e_ _7\n2022, and more recent data from the Senior Credit Of- core inflation was forecast to slow through next year\nficer Opinion Survey on Dealer Financing Terms sug- but remain moderately above 2 percent. With expected\ngested this fact had not changed. declines in consumer energy prices and a substantial\nmoderation in food price inflation, total inflation was\nWith regard to vulnerabilities associated with funding\nprojected to run below core inflation this year and next.\nrisks, the staff assessed that although funding strains\nIn 2025, both total and core PCE price inflation were\nhad been notable for some banks, such strains remained\nexpected to be at about 2 percent.\nlow for the banking system as a whole, especially in light\nof official interventions by the Federal Reserve, the The staff continued to judge that uncertainty around\nFederal Deposit Insurance Corporation, and the U.S. the baseline projection was considerable and still\nDepartment of Treasury to support bank depositors. viewed risks as being determined importantly by the imOutflows of funds from bank deposits in mid-March, plications for macroeconomic conditions of developwhich were concentrated at a limited number of banks, ments in the banking sector. If banking-sector stress\nhad slowed. were to abate more quickly or have less of an effect on\nmacroeconomic conditions than assumed in the baseStaff Economic Outlook\nline, then the risks would be tilted to the upside for ecoThe economic forecast prepared by the staff for the\nnomic activity and inflation, a scenario that the staff\nMay FOMC meeting continued to assume that the efviewed as only a little less likely than the baseline. If\nfects of the expected further tightening in bank credit\nbanking and financial conditions and their effects on\nconditions, amid already tight financial conditions,\nmacroeconomic conditions were to deteriorate more\nwould lead to a mild recession starting later this year,\nthan assumed in the baseline, then the risks around the\nfollowed by a moderately paced recovery. Real GDP\nbaseline would be skewed to the downside for ecowas projected to decelerate over the next two quarters\nnomic activity and inflation. On balance, the staff saw\nbefore declining modestly in both the fourth quarter of\nthe risks around the baseline inflation forecast as tilted\nthis year and the first quarter of next year. Real GDP\nto the upside, as an upside economic scenario with\ngrowth over 2024 and 2025 was projected to be below\nhigher inflation appeared more likely than a downside\nthe staff’s estimate of potential output growth. The unscenario with lower inflation, and because inflation\nemployment rate was forecast to increase this year, to\ncould continue to be more persistent than expected and\npeak next year, and then to start declining gradually in\ninflation expectations could become unanchored after\n2025. Resource utilization in both product and labor\na long period of elevated inflation.\nmarkets was forecast to loosen, with the level of real\noutput moving below the staff’s estimate of potential Participants’ Views on Current Conditions and the\noutput in early 2024 and the unemployment rate rising Economic Outlook\nabove the staff’s estimate of its natural rate at that time. In their discussion of current economic conditions, participants noted that economic activity had expanded at\nThe staff’s core inflation forecast was revised up a little\na modest pace in the first quarter. Nonetheless, job\nrelative to the previous projection. Recent data for core\ngains had been robust in recent months, and the unemPCE goods prices and the ECI measure of wage\nployment rate had remained low. Inflation remained\ngrowth—the latter of which importantly influences the\nelevated. Participants agreed that the U.S. banking sysstaff’s projection of core nonhousing services inflatem was sound and resilient. They commented that\ntion—came in above expectations, and the staff judged\ntighter credit conditions for households and businesses\nthat supply–demand imbalances in both goods markets\nwere likely to weigh on economic activity, hiring, and\nand labor markets were easing a bit more slowly than\ninflation. However, participants agreed that the extent\nanticipated. On a four-quarter change basis, total PCE\nof these effects remained uncertain. Against this backprice inflation was projected to be 3.1 percent this year,\nground, participants concurred that they remained\nwith core inflation at 3.8 percent. Core goods inflation\nhighly attentive to inflation risks.\nwas projected to move down further this year and then\nremain subdued, housing services inflation was ex- In assessing the economic outlook, participants noted\npected to have about peaked in the first quarter and to that the growth rate of real GDP in the first quarter of\nmove down over the rest of the year, and core nonhous- this year was modest despite a pickup in consumer\ning services inflation was forecast to slow gradually as spending, as inventory investment—a volatile catenominal wage growth eased further. Reflecting the pro- gory—declined substantially. Participants generally exjected effects of less tightness in resource utilization, pected real GDP to grow at a pace below its longer-run\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ntrend rate in 2023, reflecting the effects of restrictive conditions over the past year. Participants remarked\nfinancial conditions. Participants assessed that the cu- that higher interest rates would continue to restrain inmulative tightening of monetary policy over the past terest-sensitive expenditures by households, such as\nyear had contributed significantly to more restrictive fi- those on housing and durable goods. Participants also\nnancial conditions. They also judged that banking-sec- noted that the rise in uncertainty associated with recent\ntor stress would likely weigh further on economic activ- developments in the banking sector could weigh on\nity, but the extent to which that would be the case re- consumer sentiment and spending. However, several\nmained highly uncertain. With inflation well above the participants observed that high-frequency measures of\nCommittee’s longer-run 2 percent objective, and core consumer sentiment had not yet shown significant\ninflation showing only some signs of moderation, par- changes following the banking-sector developments. A\nticipants expected that a period of below-trend growth few participants remarked that there had been some onin real GDP and some softening in labor market condi- going reduction in consumers’ discretionary expenditions would be needed to bring aggregate supply and tures in the face of elevated inflation and higher boraggregate demand into better balance and reduce infla- rowing rates, especially among lower- and middle-intionary pressures over time. come households; some of those declines were reportedly driven by shifts in purchases toward lower-cost opParticipants generally noted that the actions taken by\ntions.\nthe Federal Reserve and other government agencies in\nresponse to developments in the banking sector had Regarding the business sector, participants observed\nbeen effective in largely reducing stress. They noted that growth in business fixed investment was subdued\nthat conditions in the banking sector had broadly im- in the first quarter, reflecting relatively high borrowing\nproved since early March, with the initial deposit out- costs, weak growth of business-sector output, and busiflows experienced by some regional and smaller banks nesses’ increasing concerns about the general economic\nmoderating substantially over subsequent weeks. Many outlook. Participants expected the tightening of bank\nparticipants commented that the recent developments lending standards to weigh further on firms’ capital exin the banking sector had contributed to some tighten- penditures. Several participants noted that, based on\ning of lending standards beyond that which had oc- reports from their District contacts, concerns related to\ncurred during previous quarters, especially among small banking-sector stress could add more uncertainty to an\nand mid-sized banks. Some participants noted that already soft economic outlook, increasing firms’ causmall businesses tend to rely on small and mid-sized tion, especially at smaller and mid-sized firms that rely\nbanks as primary sources of credit and therefore may heavily on bank credit to finance their operations.\ndisproportionally bear the effects of tighter lending However, some other participants mentioned that deconditions. Some participants mentioned that access to velopments in the banking sector appeared to have had\ncredit had not yet appeared to have declined signifi- only a modest effect so far on credit availability for\ncantly since the recent onset of stress in the banking firms.\nsector. Participants judged that stress in the banking\nParticipants noted that the labor market remained very\nsector would, in coming quarters, likely induce banks to\ntight, with robust payroll gains in March and an unemtighten lending standards by more than they would have\nployment rate near historically low levels. Nevertheless,\nin response to higher interest rates alone. However,\nthey noted some signs that the imbalance of supply and\nparticipants generally noted that it was too early to asdemand in the labor market was easing, with prime-age\nsess with confidence the magnitude and persistence of\nlabor force participation returning to its pre-pandemic\nthese effects on economic activity.\nlevel and further reductions in the rates of job openings\nIn their discussion of the household sector, participants and quits. In addition, some participants noted that\nnoted that consumer spending showed strength in the their District contacts reported less difficulty in hiring,\nfirst quarter, supported by gains in personal disposable lower turnover rates, and some layoffs. Participants anincome. They also remarked that the quarterly strength ticipated that employment growth would likely slow\nwas driven mainly by very strong spending growth in further, reflecting a moderation in aggregate demand\nJanuary, while real spending fell modestly over February coming partly from tighter credit conditions. Particiand March. Consistent with that slowing, participants pants remarked that although nominal wage growth apanticipated that consumer spending would likely grow peared to be slowing gradually, it was still running at a\nat a subdued rate over the remainder of 2023, reflecting pace that, given current estimates of trend productivity\nin large part the effects of the tightening in financial growth, was well above what would be consistent over\n\n_______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _M_a_y_ _2–_3_,_ 2_0_2_3__________________________P_a_g_e_ _9\nthe longer run with the Committee’s 2 percent inflation be raised in a timely manner, threatening significant disobjective. Participants generally anticipated that under ruptions to the financial system and tighter financial\nappropriate monetary policy, imbalances in the labor conditions that weaken the economy. Regarding risks\nmarket would gradually diminish, easing pressures on to inflation, participants cited the possibility that price\nwages and prices. pressures could prove more persistent than anticipated\nbecause of, for example, stronger-than-expected conParticipants agreed that inflation was unacceptably\nsumer spending and a tight labor market, especially if\nhigh. They commented that data through March indithe effect of bank stress on economic activity proved\ncated that declines in inflation, particularly for measures\nmodest. However, a few participants cited the possibilof core inflation, had been slower than they had exity that further tightening of credit conditions could\npected. Participants observed that although core goods\nslow household spending and reduce business investinflation had moderated since the middle of last year, it\nment and hiring, all of which would support the ongohad decelerated less rapidly than expected in recent\ning rebalancing of supply and demand in product and\nmonths, despite reports from several business contacts\nlabor markets and reduce inflation pressures.\nof supply chain constraints continuing to ease. Additionally, participants emphasized that core nonhousing In their discussion of financial stability, various particiservices inflation had shown few signs of slowing in the pants commented on recent developments in the bankpast few months. Some participants remarked that a ing sector. These participants noted that the banking\nfurther easing in labor market conditions would be system was sound and resilient, that actions taken by\nneeded to help bring down inflation in this component. the Federal Reserve in coordination with other governRegarding housing services inflation, participants ob- ment agencies had served to calm conditions in that secserved that soft readings on rents for leases signed by tor, but that stresses remained. A number of particinew tenants were starting to feed into measured infla- pants noted that the banking sector was well capitalized\ntion. They expected that this process would continue overall, and that the most significant issues in the bankand would help lead to a decline in housing services in- ing system appeared to be limited to a small number of\nflation over this year. In discussing the likely effects on banks with poor risk-management practices or substaninflation of recent banking-sector developments, sev- tial exposure to specific vulnerabilities. These vulneraeral participants remarked that tighter credit conditions bilities included significant unrealized losses on assets\nmay not put much downward pressure on inflation in resulting from rising interest rates, heavy reliance on unpart because lower credit availability could restrain ag- insured deposits, or strained profitability amid higher\ngregate supply as well as aggregate demand. Several funding costs. Some participants additionally noted\nparticipants noted that longer-term measures of infla- that, because of weak fundamentals for CRE such as\ntion expectations from surveys of households and busi- high vacancy rates in the office segment, high exposure\nnesses remained well anchored. Participants empha- to such assets was a vulnerability for some banks. Parsized that with appropriate firming of monetary policy, ticipants also commented on the susceptibility of some\nwell-anchored longer-term inflation expectations would nonbank financial institutions to runs or instability.\nsupport a return of inflation to the Committee’s 2 per- These included money market funds, which had recent longer-run goal. cently experienced large cash inflows; hedge funds,\nwhich tend to use substantial leverage and may hold\nParticipants noted that risks associated with the recent\nconcentrated positions in some assets with low or zero\nbanking stress had led them to raise their already high\nmargin; thinly capitalized nonbank mortgage servicers;\nassessment of uncertainty around their economic outand digital asset entities. Many participants mentioned\nlooks. Participants judged that risks to the outlook for\nthat it is essential that the debt limit be raised in a timely\neconomic activity were weighted to the downside, almanner to avoid the risk of severely adverse dislocathough a few noted the risks were two sided. In distions in the financial system and the broader economy.\ncussing sources of downside risk to economic activity,\nA few participants noted the importance of orderly\nparticipants referenced the possibility that the cumulafunctioning of the market for U.S. Treasury securities\ntive tightening of monetary policy could affect ecoor stressed the importance of the appropriate authorinomic activity more than expected, and that further\nties continuing to address issues related to the resilience\nstrains in the banking sector could prove more substanof the market. A number of participants emphasized\ntial than anticipated. Some participants also noted conthat the Federal Reserve should maintain readiness to\ncerns that the statutory limit on federal debt might not\nuse its liquidity tools, as well as its microprudential and\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nmacroprudential regulatory and supervisory tools, to Participants also discussed several risk-management\nmitigate future financial stability risks. considerations that could bear on future policy decisions. A few assessed that there were upside risks to\nIn their consideration of appropriate monetary policy\neconomic growth. However, almost all participants\nactions at this meeting, participants concurred that incommented that downside risks to growth and upside\nflation remained substantially elevated relative to the\nrisks to unemployment had increased because of the\nCommittee’s longer-run goal of 2 percent. Economic\npossibility that banking-sector developments could lead\nactivity had expanded at a modest pace in the first quarto further tightening of credit conditions and weigh on\nter. The labor market continued to be tight, with robust\neconomic activity. Almost all participants stated that,\njob gains in recent months, and the unemployment rate\nwith inflation still well above the Committee’s longerremained low. Participants also noted that recent derun goal and the labor market remaining tight, upside\nvelopments in the banking sector would likely result in\nrisks to the inflation outlook remained a key factor\ntighter credit conditions for households and businesses,\nshaping the policy outlook. A few participants noted\nwhich would weigh on economic activity, hiring, and\nthat they also saw some downside risks to inflation.\ninflation. However, the extent of these effects remained uncertain. Against this backdrop, all partici- Taking into account these various considerations, parpants agreed that it was appropriate to raise the target ticipants discussed their views on the extent to which\nrange for the federal funds rate 25 basis points to 5 per- further policy firming after the current meeting may be\ncent to 5¼ percent. All participants agreed that it was appropriate. Participants generally expressed unceralso appropriate to continue the process of reducing the tainty about how much more policy tightening may be\nFederal Reserve’s securities holdings, as described in its appropriate. Many participants focused on the need to\npreviously announced Plans for Reducing the Size of retain optionality after this meeting. Some participants\nthe Federal Reserve’s Balance Sheet. commented that, based on their expectations that progress in returning inflation to 2 percent could continue\nIn discussing the policy outlook, participants generally\nto be unacceptably slow, additional policy firming\nagreed that in light of the lagged effects of cumulative\nwould likely be warranted at future meetings. Several\ntightening in monetary policy and the potential effects\nparticipants noted that if the economy evolved along\non the economy of a further tightening in credit condithe lines of their current outlooks, then further policy\ntions, the extent to which additional increases in the tarfirming after this meeting may not be necessary. In\nget range may be appropriate after this meeting had belight of the prominent risks to the Committee’s objeccome less certain. Participants agreed that it would be\ntives with respect to both maximum employment and\nimportant to closely monitor incoming information and\nprice stability, participants generally noted the imassess the implications for monetary policy. In deterportance of closely monitoring incoming information\nmining the extent to which additional policy firming\nand its implications for the economic outlook.\nmay be appropriate to return inflation to 2 percent over\ntime, various participants noted specific factors that Participants discussed the importance and various asshould bear on future decisions on policy actions. One pects of clearly explaining monetary policy actions and\nsuch factor was the degree and timing with which cu- strategy. All participants reaffirmed their strong commulative policy tightening restrained economic activity mitment to returning inflation to the Committee’s\nand reduced inflation, with some participants com- 2 percent objective over time and remained highly atmenting that they saw evidence that the past years’ tentive to inflation risks. A few participants comtightening was beginning to have its intended effect. mented that recent monetary policy actions and comAnother factor was the degree to which tighter credit munications had helped keep inflation expectations well\nconditions for households and businesses resulting anchored, which they saw as important for the attainfrom events in the banking sector would weigh on ac- ment of the Committee’s goals. Participants emphativity and reduce inflation, which participants agreed sized the importance of communicating to the public\nwas very uncertain. Additional factors included the the data-dependent approach of policymakers, and the\nprogress toward returning inflation to the Committee’s vast majority of participants commented that the adlonger-run goal of 2 percent, and the pace at which la- justed language in the postmeeting statement was helpbor market conditions softened and economic growth ful in that respect. Some participants stressed that it\nslowed. was crucial to communicate that the language in the\npostmeeting statement should not be interpreted as signaling either that decreases in the target range are likely\n\n_______________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _M_a_y_ _2–_3_,_ 2_0_2_3_________________________P__ag_e_ _1_1\nthis year or that further increases in the target range had System Open Market Account in accordance with the\nbeen ruled out. following domestic policy directive, for release at\n2:00 p.m.:\nCommittee Policy Actions\nIn their discussion of monetary policy for this meeting, “Effective May 4, 2023, the Federal Open\nmembers agreed that economic activity had expanded Market Committee directs the Desk to:\nat a modest pace in the first quarter. They also con-\n• Undertake open market operations as neccurred that job gains had been robust in recent months,\nessary to maintain the federal funds rate in\nand the unemployment rate had remained low. Inflaa target range of 5 to 5¼ percent.\ntion had remained elevated.\n• Conduct standing overnight repurchase\nMembers concurred that the U.S. banking system was\nagreement operations with a minimum bid\nsound and resilient. They also agreed that tighter credit\nrate of 5.25 percent and with an aggregate\nconditions for households and businesses were likely to\noperation limit of $500 billion.\nweigh on economic activity, hiring, and inflation, but\nthat the extent of these effects was uncertain. Members • Conduct standing overnight reverse repuralso concurred that they remained highly attentive to in- chase agreement operations at an offering\nflation risks. rate of 5.05 percent and with a per-counterparty limit of $160 billion per day. Members agreed that the Committee seeks to achieve\nmaximum employment and inflation at the rate of • Roll over at auction the amount of princi2 percent over the longer run. In support of these pal payments from the Federal Reserve’s\ngoals, the members agreed to raise the target range for holdings of Treasury securities maturing in\nthe federal funds rate to 5 to 5¼ percent. Members each calendar month that exceeds a cap of\nagreed to closely monitor incoming information and as- $60 billion per month. Redeem Treasury\nsess the implications for monetary policy. In determin- coupon securities up to this monthly cap\ning the extent to which additional policy firming may be and Treasury bills to the extent that couappropriate to return inflation to 2 percent over time, pon principal payments are less than the\nmembers concurred that they will take into account the monthly cap.\ncumulative tightening of monetary policy, the lags with\nwhich monetary policy affects economic activity and in-\n• Reinvest into agency mortgage-backed securities (MBS) the amount of principal\nflation, and economic and financial developments. In\npayments from the Federal Reserve’s holdaddition, members agreed that they will continue reducings of agency debt and agency MBS reing the Federal Reserve’s holdings of Treasury securities\nceived in each calendar month that exceeds\nand agency debt and agency mortgage-backed securia cap of $35 billion per month.\nties, as described in its previously announced plans. All\nmembers affirmed that they are strongly committed to • Allow modest deviations from stated\nreturning inflation to their 2 percent objective. amounts for reinvestments, if needed for\noperational reasons. Members agreed that, in assessing the appropriate\nstance of monetary policy, they would continue to mon-\n• Engage in dollar roll and coupon swap\nitor the implications of incoming information for the\ntransactions as necessary to facilitate settleeconomic outlook. They would be prepared to adjust\nment of the Federal Reserve’s agency MBS\nthe stance of monetary policy as appropriate if risks\ntransactions.”\nemerge that could impede the attainment of the ComThe vote also encompassed approval of the statement\nmittee’s goals. Members also agreed that their assessbelow for release at 2:00 p.m.:\nments will take into account a wide range of information, including readings on labor market conditions, “Economic activity expanded at a modest pace\ninflation pressures and inflation expectations, and fi- in the first quarter. Job gains have been robust\nnancial and international developments. in recent months, and the unemployment rate\nhas remained low. Inflation remains elevated. At the conclusion of the discussion, the Committee\nvoted to direct the Federal Reserve Bank of New York, The U.S. banking system is sound and resilient.\nuntil instructed otherwise, to execute transactions in the Tighter credit conditions for households and\n\n_P_ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nbusinesses are likely to weigh on economic ac- information, including readings on labor martivity, hiring, and inflation. The extent of these ket conditions, inflation pressures and inflation\neffects remains uncertain. The Committee re- expectations, and financial and international\nmains highly attentive to inflation risks. developments.”\nThe Committee seeks to achieve maximum Voting for this action: Jerome H. Powell, John C.\nemployment and inflation at the rate of 2 per- Williams, Michael S. Barr, Michelle W. Bowman, Lisa\ncent over the longer run. In support of these D. Cook, Austan D. Goolsbee, Patrick Harker, Philip\ngoals, the Committee decided to raise the target N. Jefferson, Neel Kashkari, Lorie K. Logan, and\nrange for the federal funds rate to 5 to 5¼ per- Christopher J. Waller.\ncent. The Committee will closely monitor inVoting against this action: None.\ncoming information and assess the implications for monetary policy. In determining the To support the Committee’s decision to raise the target\nextent to which additional policy firming may range for the federal funds rate, the Board of Goverbe appropriate to return inflation to 2 percent nors of the Federal Reserve System voted unanimously\nover time, the Committee will take into ac- to raise the interest rate paid on reserve balances to\ncount the cumulative tightening of monetary 5.15 percent, effective May 4, 2023. The Board of\npolicy, the lags with which monetary policy af- Governors of the Federal Reserve System voted unanifects economic activity and inflation, and eco- mously to approve a ¼ percentage point increase in the\nnomic and financial developments. In addi- primary credit rate to 5.25 percent, effective\ntion, the Committee will continue reducing its May 4, 2023.4\nholdings of Treasury securities and agency debt\nIt was agreed that the next meeting of the Committee\nand agency mortgage-backed securities, as dewould be held on Tuesday–Wednesday, June 13–\nscribed in its previously announced plans. The\n14, 2023. The meeting adjourned at 10:00 a.m. on\nCommittee is strongly committed to returning\nMay 3, 2023.\ninflation to its 2 percent objective. Notation Vote\nIn assessing the appropriate stance of moneBy notation vote completed on April 11, 2023, the\ntary policy, the Committee will continue to\nCommittee unanimously approved the minutes of the\nmonitor the implications of incoming inforCommittee meeting held on March 21–22, 2023.\nmation for the economic outlook. The Committee would be prepared to adjust the stance\nof monetary policy as appropriate if risks\nemerge that could impede the attainment of the\nCommittee’s goals. The Committee’s assess- _______________________\nments will take into account a wide range of Joshua Gallin\nSecretary\n4 In taking this action, the Board approved requests to estab- Reserve Bank, effective on the later of May 4, 2023, or the\nlish that rate submitted by the Boards of Directors of the date such Reserve Bank informs the Secretary of the Board\nFederal Reserve Banks of Boston, Philadelphia, Cleveland, of such a request. (Secretary’s note: Subsequently, the FedRichmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas eral Reserve Bank of New York was informed of the Board’s\nCity, Dallas, and San Francisco. The vote also encompassed approval of their establishment of a primary credit rate of\napproval by the Board of Governors of the establishment of 5.25 percent, effective May 4, 2023.)\na 5.25 percent primary credit rate by the remaining Federal",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230503.pdf",
+    "action": "Raised",
+    "rate": "5.00%-5.25%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled that future rate decisions will be data-dependent, with no commitment to further hikes or cuts. Officials emphasized they will closely monitor incoming economic data and are prepared to adjust policy if risks to inflation or employment emerge.",
+    "key_economic_factors": [
+      "Persistent inflation well above the 2% target",
+      "Tight labor market with robust job gains and low unemployment",
+      "Banking sector stress leading to tighter credit conditions",
+      "Slower-than-expected progress in bringing down core inflation"
+    ],
+    "economic_outlook": "The Fed expects real GDP growth to slow below its long-run trend in 2023 due to restrictive financial conditions and tighter credit. The labor market is still very tight, but signs of softening are emerging, including declining job openings and quits. Inflation remains elevated, with core inflation showing only gradual improvement, and risks to inflation are still tilted to the upside.",
+    "market_impact": "Higher borrowing costs will continue to pressure consumer loans, mortgages, and business investment. Financial markets should expect volatility as the Fed takes a wait-and-see approach, with future moves dependent on incoming data—potentially keeping rates higher for longer."
+  },
+  {
+    "date": "2023-03-22",
+    "title": "FOMC Meeting 2023-03-22",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nMarch 21–22, 2023\nA joint meeting of the Federal Open Market Committee Roberto Perli, Manager, System Open Market Account\nand the Board of Governors of the Federal Reserve SysJulie Ann Remache, Deputy Manager, System Open\ntem was held in the offices of the Board of Governors\nMarket Account\non Tuesday, March 21, 2023, at 10:00 a.m. and continued on Wednesday, March 22, 2023, at 9:00 a.m.1 Jose Acosta, Senior Communications Analyst, Division\nof Information Technology, Board\nAttendance\nJerome H. Powell, Chair David Altig, Executive Vice President, Federal Reserve\nJohn C. Williams, Vice Chair Bank of Atlanta\nMichael S. Barr\nKartik B. Athreya, Executive Vice President, Federal\nMichelle W. Bowman\nReserve Bank of Richmond\nLisa D. Cook\nAustan D. Goolsbee\nBecky C. Bareford, First Vice President, Federal\nPatrick Harker\nReserve Bank of Richmond\nPhilip N. Jefferson\nNeel Kashkari Penelope A. Beattie,5 Section Chief, Office of the\nLorie K. Logan Secretary, Board\nChristopher J. Waller\nDaniel O. Beltran, Deputy Associate Director, Division\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly, of International Finance, Board\nLoretta J. Mester, and Sushmita Shukla,2 Alternate\nJennifer J. Burns,5 Deputy Director, Division of\nMembers of the Committee\nSupervision and Regulation, Board\nJames Bullard and Susan M. Collins, Presidents of the\nFederal Reserve Banks of St. Louis and Boston, Mark A. Carlson, Adviser, Division of Monetary\nrespectively Affairs, Board\nKelly J. Dubbert, Interim President of the Federal Todd E. Clark, Senior Vice President, Federal Reserve\nReserve Bank of Kansas City Bank of Cleveland\nJoshua Gallin, Secretary Daniel Cooper, Vice President, Federal Reserve Bank\nMatthew M. Luecke, Deputy Secretary\nof Boston\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary Stephanie E. Curcuru, Deputy Director, Division of\nMark E. Van Der Weide, General Counsel International Finance, Board\nRichard Ostrander, Deputy General Counsel\nWendy E. Dunn, Adviser, Division of Research and\nTrevor A. Reeve, Economist\nStatistics, Board\nStacey Tevlin, Economist\nBeth Anne Wilson,3 Economist Burcu Duygan-Bump, Special Adviser to the Board,\nDivision of Board Members, Board\nShaghil Ahmed,4 Roc Armenter, James A. Clouse,\nBrian M. Doyle, Andrea Raffo, Chiara Scotti, and\nRochelle M. Edge, Deputy Director, Division of\nWilliam Wascher, Associate Economists\nMonetary Affairs, Board\n1 The Federal Open Market Committee is referenced as the 3 Attended through the discussion of the economic and finan-\n“FOMC” and the “Committee” in these minutes; the Board cial situation.\nof Governors of the Federal Reserve System is referenced as 4 Attended from the discussion of the economic and financial\nthe “Board” in these minutes. situation through the end of Wednesday’s session.\n2 Elected as an Alternate by the Federal Reserve Bank of New 5 Attended through the discussion of developments in finanYork, effective March 2, 2023. cial markets and open market operations.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nMatthew J. Eichner,5 Director, Division of Reserve Fernando M. Martin, Assistant Vice President, Federal\nBank Operations and Payment Systems, Board Reserve Bank of St. Louis\nOzge Akinci Emekli, Economic Research Advisor, Thomas Mertens, Vice President, Federal Reserve Bank\nFederal Reserve Bank of New York of San Francisco\nJon Faust, Senior Special Adviser to the Chair, Division Ann E. Misback, Secretary, Office of the Secretary,\nof Board Members, Board Board\nAndrew Figura, Associate Director, Division of Giovanni Nicolò, Senior Economist, Division of\nResearch and Statistics, Board Monetary Affairs, Board\nGlenn Follette, Associate Director, Division of Michael G. Palumbo, Senior Associate Director,\nResearch and Statistics, Board Division of Research and Statistics, Board\nMichael S. Gibson, Director, Division of Supervision Marcel A. Priebsch, Principal Economist, Division of\nand Regulation, Board Monetary Affairs, Board\nChristine Graham,5 Special Adviser to the Board, Linda Robertson, Assistant to the Board, Division of\nDivision of Board Members, Board Board Members, Board\nJoseph W. Gruber, Executive Vice President, Federal Achilles Sangster II, Senior Information Manager,\nReserve Bank of Kansas City Division of Monetary Affairs, Board\nValerie S. Hinojosa, Section Chief, Division of Krista Schwarz, Principal Economist, Division of\nMonetary Affairs, Board Monetary Affairs, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Nitish Ranjan Sinha, Special Adviser to the Board,\nBoard Members, Board Division of Board Members, Board\nMichael T. Kiley, Deputy Director, Division of Yannick Timmer, Senior Economist, Division of\nFinancial Stability, Board Monetary Affairs, Board\nDon H. Kim, Senior Adviser, Division of Monetary Clara Vega, Special Adviser to the Board, Division of\nAffairs, Board Board Members, Board\nSpencer Krane, Senior Vice President, Federal Reserve Annette Vissing-Jørgensen, Senior Adviser, Division of\nBank of Chicago Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial Jeffrey D. Walker,5 Associate Director, Division of\nStability, Board Reserve Bank Operations and Payment Systems,\nBoard\nPaul Lengermann, Assistant Director, Division of\nResearch and Statistics, Board Min Wei, Senior Associate Director, Division of\nMonetary Affairs, Board\nKurt F. Lewis, Special Adviser to the Board, Division\nof Board Members, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nLaura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nDavid López-Salido, Senior Associate Director,\nDivision of Monetary Affairs, Board Recent Developments in the Banking Sector\nBefore turning to other agenda items, the Chair asked\nFrancesca Loria, Senior Economist, Division of\nthe Vice Chair for Supervision to provide an update on\nMonetary Affairs, Board\nrecent developments in the banking sector. The Vice\nByron Lutz, Deputy Associate Director, Division of Chair for Supervision described the developments, including those at Silicon Valley Bank, Signature Bank, and\nResearch and Statistics, Board\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 2_1_–_2_2_,_ 2_0_2_3________________________P_a_g_e_ _3\nCredit Suisse. He also described actions taken by the may have driven a good part of the difference between\nFederal Reserve and other regulatory agencies in re- survey and market measures. The median respondent\nsponse. He noted that the U.S. banking system is sound expected the Summary of Economic Projections (SEP)\nand resilient. He also noted that he will be leading a re- projections for the federal funds rate at the end of 2023\nview of the supervision and regulation of Silicon Valley and 2024 to shift 25 basis points higher. However, inBank, and that the Federal Reserve System will apply formation gathered after the Desk surveys closed sugwhat is learned from the review to strengthen its super- gests that those expectations had declined some, to a\nvisory and regulatory practices as appropriate. level comparable with the December SEP. Survey responses suggested only modest changes in expectations\nDevelopments in Financial Markets and Open\nfor balance sheet policy. Market Operations\nThe manager turned first to a review of U.S. financial The manager turned next to a discussion of operations\nmarket developments over the intermeeting period. and money markets. Federal funds volumes fell sharply\nEarly in the period, firmer-than-expected data and policy for a few days late in the period as Federal Home Loan\ncommunications pushed interest rates higher and equity Banks (FHLBs) sought to maintain liquidity in order to\nprices lower. Developments in the banking sector later meet increased demand for advances by member banks.\nin the period were met with sharp reductions in Treasury Money market rates remained broadly stable, and seyields, particularly at shorter tenors. Treasury market li- cured and unsecured money market rates, including the\nquidity was poor and implied volatility was high, but the effective fed funds rate, traded well within the target\nmarket remained functional amid substantial trading ac- range. Use of U.S. dollar liquidity swap lines with fortivity. Higher Treasury market volatility contributed to eign central banks had been minimal, indicating that\nwider spreads for household and business borrowing. market participants did not face significant difficulties in\nobtaining dollar funding from private sources. Financial conditions tightened considerably over the intermeeting period as a whole. Market contacts observed Borrowing from the new Bank Term Funding Program\nthat the recent developments in the banking system will had been small relative to discount window borrowing,\nlikely result in a pullback in bank lending, which would which had increased to record levels. Use of the overnot be reflected in most common financial conditions night reverse repurchase agreement (ON RRP) facility\nindexes. Following the banking-sector developments, fell, especially for money market mutual funds (MMFs),\nequity prices for large U.S. banks underperformed the as the supply of short-term securities at attractive rates\nbroad market; equity prices for U.S. regional banks gen- increased.\nerally underperformed by relatively more. By unanimous vote, the Committee ratified the Desk’s\nRegarding the outlook for inflation in the United States, domestic transactions over the intermeeting period.\nmarket-based measures of inflation compensation over There were no intervention operations in foreign currenshorter horizons rose over the period, although com- cies for the System’s account during the intermeeting pepensation retraced a good portion of its increase later in riod.\nthe period as markets reacted to the developments in the\nStaff Review of the Economic Situation\nbanking sector. Forward inflation compensation\nThe information available at the time of the March 21–\nmeasures continued to indicate that longer-term infla22 meeting indicated that labor market conditions retion expectations remained well anchored. Measures of\nmained tight in January and February, with robust job\ninflation expectations from the Open Market Desk’s\ngains and the unemployment rate near a historical low. Survey of Primary Dealers and Survey of Market ParticConsumer price inflation—as measured by the\nipants moved higher at shorter horizons and were little\n12-month percent change in the price index for personal\nchanged at longer horizons.\nconsumption expenditures (PCE)—was still elevated in\nRegarding the outlook for monetary policy, market- January. Real gross domestic product (GDP) appeared\nbased measures of policy expectations suggested that the to be expanding at a modest pace in the first quarter.\nfederal funds rate would reach a peak in May 2023 and Although financial market data had shown reactions to\nthat the target range would then move lower. However, developments in the banking sector late in the intermeetthe medians of respondents’ modal expectations of the ing period, there were essentially no economic data availfederal funds rate from the Desk surveys did not show able that covered this period.\nany declines in the target range through the end of 2023. Risk and liquidity premiums embedded in market prices\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nTotal nonfarm payroll employment increased at a faster near-term indicators—such as national and regional inmonthly pace in January and February than in the fourth dexes for new orders—pointed to softening factory outquarter of last year. The unemployment rate was little put in the coming months.\nchanged and stood at 3.6 percent in February. Over the\nThe nominal U.S. international trade deficit registered a\npast two months, the unemployment rate for African\nrecord high in 2022. The trade deficit had been narrowAmericans was unchanged, on net, and the unemploying since March of last year but resumed widening in Dement rate for Hispanics moved up; the unemployment\ncember and January. Real goods imports rose in Decemrates for both groups remained above the aggregate\nber and January, led by increases in imports of consumer\nmeasure. The aggregate measures of both the labor\ngoods and automotive products. Real goods exports\nforce participation rate and the employment-toalso increased, but by less than imports.\npopulation ratio increased slightly. The private-sector\njob openings rate in January—as measured by the Job Indicators suggested that foreign economic growth reOpenings and Labor Turnover Survey—was little bounded in the first quarter of 2023 as China reopened\nchanged, on balance, since November and remained rapidly from its COVID-19-related shutdowns and Euhigh. rope’s economy proved to be resilient to the energy price\nshock stemming from Russia’s war against Ukraine and\nRecent indicators of nominal wage growth had slowed\nbenefited from a mild winter that reduced energy debut continued to be elevated. In February, the 3-month\nmand. Manufacturing activity in emerging Asia showed\nchange in average hourly earnings for all employees was\nsigns of a turnaround from its pronounced slowdown\nat an annual rate of 3.6 percent, slower than its 12-month\nsince mid-2022. The recent developments in the bankpace of 4.6 percent. Over the four quarters of 2022, total\ning sector led to some tightening of financial conditions\nlabor compensation per hour in the business sector—as\nabroad. Oil prices edged down despite China’s rapid remeasured by the Productivity and Costs data—increased\nopening and the implementation of the European Un4.5 percent, below its pace in the previous year.\nion’s embargo on Russian refined oil products. Retail\nConsumer price inflation remained elevated early in the energy inflation continued to slow, contributing to an\nyear. Total PCE price inflation was 5.4 percent over the easing of headline consumer price inflation in many ad12 months ending in January, and core PCE price infla- vanced foreign economies (AFEs). In contrast, core intion—which excludes changes in consumer energy flation has shown little sign of easing in most foreign\nprices and many consumer food prices—was 4.7 per- economies amid tight labor markets. In response, many\ncent. The trimmed mean measure of 12-month PCE foreign central banks continued their monetary policy\nprice inflation constructed by the Federal Reserve Bank tightening, although some have either paused or indiof Dallas was 4.6 percent in January. In February, the cated that a pause soon was possible, citing the im12-month change in the consumer price index (CPI) was portance of assessing the cumulative effects of past pol6.0 percent, and core CPI inflation was 5.5 percent. The icy rate increases. CPI, along with data from the producer price index,\nStaff Review of the Financial Situation\npointed to some slowing in PCE price inflation in FebOver the first several weeks of the intermeeting period,\nruary. The latest survey-based measures of longer-term\nincoming economic data and FOMC communications\ninflation expectations from the University of Michigan\nappeared to refocus market participants on upside risks\nSurveys of Consumers, the Survey of Professional Foreto inflation and policy rates, with the market-implied\ncasters, and the Federal Reserve Bank of New York’s\npolicy rate path steepening, nominal Treasury yields risSurvey of Consumer Expectations remained within the\ning, near-term inflation compensation measures increasrange of their values reported in recent months, while\ning, and broad stock market price indexes declining. Finear-term measures of inflation expectations from these\nnancing conditions for businesses, households, and musurveys moved down.\nnicipalities had tightened during this period and were\nReal GDP growth seemed to be expanding at a modest moderately restrictive overall, as borrowing costs inpace in the first quarter. Gains in consumer spending creased notably with the expected path of policy rates\nhad picked up in recent months, but growth in business and Treasury yields and as some lenders appeared to\nfixed investment was slowing and residential investment tighten nonprice borrowing terms. Nonetheless, lending\nwas continuing to decline. After contracting over the volumes were generally solid. Credit quality was strong\nsecond half of last year, manufacturing output expanded\nmoderately, on average, over January and February, but\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 2_1_–_2_2_,_ 2_0_2_3________________________P_a_g_e_ _5\noverall, although it had worsened a bit for some borrow- stresses in the global banking sector more recently. Earers. Expectations for future credit quality continued to lier in the period, yields and market-based measures of\ndeteriorate in some markets. inflation expectations in the AFEs increased notably,\ndriven by spillovers from U.S. Treasury yields as well as\nPricing in financial markets changed notably in the latter\nupside surprises in economic and inflation data for\npart of the intermeeting period, amid developments in\nAFEs. Later in the period, developments in the banking\nthe banking sector. Treasury yields and policy rate exsector led to large declines in advanced-economy yields,\npectations moved down significantly, while broad stock\nand, on net, AFE yields declined slightly. Additionally,\nprice indexes rose somewhat. The market-implied polfor the intermeeting period overall, the staff’s dollar inicy rate path shifted down sizably, with the federal funds\ndex rose moderately, corporate and emerging market\nrate expected to peak in May before decreasing aftereconomy sovereign credit spreads widened, and foreign\nward. Further out, OIS (overnight index swap) quotes\nequity indexes generally moved lower, with bank equities\nat the end of the intermeeting period indicated that the\nfalling notably.\nexpected federal funds rate at year-end 2024 was\n3.28 percent, about 50 basis points lower than before the U.S. unsecured funding markets showed some signs of\nclosures of Silicon Valley Bank and Signature Bank but pressure later in the intermeeting period. Issuance of\nsomewhat higher than at the time of the February commercial paper (CP) and negotiable certificates of deFOMC meeting. Treasury yields declined, especially at posit (NCDs) dropped a touch over the entire period,\nshorter maturities, reflecting downward revisions in pol- and the fraction of CP issuance with overnight maturiicy rate expectations and the effects of flight to safety. ties increased but remained within normal ranges. Inflation compensation declined, especially at short ma- Spreads of term CP and NCDs widened some, and\nturities, likely reflecting, in part, a relatively larger decline spreads for issuers with lower credit ratings rose more,\nin risk premiums on nominal Treasury securities relative but other unsecured spreads remained within normal\nto Treasury Inflation-Protected Securities due to strong ranges. Prime MMFs experienced outflows, while govsafe-haven demands. ernment MMFs had inflows. Late in the intermeeting period, U.S. bank stock prices The effective federal funds rate was little changed after\ndeclined notably. Regional banks with unusually large the closures of Silicon Valley Bank and Signature Bank.\nreliance on uninsured deposits and holdings of securities Amid these developments, federal funds volumes iniwith significant unrealized mark-to-market losses expe- tially declined sharply as the FHLBs reduced their activrienced larger declines in stock prices. Broad equity ity in the federal funds market in order to meet increased\nprices rose somewhat after the closures of Silicon Valley demand for advances by member banks; market volume\nBank and Signature Bank, reportedly driven by inves- subsequently rebounded partially. Activity in the repurtors’ reassessment of the outlook for interest rates, and chase agreement market was robust, and trading volume\nafter the announcement that UBS had agreed to buy remained within recent ranges. ON RRP take-up reCredit Suisse. The VIX—the one-month option- mained within recent ranges as well.\nimplied volatility on the S&P 500—increased to about\nBorrowing costs for businesses, households, and munic26.5 percent following the closures of Silicon Valley\nipalities rose notably in the early part of the intermeeting\nBank and Signature Bank, but it subsequently declined\nperiod, mostly in line with increases in the federal funds\nto 21 percent—around the 70th percentile of its historirate and Treasury yields. Since the closures of Silicon\ncal distribution. Swaption-implied volatilities of shortValley Bank and Signature Bank, spreads on corporate\nterm interest rates increased notably during this period,\nbonds, municipal bonds, and leveraged loans rose, with\nreflecting increased uncertainty about the interest rate\nspeculative-grade corporate bond spreads registering the\noutlook. Some of the pricing moves in asset markets\nlargest moves; spreads remained at moderate levels relamay have been amplified by impaired liquidity conditive to their historical distributions. Investment-grade\ntions. Despite deteriorating liquidity conditions in\ncorporate yields and municipal yields were down modTreasury, bond, and equity markets, market functioning\nerately, whereas speculative-grade corporate yields and\nremained orderly.\nleveraged loan yields were up modestly. Mortgage rates\nOver the intermeeting period, foreign financial markets were unchanged amid an increase in mortgage-backed\nwere volatile as investors’ focus shifted from resilience securities (MBS) spreads.\nin economic activity and stubbornly high core inflation\nBased on data that do not cover the period following the\nacross advanced economies earlier in the period to\nclosures of Silicon Valley Bank and Signature Bank,\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nnonprice terms and standards appeared to tighten some- markedly this year and then to track core inflation over\nwhat in a number of markets. Nevertheless, generally the following two years. In 2024 and 2025, both total\nsolid funding flows suggest that most firms and house- and core PCE price inflation were expected to be near\nholds had remained broadly able to access funding. Data 2 percent.\non credit conditions following the developments in the\nThe staff judged that the uncertainty around the baseline\nbanking sector were limited. After the two bank cloprojection was much greater than at the time of the presures, issuance of municipal bond and leveraged loans\nvious forecast. In particular, the staff viewed the risks\nwas sluggish, and gross issuance of corporate bonds fell\naround the baseline projection as determined imto near zero. Mortgage loans to households remained\nportantly by banking conditions and the implications for\navailable.\nfinancial conditions. If the effects of the recent develThe credit quality of businesses and households was opments in the banking sector on macroeconomic conlargely stable over the intermeeting period. However, ditions were to abate quickly, then the risks around the\nmeasures of credit performance showed some signs of baseline would be tilted to the upside for both economic\nweakening. Leveraged loan credit quality deteriorated activity and inflation. If banking and financial condisomewhat after the closures of Silicon Valley Bank and tions and their effects on macroeconomic conditions\nSignature Bank. Credit quality for residential mortgages were to deteriorate more than assumed in the baseline,\nremained unchanged. then the risks around the baseline would be skewed to\nthe downside for both economic activity and inflation,\nStaff Economic Outlook\nparticularly because historical recessions related to finanFor some time, the forecast for the U.S. economy precial market problems tend to be more severe and persispared by the staff had featured subdued real GDP\ntent than average recessions.\ngrowth for this year and some softening in the labor\nmarket. Given their assessment of the potential eco- Participants’ Views on Current Conditions and the\nnomic effects of the recent banking-sector develop- Economic Outlook\nments, the staff’s projection at the time of the March In conjunction with this FOMC meeting, participants\nmeeting included a mild recession starting later this year, submitted their projections of the most likely outcomes\nwith a recovery over the subsequent two years. Real for real GDP growth, the unemployment rate, and inflaGDP growth in 2024 was projected to remain below the tion for each year from 2023 through 2025 and over the\nstaff’s estimate of potential output growth, and then longer run. The projections were based on their individGDP growth in 2025 was expected to be above that of ual assessments of appropriate monetary policy, includpotential. Resource utilization in both product and labor ing the path of the federal funds rate. The longer-run\nmarkets was forecast to be much less tight than in the projections represented each participant’s assessment of\nJanuary projection. The level of real output was pro- the rate to which each variable would be expected to\njected to move below the staff’s estimate of potential converge, over time, under appropriate monetary policy\noutput in early 2024, more than a year sooner than in the and in the absence of further shocks to the economy.\nprevious projection. Likewise, the unemployment rate An SEP was released to the public following the concluwas projected to rise above the staff’s estimate of its nat- sion of the meeting.\nural rate early next year. In their discussion of current economic conditions, parOn a four-quarter change basis, total PCE price inflation ticipants noted that recent indicators pointed to modest\nwas forecast to be 2.8 percent this year, with core infla- growth in spending and production. At the same time,\ntion at 3.5 percent. Core goods inflation was projected though, participants noted that job gains had picked up\nto move down further this year and then remain sub- in recent months and were running at a robust pace; the\ndued; housing services inflation was expected to peak unemployment rate had remained low. Inflation relater this year and then move down, while core nonhous- mained elevated. Participants agreed that the U.S. banking services inflation was forecast to slow gradually as ing system remained sound and resilient. They comnominal wage growth eased further. Reflecting the ef- mented that recent developments in the banking sector\nfects of less projected tightness in product and labor were likely to result in tighter credit conditions for\nmarkets, core inflation was forecast to slow sharply next households and businesses and to weigh on economic\nyear. With steep declines in consumer energy prices and activity, hiring, and inflation. Participants agreed that\na substantial moderation in food price inflation expected the extent of these effects was uncertain. Against this\nfor this year, total inflation was projected to step down\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 2_1_–_2_2_,_ 2_0_2_3________________________P_a_g_e_ _7\nbackground, participants continued to be highly atten- In their discussion of the household sector, participants\ntive to inflation risks. noted that incoming data on real consumer expenditures\nshowed a pickup in spending in January and February. In assessing the economic outlook, participants noted\nThey attributed the pickup to strong job gains, rising real\nthat since they met in February, data on inflation, emdisposable income, and households continuing to run\nployment, and economic activity generally came in\ndown excess savings accumulated during the pandemic.\nstronger than expected. They also noted, however, that\nThey also noted that an atypically warm start to this year,\nthe developments in the banking sector that had ocalong with challenges in seasonally adjusting data, likely\ncurred late in the intermeeting period affected their\ncontributed to the pickup in the reported data. A few\nviews of the economic and policy outlook and the unparticipants observed that credit card delinquencies, parcertainty surrounding that outlook. Based on incoming\nticularly for lower-income households, had risen in the\neconomic data, participants’ assessments of the effects\nface of elevated inflation and higher nominal interest\nof cumulative policy firming, and their initial views on\nrates. Participants noted that recent developments in the\nthe likely economic effect of the recent banking-sector\nbanking sector and the associated rise in uncertainty\ndevelopments, participants generally expected real GDP\nwould likely weigh on consumer sentiment and that into grow this year at a pace well below its long-run trend\ncreased caution on the part of consumers could restrain\nrate. With inflation remaining unacceptably high, particspending. A couple of participants observed that highipants expected that a period of below-trend growth in\nfrequency measures of consumer sentiment had not yet\nreal GDP would be needed to bring aggregate demand\nshown a significant change following the recent develinto better balance with aggregate supply and thereby reopments in the banking sector, although they also\nduce inflationary pressures. Many participants remarked\nacknowledged that the situation was fluid.\nthat the incoming data before the onset of the bankingsector stresses had led them to see the appropriate path Regarding the business sector, participants observed that\nfor the federal funds rate as somewhat higher than their growth in business fixed investment was being reassessment at the time of the December meeting. After strained by tighter financial conditions that reflected cuincorporating the banking-sector developments, partici- mulative policy firming to date. Participants expected\npants indicated that their policy rate projections were the likely tightening of credit conditions due to the renow about unchanged from December. cent developments in the banking sector to further\nweigh on investment spending. In addition, the bankParticipants agreed that the actions taken so far by the\ning-sector developments could damp business confiFederal Reserve in coordination with other government\ndence and increase firms’ caution, reducing their willingagencies, as well as actions taken by foreign authorities\nness to hire new workers. However, a few participants\nto address banking and financial stresses outside the\nmentioned that their nonbank business contacts reU.S., had helped calm conditions in the banking sector.\nported that the banking-sector developments so far had\nEven with the actions, participants recognized that there\nnot resulted in significant changes in their hiring and\nwas significant uncertainty as to how those conditions\ncapital spending plans or sales expectations, though their\nwould evolve. Participants assessed that the developcontacts also acknowledged increased uncertainties\nments so far would likely lead to some weakening of\naround their outlooks.\ncredit conditions, as some banks were likely to tighten\nlending standards amid rising funding costs and in- Participants agreed that the labor market remained very\ncreased concerns about liquidity. Participants noted that tight. Job gains had picked up to a robust pace in Januit was too early to assess with confidence the magnitude ary and February, and the unemployment rate remained\nof the effect of a credit tightening on economic activity low. Participants noted some signs of improvement in\nand inflation, and that it was important to continue to the imbalances between demand and supply in the labor\nclosely monitor developments and update assessments market, including further declines in the quits rate as well\nof the actual and expected effects of credit tightening. as an increase in the overall labor force participation rate\nSeveral participants noted that regional and community and the return of the prime-age participation rate to prebanks, a small number of which had come under signif- pandemic levels. Furthermore, participants observed\nicant stress, were important in small business and mid- that wage growth appeared to be slowing gradually amid\ndle-market lending and were providing critical and this apparent easing in labor demand and increase in launique financial services to many communities and in- bor supply. However, participants assessed that labor\ndustries. demand continued to substantially exceed labor supply,\nand several participants pointed out that wage growth\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nwas still well above the rates that would be consistent though they also recognized some downside risks to inover the longer run with the 2 percent inflation objec- flation. As a source of upside risk to inflation, particitive, given current estimates of trend productivity pants cited the possibility of more-persistent-thangrowth. Participants expected that, under appropriate anticipated price pressures, due to, for example, surprismonetary policy, supply and demand conditions in the ingly resilient labor demand. As a source of downside\nlabor market will come into better balance over time, risk to inflation, participants noted that if banks reduce\neasing upward pressures on wages and prices. the supply of credit by more than expected, the likely\nrestraint on economic activity and hiring could put addiWith inflation still well above the Committee’s longertional downward pressure on inflation.\nrun goal of 2 percent, participants agreed that inflation\nwas unacceptably high. Participants commented that re- In their consideration of appropriate monetary policy accent inflation data indicated slower-than-expected pro- tions at this meeting, participants concurred that inflagress on disinflation. In particular, they noted that revi- tion remained well above the Committee’s longer-run\nsions to the price data had indicated less disinflation at goal of 2 percent and that the recent data on inflation\nthe end of last year than had been previously reported provided few signs that inflation pressures were abating\nand that inflation was still quite elevated. Participants at a pace sufficient to return inflation to 2 percent over\nnoted that, on a 12-month basis, core goods price infla- time. Participants also noted that recent developments\ntion declined as supply chains continued to improve, but in the banking sector would likely result in tighter credit\nthe pace of the decline had slowed, highlighting the still conditions for households and businesses and weigh on\nuncertain nature of the disinflationary process. Partici- economic activity, hiring, and inflation, though the expants expected that housing services inflation would tent of these effects was highly uncertain. Against this\nlikely begin to slow in coming months, reflecting contin- backdrop, all participants agreed that it was appropriate\nued smaller increases, or potentially declines, in rents on to raise the target range for the federal funds rate 25 banew leases. Regarding prices for core services excluding sis points to 4¾ to 5 percent. All participants also agreed\nhousing, participants agreed that there was little evidence that it was appropriate to continue the process of reducpointing to disinflation in this component. Participants ing the Federal Reserve’s securities holdings, as degenerally judged that some more easing in labor market scribed in its previously announced Plans for Reducing\ntightness and slowing in nominal wage growth would be the Size of the Federal Reserve’s Balance Sheet.\nnecessary for sustained disinflation. Additionally, particSeveral participants noted that, in their policy deliberaipants observed that indicators of short-term inflation\ntions, they considered whether it would be appropriate\nexpectations from surveys of households and businesses\nto hold the target range steady at this meeting. They\nhad come down further, while longer-term inflation exnoted that doing so would allow more time to assess the\npectations remained well anchored. Participants also\nfinancial and economic effects of recent banking-sector\ndiscussed the potential effect on inflation of the develdevelopments and of the cumulative tightening of monopments in the banking sector. They noted that a tightetary policy. However, these participants also observed\nening of credit conditions was likely to weigh on aggrethat the actions taken by the Federal Reserve in coordigate demand, which in turn could help reduce inflationnation with other government agencies helped calm conary pressures. However, participants observed that the\nditions in the banking sector and lessen the near-term\nsize of such an effect was highly uncertain.\nrisks to economic activity and inflation. Consequently,\nParticipants generally observed that the recent develop- these participants judged it appropriate to increase the\nments in the banking sector had further increased the target range 25 basis points because of elevated inflation,\nalready-high level of uncertainty associated with their the strength of the recent economic data, and their comoutlooks for economic activity, the labor market, and in- mitment to bring inflation down to the Committee’s\nflation. Participants saw risks to economic activity as 2 percent longer-run goal.\nweighted to the downside. As a source of downside risk\nSome participants noted that given persistently high into activity, they noted the possibility that banks would\nflation and the strength of the recent economic data,\nreduce the supply of credit by more than expected,\nthey would have considered a 50 basis point increase in\nwhich could restrain economic activity significantly.\nthe target range to have been appropriate at this meeting\nParticipants mentioned potential intensification of Rusin the absence of the recent developments in the banking\nsia’s war against Ukraine as an additional source of\nsector. However, due to the potential for banking-sector\ndownside risk to the economic outlook. Participants\ndevelopments to tighten financial conditions and to\ngenerally saw risks to inflation as weighted to the upside,\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 2_1_–_2_2_,_ 2_0_2_3________________________P_a_g_e_ _9\nweigh on economic activity and inflation, they judged it incoming information regarding changes in credit conprudent to increase the target range by a smaller incre- ditions and credit flows as well as broader changes in fiment at this meeting. These participants noted that do- nancial conditions and to assess the implications for ecoing so would also allow the Committee time to better nomic activity, labor markets, and inflation. Several parassess the effects of banking-sector developments on ticipants emphasized the need to retain flexibility and\ncredit conditions and the economy as the Committee optionality in determining the appropriate stance of\nmoved toward a sufficiently restrictive stance of mone- monetary policy given the highly uncertain economic\ntary policy. outlook. Participants observed that the actions taken by the Fed- Participants emphasized a number of risk-management\neral Reserve in coordination with other government considerations related to the conduct of monetary polagencies in the days preceding the meeting had served to icy. Some participants observed that downside risks to\ncalm conditions in the banking sector. Participants growth and upside risks to unemployment had increased\nnoted that the most significant issues appeared to have because of the risk that banking-sector developments\nbeen limited to a small number of banks with poor risk- could lead to further tightening of credit conditions and\nmanagement practices and that the banking system re- weigh on economic activity. Some participants also\nmained sound and resilient. Participants emphasized noted that, with inflation still well above the Committhat the Federal Reserve should use its liquidity and tee’s longer-run goal and the recent economic data relender-of-last-resort tools, as well as its microprudential maining strong, upside risks to the inflation outlook reand macroprudential regulatory and supervisory tools, to mained a key factor shaping the policy outlook, and that\naddress stress in the banking sector and to mitigate fu- maintaining a restrictive policy stance until inflation is\nture financial stability risks. Participants agreed that re- clearly on a downward path toward 2 percent would be\ncent banking developments would factor into the Com- appropriate from a risk-management perspective. Sevmittee’s monetary policy decisions to the extent that eral participants noted the importance of longer-term inthese developments affect the outlook for employment flation expectations remaining anchored and remarked\nand inflation and the risks surrounding the outlook. Par- that the longer inflation remained elevated, the greater\nticipants reaffirmed their strong commitment to return- the risk of inflation expectations becoming unanchored.\ning inflation to the Committee’s 2 percent objective. Participants generally agreed on the importance of\nclosely monitoring incoming information and its impliIn discussing the policy outlook, participants observed\ncations for the economic outlook, and that they were\nthat inflation remained much too high and that the labor\nprepared to adjust their views on the appropriate stance\nmarket remained tight; as a result, they anticipated that\nof monetary policy in response to the incoming data and\nsome additional policy firming may be appropriate to atemerging risks to the economic outlook.\ntain a sufficiently restrictive policy stance to return inflation to 2 percent over time. Many participants noted Committee Policy Actions\nthat the likely effects of recent banking-sector develop- In their discussion of monetary policy for this meeting,\nments on economic activity and inflation had led them members agreed that recent indicators pointed to modto lower their assessments of the federal funds rate target est growth in spending and production. They also conrange that would be sufficiently restrictive compared curred that job gains had picked up in recent months and\nwith assessments based solely on the recent economic were running at a robust pace, that the unemployment\ndata. In determining the extent of future increases in the rate had remained low, and that inflation remains eletarget range, participants judged that it would be appro- vated. Members concurred that the U.S. banking system\npriate to take into account the cumulative tightening of is sound and resilient. They also agreed that recent demonetary policy, the lags with which monetary policy af- velopments were likely to result in tighter credit condifects economic activity and inflation, and economic and tions for households and businesses and to weigh on\nfinancial developments. economic activity, hiring, and inflation, but that the extent of these effects was uncertain. Members also conIn light of the highly uncertain economic outlook, parcurred that they remained highly attentive to inflation\nticipants underscored the importance of closely monirisks.\ntoring incoming information and assessing the implications for future monetary policy decisions. Participants Members agreed that the Committee seeks to achieve\nnoted that it would be particularly important to review maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals,\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nmembers agreed to raise the target range for the federal • Roll over at auction the amount of principal\nfunds rate to 4¾ to 5 percent. Members agreed that they payments from the Federal Reserve’s holdwould closely monitor incoming information and assess ings of Treasury securities maturing in each\nthe implications for monetary policy. Given recent de- calendar month that exceeds a cap of\nvelopments, members anticipated that some additional $60 billion per month. Redeem Treasury\npolicy firming may be appropriate in order to attain a coupon securities up to this monthly cap\nstance of monetary policy that is sufficiently restrictive and Treasury bills to the extent that coupon\nto return inflation to 2 percent over time. Members con- principal payments are less than the\ncurred that, in determining the extent of future increases monthly cap.\nin the target range, they would take into account the cu-\n• Reinvest into agency mortgage-backed semulative tightening of monetary policy, the lags with\ncurities (MBS) the amount of principal paywhich monetary policy affects economic activity and inments from the Federal Reserve’s holdings\nflation, and economic and financial developments. In\nof agency debt and agency MBS received in\naddition, members agreed that they would continue reeach calendar month that exceeds a cap of\nducing the Federal Reserve’s holdings of Treasury secu-\n$35 billion per month.\nrities and agency debt and agency MBS, as described in\nits previously announced plans. All members affirmed • Allow modest deviations from stated\nthat they remained strongly committed to returning in- amounts for reinvestments, if needed for\nflation to its 2 percent objective. operational reasons. Members agreed that, in assessing the appropriate stance • Engage in dollar roll and coupon swap\nof monetary policy, they would continue to monitor the transactions as necessary to facilitate settleimplications of incoming information for the economic ment of the Federal Reserve’s agency MBS\noutlook. They would be prepared to adjust the stance of transactions.”\nmonetary policy as appropriate if risks emerge that could\nThe vote also encompassed approval of the statement\nimpede the attainment of the Committee’s goals. Membelow for release at 2:00 p.m.:\nbers agreed that their assessments will take into account\na wide range of information, including readings on labor “Recent indicators point to modest growth in\nmarket conditions, inflation pressures and inflation ex- spending and production. Job gains have\npectations, and financial and international develop- picked up in recent months and are running at\nments. a robust pace; the unemployment rate has remained low. Inflation remains elevated. At the conclusion of the discussion, the Committee\nvoted to direct the Federal Reserve Bank of New York, The U.S. banking system is sound and resilient.\nuntil instructed otherwise, to execute transactions in the Recent developments are likely to result in\nSystem Open Market Account in accordance with the tighter credit conditions for households and\nfollowing domestic policy directive, for release at businesses and to weigh on economic activity,\n2:00 p.m.: hiring, and inflation. The extent of these effects\nis uncertain. The Committee remains highly at-\n“Effective March 23, 2023, the Federal Open\ntentive to inflation risks. Market Committee directs the Desk to:\nThe Committee seeks to achieve maximum em-\n• Undertake open market operations as necployment and inflation at the rate of 2 percent\nessary to maintain the federal funds rate in\nover the longer run. In support of these goals,\na target range of 4¾ to 5 percent.\nthe Committee decided to raise the target range\n• Conduct standing overnight repurchase for the federal funds rate to 4¾ to 5 percent.\nagreement operations with a minimum bid The Committee will closely monitor incoming\nrate of 5 percent and with an aggregate op- information and assess the implications for\neration limit of $500 billion. monetary policy. The Committee anticipates\nthat some additional policy firming may be ap-\n• Conduct standing overnight reverse repurpropriate in order to attain a stance of monetary\nchase agreement operations at an offering\npolicy that is sufficiently restrictive to return inrate of 4.8 percent and with a per-counterflation to 2 percent over time. In determining\nparty limit of $160 billion per day.\n\n_____________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _M__ar_c_h_ 2_1_–_2_2_,_ 2_0_2_3_______________________P__ag_e_ _1_1\nthe extent of future increases in the target range, To support the Committee’s decision to raise the target\nthe Committee will take into account the cumu- range for the federal funds rate, the Board of Governors\nlative tightening of monetary policy, the lags of the Federal Reserve System voted unanimously to\nwith which monetary policy affects economic raise the interest rate paid on reserve balances to 4.9 peractivity and inflation, and economic and finan- cent, effective March 23, 2023. The Board of Govercial developments. In addition, the Committee nors of the Federal Reserve System voted unanimously\nwill continue reducing its holdings of Treasury to approve a ¼ percentage point increase in the primary\nsecurities and agency debt and agency mort- credit rate to 5 percent, effective March 23, 2023.6\ngage-backed securities, as described in its previIt was agreed that the next meeting of the Committee\nously announced plans. The Committee is\nwould be held on Tuesday–Wednesday, May 2–3, 2023.\nstrongly committed to returning inflation to its\nThe meeting adjourned at 10:15 a.m. on March 22, 2023.\n2 percent objective. Notation Vote\nIn assessing the appropriate stance of monetary\nBy notation vote completed on February 21, 2023, the\npolicy, the Committee will continue to monitor\nCommittee unanimously approved the minutes of the\nthe implications of incoming information for\nCommittee meeting held on January 31–Februthe economic outlook. The Committee would\nary 1, 2023.\nbe prepared to adjust the stance of monetary\npolicy as appropriate if risks emerge that could\nimpede the attainment of the Committee’s\ngoals. The Committee’s assessments will take\n_______________________\ninto account a wide range of information, inJoshua Gallin\ncluding readings on labor market conditions, inSecretary\nflation pressures and inflation expectations, and\nfinancial and international developments.”\nVoting for this action: Jerome H. Powell, John C. Williams, Michael S. Barr, Michelle W. Bowman, Lisa D. Cook, Austan D. Goolsbee, Patrick Harker, Philip N. Jefferson, Neel Kashkari, Lorie K. Logan, and\nChristopher J. Waller. Voting against this action: None.\n6 In taking this action, the Board approved requests to estab- March 23, 2023, or the date such Reserve Banks inform the\nlish that rate submitted by the Boards of Directors of the Fed- Secretary of the Board of such a request. (Secretary’s note:\neral Reserve Banks of Boston, New York, Philadelphia, Rich- Subsequently, the Federal Reserve Banks of Cleveland, Chimond, Atlanta, Kansas City, Dallas, and San Francisco. The cago, St. Louis, and Minneapolis were informed of the Board’s\nvote also encompassed approval by the Board of Governors approval of their establishment of a primary credit rate of\nof the establishment of a 5 percent primary credit rate by the 5 percent, effective March 23, 2023.)\nremaining Federal Reserve Banks, effective on the later of",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230322.pdf",
+    "action": "Raised",
+    "rate": "4.75%-5.00%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled that 'some additional policy firming may be appropriate' to achieve a sufficiently restrictive stance to bring inflation down to 2%. However, it emphasized it would closely monitor incoming data, especially the effects of tighter credit conditions from recent banking sector stress.",
+    "key_economic_factors": [
+      "Inflation remains elevated, with core PCE at 4.7% and little progress on disinflation in services prices",
+      "Strong labor market with robust job gains and unemployment at 3.6%",
+      "Recent banking sector turmoil (e.g., Silicon Valley Bank, Signature Bank) is likely to tighten credit conditions",
+      "Earlier economic data were stronger than expected, supporting a case for further rate hikes"
+    ],
+    "economic_outlook": "The Fed acknowledged a 'modest' pace of economic growth but sees risks tilted to the downside due to likely tighter credit conditions from bank stress. The labor market remains very tight, but participants expect below-trend GDP growth to be needed to rebalance supply and demand. Inflation is still far above the 2% target, and progress on disinflation has been slower than hoped.",
+    "market_impact": "Markets should expect further rate hikes unless banking stress significantly slows the economy. Businesses and consumers will face higher borrowing costs, while investors should prepare for continued volatility as the Fed balances inflation control with financial stability risks."
+  },
+  {
+    "date": "2023-02-01",
+    "title": "FOMC Meeting 2023-02-01",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJanuary 31–February 1, 2023\nA joint meeting of the Federal Open Market Committee Patricia Zobel, Manager pro tem, System Open Market\nand the Board of Governors of the Federal Reserve Sys- Account\ntem was held in the offices of the Board of Governors\nStephanie R. Aaronson, Senior Associate Director,\non Tuesday, January 31, 2023, at 10:00 a.m. and continDivision of Research and Statistics, Board\nued on Wednesday, February 1, 2023, at 9:00 a.m.1\nJose Acosta, Senior Communications Analyst, Division\nAttendance\nof Information Technology, Board\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nIsaiah C. Ahn, Information Management Analyst,\nMichael S. Barr\nDivision of Monetary Affairs, Board\nMichelle W. Bowman\nLael Brainard\nAlyssa Arute,2 Manager, Division of Reserve Bank\nLisa D. Cook\nOperations and Payment Systems, Board\nAustan D. Goolsbee\nPatrick Harker Kartik B. Athreya, Executive Vice President, Federal\nPhilip N. Jefferson Reserve Bank of Richmond\nNeel Kashkari\nLorie K. Logan Penelope A. Beattie, Section Chief, Office of the\nChristopher J. Waller Secretary, Board\nThomas I. Barkin, Raphael W. Bostic, Mary C. Daly, Travis J. Berge, Principal Economist, Division of\nLoretta J. Mester, and Helen E. Mucciolo,\nResearch and Statistics, Board\nAlternate Members of the Committee\nDavid Bowman, Senior Associate Director, Division of\nJames Bullard and Susan M. Collins, Presidents of the\nMonetary Affairs, Board\nFederal Reserve Banks of St. Louis and Boston,\nrespectively\nIsabel Cairó, Principal Economist, Division of\nKelly J. Dubbert, Interim President of the Federal Monetary Affairs, Board\nReserve Bank of Kansas City\nPrabal Chakrabarti, Executive Vice President, Federal\nJoshua Gallin, Secretary Reserve Bank of Boston\nMatthew M. Luecke, Deputy Secretary\nBrian J. Bonis, Assistant Secretary Kathryn B. Chen, Director of Cross Portfolio Policy &\nMichelle A. Smith, Assistant Secretary Analysis, Federal Reserve Bank of New York\nMark E. Van Der Weide, General Counsel\nLaura Choi, Senior Vice President, Federal Reserve\nRichard Ostrander, Deputy General Counsel\nTrevor A. Reeve, Economist Bank of San Francisco\nStacey Tevlin, Economist\nDaniel M. Covitz, Deputy Director, Division of\nBeth Anne Wilson, Economist\nResearch and Statistics, Board\nShaghil Ahmed, Roc Armenter, James A. Clouse,\nBrian M. Doyle, Eric M. Engen, Anna Paulson, Stephanie E. Curcuru, Deputy Director, Division of\nAndrea Raffo, and William Wascher, Associate International Finance, Board\nEconomists\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of the economic and finan-\n“FOMC” and the “Committee” in these minutes; the Board cial situation.\nof Governors of the Federal Reserve System is referenced as\nthe “Board” in these minutes.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nMarnie Gillis DeBoer, Senior Associate Director, Kurt F. Lewis,2 Special Adviser to the Board, Division\nDivision of Monetary Affairs, Board of Board Members, Board\nNavtej S. Dhillon, Special Adviser to the Board, Laura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Division of Board Members, Board\nBurcu Duygan-Bump, Special Adviser to the Board, Francesca Loria, Senior Economist, Division of\nDivision of Board Members, Board Monetary Affairs, Board\nRochelle M. Edge, Deputy Director, Division of Andrew Meldrum, Assistant Director, Division of\nMonetary Affairs, Board Monetary Affairs, Board\nCharles A. Fleischman, Adviser, Division of Research Ann E. Misback, Secretary, Office of the Secretary,\nand Statistics, Board Board\nGlenn Follette, Associate Director, Division of Michelle M. Neal, Head of Markets, Federal Reserve\nResearch and Statistics, Board Bank of New York\nCarlos Garriga, Senior Vice President, Federal Reserve Giovanni Olivei, Senior Vice President, Federal\nBank of St. Louis Reserve Bank of Boston\nMichael S. Gibson, Director, Division of Supervision Ander Perez-Orive, Principal Economist, Division of\nand Regulation, Board Monetary Affairs, Board\nChristine Graham, Deputy Associate Director, Division Nellisha D. Ramdass, Deputy Director, Division of\nof Supervision and Regulation, Board Monetary Affairs, Board\nJoseph W. Gruber, Executive Vice President, Federal Julie Ann Remache, Head of Cross Market & Portfolio\nReserve Bank of Kansas City Analysis, Federal Reserve Bank of New York\nValerie S. Hinojosa, Section Chief, Division of Linda Robertson, Assistant to the Board, Division of\nMonetary Affairs, Board Board Members, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Zina Bushra Saijid, Senior Financial Analyst, Division\nBoard Members, Board of International Finance, Board\nMichael T. Kiley, Deputy Director, Division of Zack Saravay, Financial Institution and Policy Analyst,\nFinancial Stability, Board Division of Monetary Affairs, Board\nAnna Kovner, Director of Financial Stability Policy Samuel Schulhofer-Wohl, Senior Vice President,\nResearch, Federal Reserve Bank of New York Federal Reserve Bank of Dallas\nDavid E. Lebow, Senior Associate Director, Division Chiara Scotti, Deputy Associate Director, Division of\nof Research and Statistics, Board Financial Stability, Board\nSylvain Leduc, Director of Research, Federal Reserve Nitish Ranjan Sinha, Special Adviser to the Board,\nBank of San Francisco Division of Board Members, Board\nAndreas Lehnert, Director, Division of Financial Ellis W. Tallman, Executive Vice President, Federal\nStability, Board Reserve Bank of Cleveland\nKaren Leone de Nie, Vice President, Reserve Bank of Manjola Tase, Principal Economist, Division of\nAtlanta Monetary Affairs, Board\n\n_________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ J_a_n_u_a_ry_ _3_1–_F__eb_r_u_a_r_y _1_, _2_0_2_3____________________P_a_g_e_ _3\nAlene G. Tchourumoff, Senior Vice President, Federal Neel Kashkari, President of the Federal Reserve Bank of\nReserve Bank of Minneapolis Minneapolis, with Mary C. Daly, President of the Federal\nReserve Bank of San Francisco, as alternate. Robert J. Tetlow, Senior Adviser, Division of Monetary\nBy unanimous vote, the following officers of the ComAffairs, Board\nmittee were selected to serve until the selection of their\nClara Vega, Special Adviser to the Board, Division of successors at the first regularly scheduled meeting of the\nBoard Members, Board Committee in 2024:\nJerome H. Powell Chair\nJeffrey D. Walker,2 Associate Director, Division of\nJohn C. Williams Vice Chair\nReserve Bank Operations and Payment Systems,\nJoshua Gallin Secretary\nBoard\nMatthew M. Luecke Deputy Secretary\nBrian J. Bonis Assistant Secretary\nMin Wei, Senior Associate Director, Division of\nMichelle A. Smith Assistant Secretary\nMonetary Affairs, Board\nMark E. Van Der Weide General Counsel\nJonathan Willis, Vice President and Senior Economist, Richard Ostrander Deputy General Counsel\nFederal Reserve Bank of Atlanta Charles C. Gray Assistant General Counsel\nTrevor A. Reeve Economist\nPaul R. Wood, Special Adviser to the Board, Division Stacey Tevlin Economist\nof Board Members, Board Beth Anne Wilson Economist\nRebecca Zarutskie, Special Adviser to the Board,\nShaghil Ahmed\nDivision of Board Members, Board Roc Armenter\nJames A. Clouse\nAnnual Organizational Matters3\nBrian M. Doyle\nThe agenda for this meeting reported that advices of the\nEric M. Engen\nelection of the following members and alternate memBeverly J. Hirtle\nbers of the Federal Open Market Committee for a term\nAnna Paulson\nbeginning January 31, 2023, were received and that these\nAndrea Raffo\nindividuals executed their oaths of office. Chiara Scotti4\nThe elected members and alternate members were as fol- William Wascher Associate Economists\nlows:\nBy unanimous vote, the Committee selected the Federal\nJohn C. Williams, President of the Federal Reserve Bank Reserve Bank of New York to execute transactions for\nof New York, with Helen E. Mucciolo, Interim First the System Open Market Account (SOMA). Vice President of the Federal Reserve Bank of New\nBy unanimous vote, the Committee selected Patricia ZoYork, as alternate\nbel to serve at the pleasure of the Committee as deputy\nPatrick Harker, President of the Federal Reserve Bank manager of the SOMA through February 20, 2023, and\nof Philadelphia, with Thomas I. Barkin, President of the Roberto Perli and Julie Ann Remache to serve at the\nFederal Reserve Bank of Richmond, as alternate pleasure of the Committee as manager and deputy manager of the SOMA, respectively, effective February 21,\nAustan D. Goolsbee, President of the Federal Reserve\n2023, on the understanding that these selections were\nBank of Chicago, with Loretta J. Mester, President of the\nsubject to being satisfactory to the Federal Reserve Bank\nFederal Reserve Bank of Cleveland, as alternate\nof New York. Lorie K. Logan, President of the Federal Reserve Bank\nSecretary’s note: The Federal Reserve Bank of\nof Dallas, with Raphael W. Bostic, President of the FedNew York subsequently sent advice that the seeral Reserve Bank of Atlanta, as alternate\nlections indicated previously were satisfactory.\n3 Committee organizational documents are available at 4 Chiara Scotti’s selection was set to be effective upon her emwww.federalreserve.gov/monetarypolicy/rules_authoriza- ployment with the Federal Reserve Bank of Dallas.\ntions.htm.\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nAs part of the annual review of the Committee’s govern- participants judged that the FOMC would likely slow the\nance documents for open market operations and foreign pace of rate increases further at the current meeting, and\ncurrency transactions, the Committee unanimously ap- respondents to the Desk’s Survey of Primary Dealers\nproved a new governance document titled “FOMC Au- and Survey of Market Participants widely expected the\nthorizations and Continuing Directives for Open Market Committee to implement a ¼ percentage point increase\nOperations.”3 The new document includes (1) authori- in the target range for the federal funds rate. Survey rezations previously in the Committee’s Authorization for spondents assessed that uncertainty around the likely\nForeign Currency Operations and Authorization for peak level of the policy rate narrowed relative to the\nDomestic Open Market Operations; (2) a new “Contin- comparable results from the December surveys and, on\nuing Directive for Domestic Open Market Operations,” average, placed significant probability on a target federal\nwhich combines direction to the Desk in the Standing funds rate range close to 5 percent. A significant share\nRepurchase Agreement Facility and FIMA Repurchase of survey respondents anticipated that the Committee\nAgreement Facility resolutions with direction to the would hold the policy rate stable for much of 2023. Desk to continue to carry out other ongoing activities;\nModerating inflation in the United States and improving\n(3) the Foreign Currency Directive; and (4) two other\nglobal growth prospects lifted market sentiment. While\nexisting documents related to contingency arrangemost Desk survey respondents expected subdued\nments. The new unified document improves clarity and\ngrowth or a mild recession in 2023, market participants\ntransparency in the governance of Desk activities but\ncontinued to see notable uncertainties ahead, including\ndoes not make substantive changes to governance. The\nprospects for a deeper downturn or the potential for\ndomestic policy directive released after each FOMC\nmore persistent inflation.\nmeeting will have modest conforming changes going\nforward. Regarding the international outlook, signs of a faster reopening in China and a less severe downturn in Europe\nAhead of the vote on policies relating to information seeased concerns about global growth, contributing to a\ncurity, external communications, and investment and\ndepreciation in the exchange value of the dollar and suptrading, the Chair commented on the critical importance\nporting optimism about emerging market economies.\nof maintaining the public’s trust and confidence in the\nNarrowing interest rate differentials between the United\nFederal Reserve as an institution and indicated that these\nStates and other advanced foreign economies also conpolicies were very important in that regard. All particitributed to dollar depreciation, as some foreign central\npants indicated support for, and agreed to abide by the\nbank communications suggested a need for further monrequirements of, the Program for Security of FOMC Inetary policy tightening to address inflation pressures. In\nformation (Program), the FOMC Policy on External\naddition, the Bank of Japan unexpectedly widened its\nCommunications of Committee Participants, the FOMC\nyield curve control band at its December meeting to adPolicy on External Communications of Federal Reserve\ndress market functioning issues in the market for JapaSystem Staff, and the Investment and Trading Policy for\nnese government bonds. Over the period, some other\nFOMC Officials. The Committee voted unanimously to\ncentral banks communicated that they were at or near a\nreaffirm all four policies without revision.3\npoint where it would be appropriate to pause policy rate\nAs part of the Committee’s annual organizational review increases and assess the effects of cumulative policy\nprocess, all participants indicated support for the State- tightening.\nment on Longer-Run Goals and Monetary Policy StratThe manager pro tem turned next to a discussion of\negy, and the Committee voted unanimously to reaffirm\nmoney markets and Federal Reserve operations. Money\nit without revision.3\nmarket rates were stable over the period, with the yearDevelopments in Financial Markets and Open end passing smoothly. As expected, balances in the\nMarket Operations overnight reverse repurchase agreement (ON RRP) faThe manager pro tem turned first to a review of U.S. cility increased at year-end but quickly retraced. Market\nfinancial market developments. Market participants participants generally expected usage of the ON RRP fagenerally expected U.S. economic growth to moderate cility to continue a downward trend in 2023, moderating\nthis year, although there was a wide dispersion in views the decline in reserve balances as the Federal Reserve’s\nabout the extent of a potential slowdown. Market par- holdings of securities continue to run off. Should tranticipants interpreted incoming data as pointing to mod- sitory pressures occur in money markets over the course\nerating inflation risks. Against this backdrop, market of the year, the manager pro tem noted that the standing\n\n_________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ J_a_n_u_a_ry_ _3_1–_F__eb_r_u_a_r_y _1_, _2_0_2_3____________________P_a_g_e_ _5\nrepurchase agreement (repo) facility and discount win- change in the employment cost index (ECI) of hourly\ndow would be available to help support effective mone- compensation in the private sector slowed to a 4.0 pertary policy implementation. cent annual rate in December, while the three-month\nchange measure of average hourly earnings (AHE) for\nThe manager noted that, over coming months, developall employees eased to an annual rate of 4.1 percent.\nments affecting the Treasury General Account (TGA)\nOver the 12 months ending in December, the ECI inand Treasury financing could influence money market\ncreased 5.1 percent, and AHE rose 4.6 percent.\nconditions. An increase in TGA balances associated\nwith April individual tax receipts could result in a tem- Consumer price inflation eased in November and Deporary decline in reserve balances. In subsequent cember but remained elevated. Total PCE price inflamonths, uncertainties associated with the debt limit tion was 5.0 percent over the 12 months ending in Decould also be important. In particular, the Treasury cember, 1.1 percentage points lower than the October\ncould increase bill issuance to rebuild TGA balances figure. Core PCE price inflation, which excludes\nonce the debt limit is lifted, reducing reserves and po- changes in consumer energy prices and many consumer\ntentially lifting money market rates. The manager pro food prices, was 4.4 percent over the 12 months ending\ntem noted that in recent months, investors in the in December, down 0.7 percentage point from its OctoON RRP facility had responded to small increases in ber reading. The trimmed mean measure of 12-month\nmoney market rates by shifting balances into private in- PCE price inflation constructed by the Federal Reserve\nvestments, and that reductions in ON RRP volumes Bank of Dallas was 4.4 percent in December, 0.3 permay help smooth adjustments in money markets. centage point lower than in October. The latest surveybased readings on longer-term inflation expectations\nBy unanimous vote, the Committee ratified the Desk’s\nfrom the University of Michigan Surveys of Consumers\ndomestic transactions over the intermeeting period.\nand the Federal Reserve Bank of New York’s Survey of\nThere were no intervention operations in foreign\nConsumer Expectations remained within the range of\ncurrencies for the System’s account during the\ntheir values reported in recent months, while near-term\nintermeeting period.\nmeasures of inflation expectations from these surveys\nStaff Review of the Economic Situation moved down along with actual inflation. The information available at the time of the January 31–\nAlthough real GDP expanded at an annual rate of\nFebruary 1 meeting indicated that labor market condi2.9 percent in the fourth quarter, real private domestic\ntions remained tight in December, with the unemployfinal purchases (PDFP)—which includes PCE, residenment rate at a historical low. Consumer price inflation—\ntial investment, and business fixed investment—inas measured by the 12-month percent change in the\ncreased at a subdued annual rate of 0.2 percent. Real\nprice index for personal consumption expenditures\nGDP growth was bolstered especially by a large gain in\n(PCE)—continued to step down in November and Deinventory investment and a notable contribution from\ncember but was still elevated. Real gross domestic prodnet exports, as imports fell more than exports. Both inuct (GDP) increased at a solid pace in the fourth quarter\nventories and net exports are volatile categories in aggreof last year.\ngate spending. Regarding production, U.S. manufacturTotal nonfarm payroll employment increased solidly in ing output declined sizably in both November and DeDecember, although at a slower pace than in the previ- cember.\nous two months. The unemployment rate moved back\nForeign economic growth slowed in the fourth quarter,\ndown to 3.5 percent in December. The unemployment\nweighed down by the COVID-19-related slowdown in\nrate for African Americans was unchanged, and the unChina and repercussions of Russia’s war against Ukraine.\nemployment rate for Hispanics ticked up; the unemployWeaker global demand and a rebalancing from goods to\nment rates for both groups remained above the aggreservices also resulted in a pronounced slowdown in\ngate measure. The aggregate measures of both the labor\nmanufacturing, which weighed on activity in emerging\nforce participation rate and the employment-to-populaAsia. In China, the pivot away from its zero-COVID\ntion ratio edged up. The private-sector job openings\npolicy appears to have resulted in a rapid surge in virus\nrate, as measured by the Job Openings and Labor Turncases late in the year, but also in a rebound in activity as\nover Survey, was flat in November and remained high.\nrestrictions were rapidly removed. In Europe, the slowMeasures of nominal wage growth slowed at the end of down in economic growth was tempered by mild winter\nlast year but continued to be elevated. The three-month weather, which also prompted further declines in energy\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nprices. A decline in retail energy as well as food prices rates. Bank deposit rates gradually increased but contincontributed to an easing in headline consumer price in- ued to lag cumulative increases in the federal funds rate.\nflation in many foreign economies. With core inflation\nOver the intermeeting period, investor perceptions of an\nremaining elevated amid tight labor markets, however,\nimproved economic outlook in China and Europe conmany central banks continued to tighten monetary poltributed to increases in foreign risky asset prices and\nicy.\nweighed on the exchange value of the dollar. Global eqStaff Review of the Financial Situation uity indexes rose, supported in part by lower European\nOver the intermeeting period, the market-implied fed- natural gas prices and China’s decision to abandon its\neral funds rate path was little changed for 2023 but mod- zero-COVID policy. Sovereign yields increased notably\nerately moved down further out. Nominal Treasury in the euro area and Japan, reflecting more-restrictiveyields were little changed, while swaps-based inflation than-expected communications from the European\ncompensation measures fell notably. Stock market in- Central Bank and the Bank of Japan’s decision to widen\ndexes were slightly higher, and market volatility declined its yield curve control target band, respectively. In conbut remained slightly elevated. Businesses and house- trast, yields in other major advanced foreign economies\nholds continued to face elevated borrowing costs. were little changed on net. The staff’s broad dollar index\nCredit quality remained strong overall, although there declined over the intermeeting period, with larger dewere some signs of deterioration for consumer loans. clines against emerging market economy (EME) currencies amid significant inflows into EME-focused investThe market-implied federal funds rate path for 2023 was\nment funds in January on improved investor sentiment.\nlittle changed, on net, during the intermeeting period but\nNarrowing yield differentials between the United States\nfell moderately beyond mid-2024. On net, nominal\nand some advanced foreign economies also contributed\nTreasury yields were roughly unchanged, and swapsto the depreciation of the dollar.\nmarket-implied inflation compensation measures fell\nnotably. In domestic credit markets, businesses and households\ncontinued to face elevated borrowing costs. Yields for\nBroad stock price indexes ended the intermeeting period\ncorporate bonds declined, while borrowing costs for levonly slightly higher despite sizable fluctuations. Equity\neraged loans were little changed at elevated levels. Bank\nprices fell sharply following the December FOMC stateinterest rates for commercial and industrial (C&I) loans\nment but recovered over the remainder of the period in\ncontinued to trend upward in the fourth quarter. Yields\nresponse to data releases. The VIX—the one-month\non municipal bonds declined during the intermeeting peoption-implied volatility on the S&P 500—decreased\nriod but remained above their historical average. Resisomewhat but remained slightly above the median range\ndential mortgage rates were little changed over the interof its historical distribution. Spreads on investmentmeeting period and remained well above their levels in\ngrade and high-yield corporate bonds narrowed somethe previous tightening cycle, notwithstanding the dewhat, on net, over the intermeeting period, while spreads\ncline from their peak in early November. Interest rates\non municipal bonds narrowed substantially.\non existing credit cards continued to increase in recent\nConditions in short-term funding markets remained sta- months, and interest rates on new auto loans also rose\nble over the intermeeting period, with the December in- through mid-January.\ncrease in the target range for the federal funds rate and\nCredit remained broadly available for businesses and\nthe associated increases in the Federal Reserve’s adminhouseholds with strong credit quality but remained tight\nistered rates passing through quickly to overnight money\nfor lower-rated borrowers. Lending standards tightened\nmarket rates. In secured markets, repo rates were\nfurther for bank-dependent borrowers. Issuance of corroughly the same as the ON RRP offering rate but conporate bonds was subdued in December before picking\ntinued to occasionally print slightly higher around days\nup somewhat in January. New launches of leveraged\nwith Treasury bill and coupon settlements. Daily takeloans were notably subdued in December and January,\nup in the ON RRP facility remained elevated, reflecting\nlikely reflecting soft investor demand and higher refercontinued elevated assets under management (AUM) for\nence rates on floating-rate loans.\nmoney market mutual funds (MMFs), ongoing uncertainty around the policy path, and limited supply of al- In the January Senior Loan Officer Opinion Survey on\nternative investments such as Treasury bills. Net yields Bank Lending Practices (SLOOS), banks reported havon MMFs rose further over the intermeeting period, ing tightened C&I and commercial real estate (CRE)\nmostly passing through the increase in administered\n\n_________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ J_a_n_u_a_ry_ _3_1–_F__eb_r_u_a_r_y _1_, _2_0_2_3____________________P_a_g_e_ _7\nlending standards over the previous three months. Al- The credit quality of households also remained strong,\nthough C&I loans at banks continued to expand through on balance, despite some signs of deterioration. DelinDecember, they decelerated relative to earlier in the year, quencies for Federal Housing Administration mortgages\nin line with tighter lending standards and weaker demand increased slightly, but overall mortgage delinquency\nfor C&I loans over the fourth quarter. CRE loan growth rates were still near pre-pandemic lows. Delinquency\non domestic banks’ balance sheets remained robust in rates for credit cards and auto loans continued to rise\nthe fourth quarter. Meanwhile, issuance of commercial during the third quarter. While delinquency rates on\nmortgage-backed securities remained slow in November credit cards were still relatively low, those on auto loans\nand December, amid high base interest rates and rose above pre-pandemic levels. In the January SLOOS,\nspreads. Some tightening in lending conditions was also banks reported expecting a further deterioration in the\nevident for small businesses, with the share of small quality of household loans in 2023, especially for confirms reporting that it was more difficult to obtain credit sumer loans.\ncompared with three months earlier continuing to trend\nThe staff provided an update on its assessment of the\nup through December.\nstability of the financial system and, on balance, characCredit was broadly available in the residential mortgage terized the financial vulnerabilities of the U.S. financial\nmarket for high-credit-score borrowers who met stand- system as moderate. The staff judged that asset valuaard conforming loan criteria. Credit availability for tion pressures remained notable. In particular, the staff\nhouseholds with lower credit scores was considerably noted that measures of valuations in both residential and\ntighter, though comparable to levels prevailing before commercial property markets remained high, and that\nthe pandemic. Purchase mortgage applications and re- the potential for large declines in property prices refinance applications were both little changed over the in- mained greater than usual. In addition, the forward\ntermeeting period. Home equity line of credit (HELOC) price-to-earnings ratio for S&P 500 firms remained\nbalances at banks continued to grow through the fourth above its median value despite the decline in equity\nquarter, on net, potentially reflecting homeowners using prices over the past year. The staff assessed that valuaHELOCs as a preferred way of extracting home equity tion pressures had eased for corporate bonds and leverin the presence of high current mortgage rates. In the aged loans, as spreads in both markets had increased\nJanuary SLOOS, banks reported tighter standards for all from recent lows.\nconsumer loans. Even so, total credit card balances inThe staff assessed that vulnerabilities associated with\ncreased at a solid pace in November, while auto loans\nhousehold and business leverage remained moderate,\ngrew modestly.\nnoting that although measures of business leverage were\nOverall, credit quality remained strong, although there at or near a historically high level, the ability of firms to\nwas some deterioration for credit card and auto loan service their debt has kept pace with rising debt loads\nborrowers and some predictors of future credit quality and interest rates. Household borrowing rose for borworsened a bit further. The volume of corporate bond rowers with prime credit scores but declined for houserating downgrades outpaced upgrades in December, al- holds with lower credit scores. Vulnerabilities associated\nthough the level of downgrades remained moderate. with financial leverage also remained moderate. In parLeveraged loans experienced notable net rating down- ticular, risk-based capital ratios for banks increased\ngrades in December, but the pace moderated in January. slightly, a staff measure of leverage at life insurance comDefault rates on corporate bonds and leveraged loans panies remained relatively flat in recent quarters, and levremained low. Measures of expected default probabili- erage among private credit funds has remained steady\nties for corporate bonds and leveraged loans remained for several years. While measures of hedge fund leverage\nelevated relative to their historical distributions. The have decreased since the pandemic shock, the staff\ncredit quality of businesses that borrow from banks re- noted that leverage among the largest funds was on track\nmained sound, on balance, although, in the January to return to 2019 levels. SLOOS, banks reported expecting a deterioration in the\nVulnerabilities associated with funding risks were charquality of business loans in their portfolio over 2023.\nacterized as moderate. The rising rate environment has\nDelinquencies on small business loans continued to edge\nprompted inflows into prime retail MMFs, while AUM\nup in November but remained low relative to historical\nat prime institutional funds, which have proved more\nlevels.\nsensitive to turmoil in the past, have grown much less. Assets in open-end mutual funds that invest in less liquid\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ninstruments like bank loans or high-yield corporate The sluggish growth in real private domestic spending\nbonds have declined notably over the past year. In re- expected this year and the persistently tight financial\nsponse to vulnerabilities at MMFs and open-end mutual conditions were seen as tilting the risks to the downside\nfunds, the Securities and Exchange Commission has around the baseline projection for real economic activproposed rules to make these funds more resilient. ity, and the staff still viewed the possibility of a recession\nsometime this year as a plausible alternative to the baseStaff Economic Outlook\nline. Moreover, with core PCE price inflation having\nThe forecast for the U.S. economy prepared by the staff\nslowed in recent months, along with the cumulative upfor this FOMC meeting had a somewhat higher path for\nward revisions to the core inflation projection over the\nthe level of real GDP and a modestly lower path for the\npast year and the expected softening in economic\nunemployment rate than in the December projection, regrowth, the staff now viewed the risks around the baseflecting both the recent data and a small additional boost\nline forecast for inflation this year as balanced. For beto output from a lower projected path for the dollar. Alyond this year, the staff continued to view the risks\nthough recent data indicated that real GDP growth in\naround the inflation projection as skewed to the upside,\nthe fourth quarter of 2022 was stronger than expected,\nreflecting concerns about the potential persistence of inreal PDFP growth was weaker than previously forecast,\nflation.\nand the large, unexpected boost to GDP growth from\ninventory investment was not projected to persist. In Participants’ Views on Current Conditions and the\npart reflecting the lagged effects of previous monetary Economic Outlook\npolicy tightening, the staff still projected real GDP In their discussion of current economic conditions, pargrowth to slow markedly this year and the labor market ticipants noted that recent indicators pointed to modest\nto soften. The staff forecast continued to include a growth in spending and production. Nonetheless, job\npickup in real GDP growth starting next year, although gains had been robust in recent months, and the unemprojected output growth in 2024 and 2025 remains be- ployment rate remained low. Inflation had eased somelow the staff’s estimate of potential output growth. The what but remained elevated. Participants recognized\nlevel of real output was expected to move down to the that Russia’s war against Ukraine was causing tremenstaff’s estimate of potential near the end of 2025. Like- dous human and economic hardship and was contribwise, the unemployment rate was projected to gradually uting to elevated global uncertainty. Against this backmove up to the staff’s estimate of its natural rate at the ground, participants continued to be highly attentive to\nend of 2025. inflation risks. On a four-quarter change basis, total PCE price inflation Participants agreed that cumulative policy firming to\nwas forecast to be 2.8 percent in 2023, and core inflation date had reduced demand in the most interest-rate-senwas expected to be 3.2 percent, both lower than in the sitive sectors of the economy, particularly housing. ParDecember projection. With the effects of supply–de- ticipants observed that growth in economic activity in\nmand imbalances in goods markets expected to further 2022 had been below its longer-run trend and expected\nunwind and labor and product markets projected to be- that real GDP growth would slow further in 2023. While\ncome less tight, the staff continued to forecast that infla- real GDP growth had rebounded in the second half of\ntion would decline further over 2024 and 2025. On a 2022, several participants noted that growth in PDFP\nfour-quarter change basis, core goods inflation was pro- had nearly stalled in the fourth quarter. With inflation\njected to move down further this year and then remain remaining unacceptably high, participants expected that\nsubdued, housing services inflation was expected to peak a period of below-trend growth in real GDP would be\nlater this year and then move down, and core nonhous- needed to bring aggregate demand into better balance\ning services inflation was forecast to slow as nominal with aggregate supply and thereby reduce inflationary\nwage growth eased. With steep declines in consumer pressures. Some participants judged that recent ecoenergy prices and a substantial moderation in food price nomic data signaled a somewhat higher chance of coninflation expected for this year, total inflation was pro- tinued subdued economic growth, with inflation falling\njected to step down markedly this year and then to track over time to the Committee’s longer-run goal of 2 percore inflation over the following two years. In 2025, cent, although some participants noted that the probaboth total and core PCE price inflation were expected to bility of the economy entering a recession in 2023 rebe near 2 percent. mained elevated.\n\n_________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ J_a_n_u_a_ry_ _3_1–_F__eb_r_u_a_r_y _1_, _2_0_2_3____________________P_a_g_e_ _9\nIn their discussion of the household sector, participants spread weakness in the demand for labor. A few particobserved that real consumer spending had declined in ipants remarked that some business contacts appeared\nNovember and December—in part reflecting the tight- keen to retain workers even in the face of slowing deening in financial conditions over the past year—and an- mand for output because of their recent experiences of\nticipated that consumption would likely grow at a sub- labor shortages and hiring challenges. Participants\ndued rate in 2023. Participants noted that excess savings agreed that labor supply remained constrained by strucaccumulated during the pandemic had continued to sup- tural factors such as the effects from the pandemic, inport consumption, although several participants re- cluding those on early retirements, and the reduced availmarked that the importance of this factor would likely ability and increased cost of childcare. Nevertheless,\nwane over time as excess savings continued to be drawn participants noted tentative signs that imbalances bedown or eroded by inflation. A couple of participants tween demand and supply in the labor market were imobserved that some consumers were shifting their proving, with job vacancies and payroll gains declining\nspending to less expensive alternatives. A few partici- somewhat from high levels, the average number of\npants noted the effects of higher interest costs in re- hours worked falling, and growth in wages and employstraining consumption or inhibiting the ability of some ment costs slowing. Some participants commented on\nhouseholds to repay their loans, while a couple of par- the recent reduction in temporary employment, which\nticipants noted that inflation was eroding households’ previously had often preceded more widespread reducpurchasing power. However, a couple of participants tions in labor demand. Under appropriate monetary\nnoted that some states could return part of their sizable policy, participants expected labor market demand and\nbudget surpluses to households through tax cuts or re- supply to come into better balance over time, easing upbates, which would provide support to consumption. ward pressure on nominal wages and prices. A number\nParticipants agreed that activity in the housing market of participants commented on the importance of recoghad continued to weaken, largely reflecting the increase nizing that, to the extent national unemployment inin mortgage rates over the past year. creases, historical evidence indicates that even larger increases in the unemployment rate for some demographic\nRegarding the business sector, participants observed that\ngroups—particularly African Americans and Hispangrowth in business fixed investment spending had been\nics—would be likely to occur.\nsubdued in the fourth quarter and was being restrained\nby past interest rate increases. A number of participants With inflation still well above the Committee’s longercommented that supply bottlenecks continued to ease, run goal of 2 percent, participants agreed that inflation\nalthough supply chain issues remained a challenge in was unacceptably high. A number of participants comsome sectors. Several participants remarked that the re- mented that the costs of elevated inflation are particucent strong growth in inventory investment will likely larly high for lower-income households. Participants\nslow; a couple of those participants noted that busi- noted that inflation data received over the past three\nnesses appeared more confident that significant supply months showed a welcome reduction in the monthly\nbottlenecks would not reemerge and might therefore pace of price increases but stressed that substantially\nchoose to hold smaller inventories. Some participants more evidence of progress across a broader range of\ncommented that the easing of COVID-related lockdown prices would be required to be confident that inflation\nrestrictions in China or stronger-than-expected growth was on a sustained downward path. Participants noted\nin economic activity in the euro area could provide sup- that core goods prices had declined notably over the preport to final demand in the United States. vious few months as supply bottlenecks had eased but\nanticipated that price declines for this component would\nParticipants agreed that the labor market remained very\ndissipate as the downward pressure on goods prices\ntight and assessed that labor demand substantially exfrom resolving supply bottlenecks fades. Participants\nceeded the supply of available workers. Participants\njudged that housing services inflation would likely begin\nnoted that the unemployment rate had returned to a histo fall later this year, reflecting continued smaller intorically low level in December, job vacancies remained\ncreases, or potentially declines, in rents on new leases.\nhigh, and wage growth remained elevated. Several parParticipants agreed that they had observed less evidence\nticipants noted that recent reductions in the workforces\nof a slowdown in the rate of increase of prices for core\nof some large technology businesses followed much\nservices excluding housing, a category that accounts for\nlarger increases over the previous few years and judged\nmore than half of the core PCE price index. Participants\nthat these reductions did not appear to reflect widejudged that as long as the labor market remained very\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ntight, wage growth in excess of 2 percent inflation and their inflation outlook had become more balanced. Partrend productivity growth would likely continue to put ticipants agreed that the risks to the outlook for ecoupward pressure on some prices in this component. A nomic activity were weighted to the downside. Particicouple of participants observed that changes in wages pants noted that sources of such risks included the protend to lag changes in prices, which can complicate the spect of unexpected negative shocks tipping the econassessment of inflation pressures. A couple of partici- omy into a recession in an environment of subdued\npants remarked that the poor performance of labor growth, the effects of synchronous policy firming by maproductivity growth last year was restraining aggregate jor central banks, and disruptions in the financial system\nsupply, which was contributing to imbalances between and broader economy associated with concerns that the\naggregate demand and aggregate supply and therefore to statutory debt limit might not be raised in a timely manupward pressure on inflation. Several participants noted ner.\nthe possibility that as consumers become more price\nIn their discussion of issues related to financial stability,\nsensitive, businesses might accept lower profit margins\nseveral participants discussed vulnerabilities in the finanin an effort to maintain market share, which could recial system associated with higher interest rates, includduce inflation temporarily. Participants observed that\ning the elevated valuations for some categories of assets,\nindicators of short-term inflation expectations from surparticularly in the CRE sector; the susceptibility of some\nveys of households and businesses as well as from finannonbank financial institutions to runs; and the effect of\ncial markets had come down and that longer-term inflalarge, unrealized losses on some banks’ securities porttion expectations remained well anchored. A number of\nfolios. A few participants commented that international\nparticipants noted the importance of longer-term inflastresses had the potential to transmit to the U.S. financial\ntion expectations remaining anchored and remarked that\nsystem. A number of participants noted the importance\nthe longer inflation remained elevated, the greater the\nof orderly functioning of the market for U.S. Treasury\nrisk of inflation expectations becoming unanchored. In\nsecurities and stressed the importance of the appropriate\nthat adverse scenario, it would be more costly to bring\nauthorities continuing to address issues related to the reinflation down to achieve the Committee’s statutory obsilience of the market. Although several participants\njectives of maximum employment and price stability.\nnoted that the Federal Reserve’s standing liquidity facilParticipants observed that financial conditions remained ities could be helpful in addressing significant pressures\nmuch tighter than in early 2022. However, several par- in funding markets, should they arise, several particiticipants observed that some measures of financial con- pants also noted the challenges of addressing potential\nditions had eased over the past few months. A few par- disruptions in U.S. core market functioning. A few participants noted that increased confidence among market ticipants remarked that recent failures of companies inparticipants that inflation would fall quickly appeared to volved in crypto finance have had a limited effect on the\ncontribute to declines in market expectations of the fed- broader financial system. These participants indicated\neral funds rate path beyond the near term. Participants that this limited effect reflected the minimal extent of\nnoted that it was important that overall financial condi- the crypto market’s connections to the banking system\ntions be consistent with the degree of policy restraint thus far, consistent with the risks associated with many\nthat the Committee is putting into place in order to bring of these activities. Several participants discussed the\ninflation back to the 2 percent goal. value of the Federal Reserve taking additional steps to\nunderstand the potential risks associated with climate\nParticipants observed that the uncertainty associated\nchange or to assess the materiality of such risks in the\nwith their outlooks for economic activity, the labor marcontext of carrying out its responsibilities to evaluate\nket, and inflation was high. Regarding upside risks to\nrisks in the banking system and broader financial system.\ninflation, participants cited a variety of factors, including\nA number of participants stressed that a drawn-out pethe possibility that price pressures could prove to be\nriod of negotiations to raise the federal debt limit could\nmore persistent than anticipated due to, for example, the\npose significant risks to the financial system and the\nlabor market staying tight for longer than anticipated.\nbroader economy. Participants also saw a number of upside risks surrounding the outlook for inflation stemming from factors In their consideration of appropriate monetary policy acabroad, such as China’s relaxation of its zero-COVID tions at this meeting, participants concurred that the\npolicies and Russia’s continuing war against Ukraine. Committee had made significant progress over the past\nHowever, a few participants remarked that the risks to year in moving toward a sufficiently restrictive stance of\nmonetary policy. Even so, participants agreed that,\n\n_________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ J_a_n_u_a_ry_ _3_1–_F__eb_r_u_a_r_y _1_, _2_0_2_3___________________P__ag_e_ _1_1\nwhile there were recent signs that the cumulative effect that could affect inflation and real economic activity.\nof the Committee’s tightening of the stance of monetary Participants generally noted that the Committee’s future\npolicy had begun to moderate inflationary pressures, in- decisions regarding policy would continue to be inflation remained well above the Committee’s longer-run formed by the incoming data and their implications for\ngoal of 2 percent and the labor market remained very the outlook for economic activity and inflation. A numtight, contributing to continuing upward pressures on ber of participants observed that financial conditions\nwages and prices. Against this backdrop, and in consid- had eased in recent months, which some noted could\neration of the lags with which monetary policy affects necessitate a tighter stance of monetary policy.\neconomic activity and inflation, almost all participants\nParticipants also discussed a number of risk-manageagreed that it was appropriate to raise the target range\nment considerations related to the conduct of monetary\nfor the federal funds rate 25 basis points at this meeting.\npolicy. Almost all participants observed that slowing the\nMany of these participants observed that a further slowpace of rate increases at the current juncture would allow\ning in the pace of rate increases would better allow them\nfor appropriate risk management as the Committee asto assess the economy’s progress toward the Commitsessed the extent of further tightening needed to meet\ntee’s goals of maximum employment and price stability\nthe Committee’s goals. Several of those participants obas they determine the extent of future policy tightening\nserved that risks to the economic outlook were becomthat will be required to attain a stance that is sufficiently\ning more balanced. With inflation still well above the\nrestrictive to achieve these goals. A few participants\nCommittee’s longer-run goal, participants generally\nstated that they favored raising the target range for the\nnoted that upside risks to the inflation outlook remained\nfederal funds rate 50 basis points at this meeting or that\na key factor shaping the policy outlook, and that mainthey could have supported raising the target by that\ntaining a restrictive policy stance until inflation is clearly\namount. The participants favoring a 50-basis point inon a path toward 2 percent is appropriate from a riskcrease noted that a larger increase would more quickly\nmanagement perspective. A number of participants obbring the target range close to the levels they believed\nserved that a policy stance that proved to be insuffiwould achieve a sufficiently restrictive stance, taking into\nciently restrictive could halt recent progress in moderataccount their views of the risks to achieving price stabiling inflationary pressures, leading inflation to remain\nity in a timely way. All participants agreed that it was\nabove the Committee’s 2 percent objective for a longer\nappropriate to continue the process of reducing the Fedperiod, and pose a risk of inflation expectations becomeral Reserve’s securities holdings, as described in its preing unanchored.\nviously announced Plans for Reducing the Size of the\nFederal Reserve’s Balance Sheet. Participants noted that the runoff of the balance sheet\nhad been proceeding smoothly. A few participants obIn discussing the policy outlook, with inflation still well\nserved that money markets could experience some temabove the Committee’s 2 percent goal and the labor\nporary pressures as reserves declined if use of the Fedmarket remaining very tight, all participants continued to\neral Reserve’s ON RRP facility continued to remain\nanticipate that ongoing increases in the target range for\nhigh. They noted, however, that such pressures, should\nthe federal funds rate would be appropriate to achieve\nthey occur, would likely cause an upward re-pricing of\nthe Committee’s objectives. Participants affirmed their\nprivate money-market rates that could encourage market\nstrong commitment to returning inflation to the Comparticipants to reduce their use of the facility.\nmittee’s 2 percent objective. In determining the extent\nof future increases in the target range, participants Committee Policy Actions\njudged that it would be appropriate to take into account In their discussion of monetary policy for this meeting,\nthe cumulative tightening of monetary policy, the lags members agreed that recent indicators pointed to modwith which monetary policy affects economic activity est growth in spending and production. Members also\nand inflation, and economic and financial developments. concurred that job gains had been robust in recent\nParticipants observed that a restrictive policy stance months, and the unemployment rate had remained low.\nwould need to be maintained until the incoming data Members agreed that inflation had eased somewhat but\nprovided confidence that inflation was on a sustained remained elevated. Members concurred that Russia’s\ndownward path to 2 percent, which was likely to take war against Ukraine was causing tremendous human and\nsome time. economic hardship and was contributing to elevated\nglobal uncertainty. Members also concurred that they\nParticipants discussed the heightened uncertainty reremained highly attentive to inflation risks.\ngarding the economic outlook and a number of factors\n\n_P_ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nMembers agreed that the Committee seeks to achieve • Conduct overnight reverse repurchase\nmaximum employment and inflation at the rate of 2 per- agreement operations at an offering rate of\ncent over the longer run. In support of these goals, 4.55 percent and with a per-counterparty\nmembers agreed to raise the target range for the federal limit of $160 billion per day; the per-counfunds rate to 4½ to 4¾ percent. Members anticipated terparty limit can be temporarily increased\nthat ongoing increases in the target range would be ap- at the discretion of the Chair.\npropriate in order to attain a stance of monetary policy\n• Roll over at auction the amount of principal\nthat is sufficiently restrictive to return inflation to 2 perpayments from the Federal Reserve’s holdcent over time. Members concurred that, in determining\nings of Treasury securities maturing in each\nthe extent of future increases in the target range, they\ncalendar month that exceeds a cap of\nwould take into account the cumulative tightening of\n$60 billion per month. Redeem Treasury\nmonetary policy, the lags with which monetary policy afcoupon securities up to this monthly cap\nfects economic activity and inflation, and economic and\nand Treasury bills to the extent that coupon\nfinancial developments. In addition, members agreed\nprincipal payments are less than the\nthat they would continue reducing the Federal Reserve’s\nmonthly cap.\nholdings of Treasury securities and agency debt and\nagency mortgage-backed securities, as described in its • Reinvest into agency mortgage-backed sepreviously announced plans. The Committee remained curities (MBS) the amount of principal paystrongly committed to returning inflation to its 2 percent ments from the Federal Reserve’s holdings\nobjective. of agency debt and agency MBS received in\neach calendar month that exceeds a cap of\nMembers agreed that, in assessing the appropriate stance\n$35 billion per month.\nof monetary policy, they would continue to monitor the\nimplications of incoming information for the economic • Allow modest deviations from stated\noutlook. They would be prepared to adjust the stance of amounts for reinvestments, if needed for\nmonetary policy as appropriate if risks emerge that could operational reasons.\nimpede the attainment of the Committee’s goals. Mem-\n• Engage in dollar roll and coupon swap\nbers agreed that their assessments will take into account\ntransactions as necessary to facilitate settlea wide range of information, including readings on labor\nment of the Federal Reserve’s agency MBS\nmarket conditions, inflation pressures and inflation extransactions.”\npectations, and financial and international developments. The vote also encompassed approval of the statement\nbelow for release at 2:00 p.m.:\nAt the conclusion of the discussion, the Committee\nvoted to authorize and direct the Federal Reserve Bank “Recent indicators point to modest growth in\nof New York, until instructed otherwise, to execute spending and production. Job gains have been\ntransactions in the SOMA in accordance with the robust in recent months, and the unemployfollowing domestic policy directive, for release at ment rate has remained low. Inflation has eased\n2:00 p.m.: somewhat but remains elevated.\n“Effective February 2, 2023, the Federal Open Russia’s war against Ukraine is causing tremenMarket Committee directs the Desk to: dous human and economic hardship and is contributing to elevated global uncertainty. The\n• Undertake open market operations as necCommittee is highly attentive to inflation risks.\nessary to maintain the federal funds rate in\na target range of 4½ to 4¾ percent. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent\n• Conduct overnight repurchase agreement\nover the longer run. In support of these goals,\noperations with a minimum bid rate of\nthe Committee decided to raise the target range\n4.75 percent and with an aggregate operafor the federal funds rate to 4½ to 4¾ percent.\ntion limit of $500 billion; the aggregate opThe Committee anticipates that ongoing ineration limit can be temporarily increased at\ncreases in the target range will be appropriate in\nthe discretion of the Chair.\norder to attain a stance of monetary policy that\nis sufficiently restrictive to return inflation to\n\n_________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ J_a_n_u_a_ry_ _3_1–_F__eb_r_u_a_r_y _1_, _2_0_2_3___________________P__ag_e_ _1_3\n2 percent over time. In determining the extent Harker, Philip N. Jefferson, Neel Kashkari, Lorie K.\nof future increases in the target range, the Com- Logan, and Christopher J. Waller.\nmittee will take into account the cumulative\nVoting against this action: None.\ntightening of monetary policy, the lags with\nwhich monetary policy affects economic activity To support the Committee’s decision to raise the target\nand inflation, and economic and financial devel- range for the federal funds rate, the Board of Governors\nopments. In addition, the Committee will con- of the Federal Reserve System voted unanimously to\ntinue reducing its holdings of Treasury securi- raise the interest rate paid on reserve balances to\nties and agency debt and agency mortgage- 4.65 percent, effective February 2, 2023. The Board of\nbacked securities, as described in its previously Governors of the Federal Reserve System voted unaniannounced plans. The Committee is strongly mously to approve a ¼ percentage point increase in the\ncommitted to returning inflation to its 2 percent primary credit rate to 4.75 percent, effective February\nobjective. 2, 2023.5\nIn assessing the appropriate stance of monetary It was agreed that the next meeting of the Committee\npolicy, the Committee will continue to monitor would be held on Tuesday–Wednesday, March 21–\nthe implications of incoming information for 22, 2023. The meeting adjourned at 10:20 a.m. on Febthe economic outlook. The Committee would ruary 1, 2023.\nbe prepared to adjust the stance of monetary\nNotation Vote\npolicy as appropriate if risks emerge that could\nBy notation vote completed on January 3, 2023, the\nimpede the attainment of the Committee’s\nCommittee unanimously approved the minutes of the\ngoals. The Committee’s assessments will take\nCommittee meeting held on December 13–14, 2022.\ninto account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and\nfinancial and international developments.”\n_______________________\nVoting for this action: Jerome H. Powell, John C. Joshua Gallin\nWilliams, Michael S. Barr, Michelle W. Bowman, Lael\nSecretary\nBrainard, Lisa D. Cook, Austan D. Goolsbee, Patrick\n5 In taking this action, the Board approved requests to estab- on the later of February 2, 2023, or the date such Reserve\nlish that rate submitted by the Boards of Directors of the Fed- Banks inform the Secretary of the Board of such a request.\neral Reserve Banks of Boston, New York, Philadelphia, Rich- (Secretary’s note: Subsequently, the Federal Reserve Banks of\nmond, Atlanta, Chicago, Kansas City, Dallas, and San Fran- Cleveland, St. Louis, and Minneapolis were informed of the\ncisco. The vote also encompassed approval by the Board of Board’s approval of their establishment of a primary credit\nGovernors of the establishment of a 4.75 percent primary rate of 4.75 percent, effective February 2, 2023.)\ncredit rate by the remaining Federal Reserve Banks, effective",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20230201.pdf",
+    "action": "Raised",
+    "rate": "4.50%-4.75%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled that ongoing rate increases will likely be needed to achieve a sufficiently restrictive policy stance to bring inflation back to 2%. Future decisions will depend on incoming data, with the Committee closely monitoring economic and financial developments.",
+    "key_economic_factors": [
+      "Inflation remains elevated, though it has eased somewhat in recent months",
+      "Labor market conditions are still very tight, with robust job gains and a low unemployment rate",
+      "Recent data show modest growth in spending and production",
+      "Financial conditions have eased somewhat in recent months, which could necessitate further tightening"
+    ],
+    "economic_outlook": "The Fed sees economic growth slowing further in 2023, with real GDP growth below its longer-run trend. While inflation has moderated, it remains well above the 2% target. The labor market remains strong, but participants expect demand to weaken over time, helping bring supply and demand into better balance.",
+    "market_impact": "Higher borrowing costs will continue to weigh on interest-sensitive sectors like housing and business investment. Investors should expect further rate hikes, supporting the dollar and bond yields, while equity markets may face volatility as the economy slows toward a potential soft landing or mild recession."
+  },
+  {
+    "date": "2022-12-14",
+    "title": "FOMC Meeting 2022-12-14",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nDecember 13–14, 2022\nA joint meeting of the Federal Open Market Committee David Altig, Executive Vice President, Federal Reserve\nand the Board of Governors of the Federal Reserve Sys- Bank of Atlanta\ntem was held in the offices of the Board of Governors\nRoc Armenter, Vice President, Federal Reserve Bank of\non Tuesday, December 13, 2022, at 10:00 a.m. and conPhiladelphia\ntinued on Wednesday, December 14, 2022, at 9:00 a.m.1\nKartik B. Athreya, Executive Vice President, Federal\nAttendance\nReserve Bank of Richmond\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair\nPenelope A. Beattie, Section Chief, Office of the\nMichael S. Barr\nSecretary, Board\nMichelle W. Bowman\nLael Brainard Daniel O. Beltran, Deputy Associate Director, Division\nJames Bullard of International Finance, Board\nSusan M. Collins\nEllen J. Bromagen, First Vice President, Federal\nLisa D. Cook\nReserve Bank of Chicago\nEsther L. George\nPhilip N. Jefferson Jennifer J. Burns, Deputy Director, Division of\nLoretta J. Mester\nSupervision and Regulation, Board\nChristopher J. Waller\nMark A. Carlson, Adviser, Division of Monetary\nCharles L. Evans, Patrick Harker, Neel Kashkari, Lorie\nAffairs, Board\nK. Logan, and Helen E. Mucciolo, Alternate\nMembers of the Committee Todd E. Clark, Senior Vice President, Federal Reserve\nBank of Cleveland\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Daly, Presidents of the Federal Reserve Banks of Stephanie E. Curcuru, Deputy Director, Division of\nRichmond, Atlanta, and San Francisco, respectively\nInternational Finance, Board\nJames A. Clouse, Secretary\nNavtej S. Dhillon, Special Adviser to the Board,\nMatthew M. Luecke, Deputy Secretary\nDivision of Board Members, Board\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary Burcu Duygan-Bump, Special Adviser to the Board,\nMark E. Van Der Weide, General Counsel Division of Board Members, Board\nRichard Ostrander, Deputy General Counsel\nRochelle M. Edge, Deputy Director, Division of\nTrevor A. Reeve, Economist\nMonetary Affairs, Board\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist\nMatthew J. Eichner,2 Director, Division of Reserve\nShaghil Ahmed, Carlos Garriga, Joseph W. Gruber, and Bank Operations and Payment Systems, Board\nWilliam Wascher, Associate Economists\nEric M. Engen, Senior Associate Director, Division of\nPatricia Zobel, Manager pro tem, System Open Market Research and Statistics, Board\nAccount\nEric C. Engstrom, Associate Director, Division of\nJose Acosta, Senior Communications Analyst, Division Monetary Affairs, Board\nof Information Technology, Board\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as\nthe “Board” in these minutes.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nJon Faust, Senior Special Adviser to the Chair, Division Ann E. Misback, Secretary, Office of the Secretary,\nof Board Members, Board Board\nGlenn Follette, Associate Director, Division of Raven Molloy, Deputy Associate Director, Division of\nResearch and Statistics, Board Research and Statistics, Board\nJoshua Gallin, Senior Special Adviser to the Chair, Norman J. Morin, Deputy Associate Director, Division\nDivision of Board Members, Board of Research and Statistics, Board\nJonathan E. Goldberg, Principal Economist, Division Michelle M. Neal, Head of Markets, Federal Reserve\nof Monetary Affairs, Board Bank of New York\nErik A. Heitfield, Deputy Associate Director, Division Giovanni Nicolò, Senior Economist, Division of\nof Research and Statistics, Board Monetary Affairs, Board\nValerie S. Hinojosa, Section Chief, Division of Anna Nordstrom, Capital Markets Trading Head,\nMonetary Affairs, Board Federal Reserve Bank of New York\nJane E. Ihrig, Special Adviser to the Board, Division of Marcelo Ochoa,3 Principal Economist, Division of\nBoard Members, Board Monetary Affairs, Board\nBenjamin K. Johannsen, Section Chief, Division of Giovanni Olivei, Senior Vice President, Federal\nMonetary Affairs, Board Reserve Bank of Boston\nMichael T. Kiley, Deputy Director, Division of Anna Paulson, Executive Vice President, Federal\nFinancial Stability, Board Reserve Bank of Chicago\nDon H. Kim, Senior Adviser, Division of Monetary Andrea Raffo, Senior Vice President, Federal Reserve\nAffairs, Board Bank of Minneapolis\nElizabeth K. Kiser, Associate Director, Division of Linda Robertson, Assistant to the Board, Division of\nResearch and Statistics, Board Board Members, Board\nSylvain Leduc, Executive Vice President, Federal Achilles Sangster II, Senior Information Manager,\nReserve Bank of San Francisco Division of Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial Anthony Sarver, Senior Financial Institution and Policy\nStability, Board Analyst, Division of Monetary Affairs, Board\nPaul Lengermann, Assistant Director, Division of John W. Schindler,4 Senior Associate Director,\nResearch and Statistics, Board Division of Financial Stability, Board\nEric LeSueur,2 Policy and Market Monitoring Advisor, Samuel Schulhofer-Wohl, Senior Vice President,\nFederal Reserve Bank of New York Federal Reserve Bank of Dallas\nKurt F. Lewis, Special Adviser to the Board, Division Seth Searls,2 Policy and Market Monitoring Associate\nof Board Members, Board Director, Federal Reserve Bank of New York\nLaura Lipscomb, Special Adviser to the Board, Nitish Ranjan Sinha, Special Adviser to the Board,\nDivision of Board Members, Board Division of Board Members, Board\nDavid López-Salido, Senior Associate Director, Clara Vega, Special Adviser to the Board, Division of\nDivision of Monetary Affairs, Board Board Members, Board\nJonathan P. McCarthy, Economic Research Advisor, Annette Vissing-Jørgensen, Senior Adviser, Division of\nFederal Reserve Bank of New York Monetary Affairs, Board\n3 Attended Tuesday’s session only. 4 Attended opening remarks for Tuesday’s session only.\n\n____________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_3_–_1_4_, _2_0_22_______________________P_a_g_e_ _3\nJeffrey D. Walker,2 Associate Director, Division of inflation risk premiums may have contributed to the\nReserve Bank Operations and Payment Systems, moves. Both market- and survey-based measures conBoard tinued to point to expectations for a moderation of inflation over the coming year. Min Wei, Senior Associate Director, Division of\nRegarding the outlook for monetary policy, both marMonetary Affairs, Board\nket- and Desk survey-based measures indicated expectaPaul R. Wood, Special Adviser to the Board, Division tions for the Committee to maintain elevated policy rates\nof Board Members, Board through 2023. In the December survey, the median respondent’s modal expectation for the path of the federal\nRebecca Zarutskie, Special Adviser to the Board,\nfunds rate in 2023 shifted higher by 25 basis points relaDivision of Board Members, Board\ntive to the November survey. The survey-based estimate\nSelection of Committee Officer of the expected policy path in 2024 continued to suggest\nBy unanimous vote, the Committee selected Richard a decline in the target range for the federal funds rate\nOstrander to serve as deputy general counsel, effective over 2024, little changed from the path anticipated in the\nDecember 13, 2022, until the first regularly scheduled November survey. In contrast, the market-implied path\nmeeting of the Committee in 2023. of the federal funds rate in 2024 shifted down by as\nmuch as ¾ percentage point over the period, likely reDevelopments in Financial Markets and Open\nflecting declining risk premiums. Market Operations\nThe manager pro tem turned first to a discussion of de- The manager pro tem turned next to a discussion of opvelopments in financial markets. Following several erations and money markets and assessed that balance\nmonths of tightening, financial conditions eased over the sheet runoff was proceeding smoothly. Repurchase\nperiod as investor concerns about global risks edged agreement (repo) rates firmed modestly relative to the\nlower and incoming data showed nascent signs of a overnight reverse repurchase agreement (ON RRP) famoderation in inflationary pressures. Central bank com- cility rate over the period with balance sheet reduction\nmunications signaling a slower pace of policy rate in- reportedly contributing, in part, to an increase in the decreases appeared to contribute to improved sentiment. mand for financing of Treasury securities. ON RRP balMeasures of implied volatility across financial markets ances declined, on net, as money market funds shifted\ndeclined somewhat from the elevated levels observed in investments out of the ON RRP facility, reportedly in\nOctober. Consistent with the decline in volatility, favor of higher rates available in repo markets.\nmodel-based measures suggested that a drop in term\nIn recent months, banks continued to increase their use\npremiums accounted for much of the decline in Treasury\nof wholesale funding. In addition, survey information\nyields over the period. Equity markets moved higher.\nsuggested that banks expected to move deposit rates\nHowever, equity market contacts noted risks to growth\nmodestly higher relative to the target range in coming\nahead, and earnings expectations for coming quarters\nmonths. Over time, greater competition among banks\nhad been marked down. In foreign exchange markets,\nfor funding could contribute to drawdowns in the\nmoderating concerns about the potential for highly eleON RRP facility. Staff indicated that they would convated U.S. interest rates spurred a depreciation in the\ntinue to monitor money market conditions closely as balforeign exchange value of the dollar. In other market\nance sheet reduction proceeds.\ndevelopments, the manager pro tem noted the failure of\na prominent crypto-asset exchange. While the spillovers Looking ahead to year end, market participants anticifrom this situation had been significant among other pated limited pressures. The manager pro tem noted\ncrypto lenders and exchanges, the collapse was not seen that if transitory pressures emerged in money markets,\nas posing broader market risks to the financial system. the Federal Reserve’s backstop facilities are available to\nsupport effective policy implementation and smooth\nRegarding the outlook for inflation in the United States,\nmarket functioning.\ninflation compensation implied by Treasury Inflation\nProtected Securities declined over the period, respond- By unanimous vote, the Committee ratified the Desk’s\ning to lower-than-expected consumer price index (CPI) domestic transactions over the intermeeting period.\ndata and a sizable drop in oil prices. However, the Desk There were no intervention operations in foreign currensurvey-based measures of inflation expectations were lit- cies for the System’s account during the intermeeting petle changed from the prior survey, suggesting that falling riod.\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nStaff Review of the Economic Situation flation constructed by the Federal Reserve Bank of DalThe information available at the time of the Decem- las remained at 4.7 percent in October. In November,\nber 13–14 meeting suggested that U.S. real gross domes- the 12-month change in the CPI stepped down to\ntic product (GDP) was increasing at a modest pace in 7.1 percent and core CPI inflation dropped to 6.0 perthe fourth quarter of 2022 after expanding strongly in cent. The CPI, along with data from the producer price\nthe third quarter. Labor market conditions eased some- index, pointed to a further slowing in PCE price inflation\nwhat over October and November but remained quite in November. A preliminary estimate of the staff’s comtight. Consumer price inflation—as measured by the mon inflation expectations index, which combines infor12-month percent change in the price index for personal mation from many indicators of inflation expectations\nconsumption expenditures (PCE)—stepped down in and inflation compensation, edged down in the fourth\nOctober but continued to be elevated. quarter but continued to be above pre-pandemic levels. Total nonfarm payroll employment posted solid gains in After expanding at a moderate pace in the third quarter,\nOctober and November that were slower than the aver- real PCE growth appeared to have picked up in the\nage monthly pace seen over the earlier part of the year. fourth quarter. In contrast, residential investment\nThe unemployment rate moved up 0.2 percentage point looked to be contracting sharply further, and growth in\nto 3.7 percent in October and remained at that rate in business fixed investment seemed to be slowing markNovember. On balance, the unemployment rate for Af- edly, with tepid gains in equipment and intangibles\nrican Americans edged down over those two months, spending and continued declines in nonresidential strucwhile the unemployment rate for Hispanics increased tures investment. Manufacturing production increased\nslightly; the unemployment rates for both groups re- only modestly in October, and the available data pointed\nmained above the national measure. Both the labor to a decline in November. A decrease in factory output\nforce participation rate and the employment-to- would be consistent with recent readings from national\npopulation ratio declined a little over the past two and regional manufacturing surveys, which showed demonths. The private-sector job openings rate, as meas- clining new orders and a drawdown in order backlogs.\nured by the Job Openings and Labor Turnover Survey,\nAfter narrowing in the third quarter, the nominal U.S.\nmoved back down in October but remained high.\ninternational trade deficit widened in October. Real\nNominal wage growth continued to be elevated and re- goods exports fell, led by declines in exports of industrial\nmained above the pace judged to be consistent with the supplies and consumer goods. Real goods imports rose,\nFOMC’s 2 percent inflation objective. Average hourly driven by increases in imports of industrial supplies,\nearnings rose 5.1 percent over the 12 months ending in which more than offset declines in imports of capital\nNovember, close to the pace recorded in the employ- goods and consumer goods. Exports of services rose, in\nment cost index of hourly compensation in the private part as travel exports continued to recover, while imsector over the 12 months ending in September. Com- ports of services were little changed.\npensation per hour (CPH) in the business sector rose\nForeign economic activity grew at a moderate pace in the\n4.0 percent over the four quarters ending in the third\nthird quarter, but more recent data pointed to weakening\nquarter, but the reported increase likely understated the\ngrowth, weighed down by the economic fallout of Rustrue pace of increase in CPH, as the lower second-quarsia’s war against Ukraine and a COVID-19-related slowter employment data from the Quarterly Census of Emdown in China. High inflation continued to contribute\nployment and Wages had not yet been incorporated in\nto a decline in real disposable incomes, which, together\nthe CPH measure.\nwith disruptions to energy supplies, depressed economic\nConsumer price inflation remained elevated but had activity, especially in Europe. In China, authorities beeased in recent months. Total PCE price inflation was gan to ease social restrictions even as COVID cases\n6.0 percent over the 12 months ending in October, surged, raising the prospect of significant disruptions to\n0.3 percentage point below the September figure. Core economic activity in the near term, but also a faster reoPCE price inflation, which excludes changes in con- pening. Weaker global demand and high interest rates\nsumer energy prices and many consumer food prices, also weighed on activity in emerging market economies.\nwas 5.0 percent over the 12 months ending in October, Despite tentative signs of easing in foreign headline indown 0.2 percentage point from its September reading. flation, core inflationary pressures remained elevated in\nThe trimmed mean measure of 12-month PCE price in-\n\n____________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_3_–_1_4_, _2_0_22_______________________P_a_g_e_ _5\nmany countries. In response to high inflation, many cen- period, mostly passing through the increase in administral banks further tightened monetary policy, albeit at a tered rates, while bank deposit rates increased only\nslower pace in some cases. slightly in October and November. Staff Review of the Financial Situation Foreign financial conditions broadly eased over the inOver the intermeeting period, Treasury yields and termeeting period, largely driven by lower-than-expected\nmeasures of inflation compensation declined, on net, U.S. inflation data. The foreign exchange value of the\nand the implied path of the federal funds rate in 2023 dollar depreciated against most foreign currencies, parended modestly lower. Stock market indexes rose, on ticularly against those of advanced foreign economies, in\nbalance, likely reflecting reduced concerns about the in- part reflecting a narrowing of near-term yield differenflation outlook, and market volatility declined notably. tials between the United States and other advanced\nBorrowing costs declined, on net, over the intermeeting economies. Investors reacted positively to news of an\nperiod. Credit flows moderated a bit in recent months, easing of COVID restrictions in China, which drove\nand the credit quality of businesses and most households risky asset prices significantly higher despite near-term\nremained solid. challenges associated with the health policy shift. Emerging market fund outflows moderated and turned\nThe expected path of the federal funds rate implied by a\nto inflows later in the intermeeting period. Optionstraight read of financial market quotes ended the interimplied volatility measures for exchange rates and\nmeeting period lower, largely reflecting data releases that\nbenchmark foreign yields declined but remained elepointed to a larger-than-expected moderation in inflavated by historical norms amid a high degree of uncertion. Medium-to-longer-term nominal Treasury yields\ntainty around global inflation and the prospects for a redeclined substantially over the intermeeting period,\nopening of the Chinese economy.\ndriven primarily by lower-than-expected inflation data\nreleases, which appeared to prompt a substantial reduc- In domestic credit markets, changes in borrowing costs\ntion in investors’ concerns about the possibility that in- were mixed during the intermeeting period but remained\nflation would remain high for a long period. In line with above levels observed at the end of the previous tightthose developments, inflation compensation measures ening cycle. Yields for corporate bonds declined, while\nbased on inflation swaps declined notably, especially for borrowing costs for leveraged loans remained at an eleshorter maturities. vated level. Bank interest rates for commercial and industrial (C&I) loans continued to trend up in the third\nBroad stock price indexes increased, likely reflecting requarter. Municipal bond yields also decreased across ratduced concerns about the inflation outlook and the asing categories. Residential mortgage rates fell, on net,\nsociated implications for the future path of policy. On\nafter the November FOMC meeting. In contrast, internet, the one-month option-implied volatility on the\nest rates in credit card offers continued to increase, reS&P 500—the VIX—decreased notably and was around\nflecting the higher prime rate that was quickly passed\nthe middle of its range since mid-2020. In line with rethrough. Interest rates on auto loans also rose steadily\nduced investor concerns about the inflation outlook,\nthrough November.\nspreads of interest rates on corporate debt, mortgagebacked securities, and municipal bonds to comparable- Credit continued to be generally available to businesses\nduration Treasury yields all narrowed over the intermeet- and households, but high borrowing costs appeared to\ning period. weigh on financing volumes in many markets. Issuance\nof investment-grade corporate bonds rebounded someConditions in short-term funding markets remained stawhat in late October and November from earlier subble over the intermeeting period, with the November indued levels, while speculative-grade issuance remained\ncrease in the target range for the federal funds rate and\nsoft. New launches of leveraged loans picked up in Nothe associated increases in the Federal Reserve’s adminvember, particularly for higher-rated firms.\nistered rates passing through quickly to overnight money\nmarket rates. In secured markets, repo rates were below Business loan originations continued to expand in Octothe ON RRP offering rate less frequently than in the pre- ber and November but at a slower pace than observed\nvious intermeeting period. Daily take-up in the in previous months. C&I loans continued to grow in\nON RRP facility declined modestly, consistent with the October and November but decelerated relative to the\nrecent firming in overnight repo rates. Net yields on third-quarter pace, moderating the robust rate of growth\nmoney market funds rose further over the intermeeting observed earlier this year. Nonetheless, the volume of\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nC&I lending remained solid overall. Commercial real es- addition, the credit quality of non-agency CMBS loan\ntate (CRE) loans outstanding at commercial banks con- borrowers deteriorated slightly, with average delintinued to increase in October and November, but the quency rates ticking up in September and October,\nrecent pace was somewhat lower than in previous driven by the office and retail sectors.\nmonths. In addition, banks increased CRE originations\nThe credit quality of most households remained solid\nto multifamily and industrial properties relative to office\noverall. Delinquencies on conventional mortgages conproperties, reflecting caution in the context of rising oftinued to trend down through October, while those on\nfice vacancies. Moreover, commercial mortgage-backed\nFederal Housing Administration mortgages ticked up a\nsecurities (CMBS) issuance softened somewhat in Octobit from low levels. In contrast, delinquency rates for\nber amid elevated financing costs and tighter underwritcredit cards and auto loans continued to rise over the\ning standards. Credit availability to small businesses apthird quarter. While delinquency rates on credit cards\npeared to have tightened further this fall, with the share\nremained low relative to their historical range, those on\nof small firms reporting that it was more difficult to obauto loans surpassed their pre-pandemic peak.\ntain credit than three months earlier trending up through\nNovember. Staff Economic Outlook\nThe forecast for U.S. economic activity prepared by the\nCredit was readily available in the residential mortgage\nstaff for the December FOMC meeting was not as weak\nmarket for high-credit-score borrowers who met standas the November projection. Recent data suggested that\nard conforming loan criteria. Credit availability for\nreal GDP growth in the second half of 2022 was\nhouseholds with lower credit scores was considerably\nstronger than previously expected, but economic growth\ntighter at levels comparable with what prevailed before\nwas still forecast to slow markedly in 2023 from its secthe pandemic. The number of home purchases and reond-half pace. Broad financial conditions were profinance mortgage rate locks edged lower at subdued levjected to be somewhat less restrictive than previously asels despite recent declines in mortgage interest rates. In\nsumed, as the effects of a higher path for equity values\ncontrast, home equity lines of credit (HELOCs) grew\nand a lower path for the dollar more than offset a higher\nnotably in recent months, on net, potentially reflecting\nmedium-term trajectory for interest rates. Nevertheless,\nhomeowners using HELOCs as a preferred way of exthe forecast for U.S. real GDP growth through 2025 retracting home equity in the presence of high mortgage\nmained subdued. The staff slightly lowered its outlook\nrates. Consumer credit remained available for most confor potential output, reflecting a lower expected trend in\nsumers through September, with auto loans and credit\nlabor force participation. Moreover, the staff assumed a\ncard debt growing at a robust pace. Bank credit data also\nslower pace of decline in the natural rate of unemployindicate that the expansion in credit card balances conment over the near term in response to recent estimates\ntinued in October before slowing in early November.\nsuggesting that job-matching efficiency was not improvThe credit quality of nonfinancial corporations remained ing as fast as previously anticipated. With all these\nsolid. The volume of speculative-grade corporate bond changes, output was expected to move below the staff’s\ndowngrades slightly exceeded upgrades in October and estimate of potential near the end of 2024—a year later\nNovember, while for investment-grade corporate than in the previous forecast—and to remain below pobonds, the volume of upgrades turned positive, on net, tential in 2025. Likewise, the unemployment rate was\nin November. Leveraged loans experienced net down- expected to move above the staff’s estimate of its natural\ngrades in October, but the pace of net downgrades rate near the end of 2024 and remain above it in 2025.\nslowed substantially in recent weeks. Default rates on\nOn a four-quarter change basis, total PCE price inflation\ncorporate bonds and leveraged loans remained at very\nwas expected to be 5.5 percent in 2022, while core inflalow levels. However, measures of expected default\ntion was expected to be 4.7 percent, both lower than in\nprobabilities for corporate bonds and leveraged loans\nthe November projection. With the effects of supply–\nhad increased from their levels at the beginning of the\ndemand imbalances in goods markets expected to unyear in recent months. Overall, the credit quality of muwind further and labor and product markets projected to\nnicipalities remained robust amid strong revenues at\nbecome less tight, the staff continued to forecast that instate and local governments. The credit quality of busiflation would decline markedly over the next two years.\nnesses that borrow from banks remained sound on balCore goods inflation was anticipated to slow further,\nance. Delinquencies on C&I loans stayed flat, and those\nhousing services inflation was expected to peak in 2023\non small businesses loans continued to edge up, but deand then move down, while core non-housing services\nlinquencies remained low relative to historical levels. In\n\n____________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_3_–_1_4_, _2_0_22_______________________P_a_g_e_ _7\ninflation was forecast to move down as wage growth economic activity appeared likely to expand in 2023 at a\neased. In 2025, both total and core PCE price inflation pace well below its trend growth rate. With inflation rewere expected to be near 2 percent. maining unacceptably high, participants expected that a\nsustained period of below-trend real GDP growth would\nWith inflation still elevated, the staff continued to view\nbe needed to bring aggregate supply and aggregate dethe risks to the inflation projection as skewed to the upmand into better balance and thereby reduce inflationary\nside. Moreover, the sluggish growth in real private dopressures.\nmestic spending expected over the next year, a subdued\nglobal economic outlook, and persistently tight financial In their discussion of the household sector, participants\nconditions were seen as tilting the risks to the downside noted that growth in consumer spending in September\naround the baseline projection for real economic activ- and October had been stronger than they had previously\nity, and the staff still viewed the possibility of a recession expected, likely supported by a strong labor market and\nsometime over the next year as a plausible alternative to households running down excess savings accumulated\nthe baseline. during the pandemic. A couple of participants remarked\nthat excess savings likely would continue to support conParticipants’ Views on Current Conditions and the\nsumption spending for a while. A couple of other parEconomic Outlook\nticipants, however, commented that excess savings, parIn conjunction with this FOMC meeting, participants\nticularly among low-income households, appeared to be\nsubmitted their projections of the most likely outcomes\nlower and declining more rapidly than previously\nfor real GDP growth, the unemployment rate, and inflathought or that the savings, the majority of which aption for each year from 2022 through 2025 and over the\npeared to be held by higher-income households, might\nlonger run, based on their individual assessments of apcontinue to be largely unspent. Several participants repropriate monetary policy, including the path of the fedmarked that budgets were stretched for low-to-modereral funds rate. The longer-run projections represented\nate-income households and that many consumers were\neach participant’s assessment of the rate to which each\nshifting their spending to less expensive alternatives.\nvariable would be expected to converge, over time, unThey also observed that many households were increasder appropriate monetary policy and in the absence of\ningly using credit to finance spending. Overall, particifurther shocks to the economy. A Summary of Ecopants assessed that there was considerable uncertainty\nnomic Projections was released to the public following\naround the consumer spending outlook. Participants\nthe conclusion of the meeting.\ncommented that higher mortgage interest rates had noIn their discussion of current economic conditions, par- tably restrained housing activity and that they expected\nticipants noted that recent indicators pointed to modest housing activity to remain weak. A couple of particigrowth of spending and production. Nonetheless, job pants remarked on anecdotes or concerns from builder\ngains had been robust in recent months, and the unem- contacts about contract cancellations by purchasers no\nployment rate had remained low. Inflation remained el- longer able to qualify for loans at higher interest rates.\nevated, reflecting supply and demand imbalances related\nWith regard to the business sector, participants noted\nto the pandemic, higher food and energy prices, and\nthat growth in investment spending appeared modest\nbroader price pressures. Participants recognized that\nand was being restrained by high borrowing costs and an\nRussia’s war against Ukraine was causing tremendous\noutlook for slow growth of final demand, although\nhuman and economic hardship. The war and related\nviews on investment prospects varied across businesses\nevents were contributing to upward pressure on inflation\nand Districts. Based on discussions with District conand were weighing on global economic activity. Against\ntacts as well as a survey of firms’ chief financial officers,\nthis background, participants continued to be highly atsome participants commented that while businesses\ntentive to inflation risks.\nwere generally optimistic about their own prospects,\nParticipants observed that the growth of economic ac- they expressed increasing concern about the general ecotivity had slowed significantly in 2022 from the previous nomic outlook for 2023. Participants noted signs of\nyear’s robust pace, partly in response to the Committee’s continued easing in supply bottlenecks, with a couple citpolicy actions. The effects of those actions were espe- ing District contacts’ reports of declines in shipping\ncially notable in interest-sensitive sectors, particularly costs and delivery times. Even so, participants remarked\nhousing. Participants remarked that, although real GDP that the improvements in supply chains had not been\nappeared to have rebounded moderately in the second uniform and supply shortages remained for some types\nhalf of 2022 after declining somewhat in the first half, of goods. Participants also discussed the developments\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nin energy and agricultural sectors. Several participants With inflation still well above the Committee’s longercommented that they saw diminished risks of severe dis- run goal of 2 percent, participants agreed that inflation\nruption from the European Union’s embargo and the was unacceptably high. Participants concurred that the\nGroup of Seven’s price cap on Russian oil exports. A inflation data received for October and November\ncouple of participants noted that high costs for inputs showed welcome reductions in the monthly pace of\nlike diesel, feed, and fertilizer were creating challenges price increases, but they stressed that it would take subfor the agricultural sector. stantially more evidence of progress to be confident that\ninflation was on a sustained downward path. ParticiParticipants observed that the labor market had repants noted that core goods prices declined in the Octomained very tight, with the unemployment rate near a\nber and November CPI data, consistent with easing suphistorically low level, robust payroll gains, a high level of\nply bottlenecks. Some participants also noted that, by\njob vacancies, and elevated nominal wage growth. Sevsome measures, firms’ markups were still elevated and\neral participants commented that there were tentative\nthat a continued subdued expansion in aggregate designs of labor market imbalances improving, including\nmand would likely be needed to reduce remaining updeclines in job openings and quits over the second half\nward pressure on inflation. Regarding housing services\nof 2022 as well as reports from District contacts that\ninflation, many participants observed that measures of\nthey were seeing more qualified job applicants for open\nrent based on new leases were indicating a deceleration,\npositions than earlier in the year. Some participants\nwhich would be reflected in the measures of shelter inpointed out that payroll gains had remained robust even\nflation with some lag. Participants noted that, in the latas they slowed in recent months. Nevertheless, they\nest inflation data, the pace of increase for prices of core\nnoted that some other measures of employment—such\nservices excluding shelter—which represents the largest\nas those based on the Bureau of Labor Statistics’ housecomponent of core PCE price inflation—was high.\nhold survey and the Quarterly Census of Employment\nThey also remarked that this component of inflation has\nand Wages—suggested that job growth in 2022 may\ntended to be closely linked to nominal wage growth and\nhave been weaker than indicated by payroll employment.\ntherefore would likely remain persistently elevated if the\nParticipants generally concluded that there remained a\nlabor market remained very tight. Consequently, while\nlarge imbalance between labor supply and labor demand,\nthere were few signs of adverse wage-price dynamics at\nas indicated by the still-large number of job openings\npresent, they assessed that bringing down this compoand elevated nominal wage growth. Participants comnent of inflation to mandate-consistent levels would remented that labor demand had remained strong to date\nquire some softening in the growth of labor demand to\ndespite the slowdown in economic growth, with a few\nbring the labor market back into better balance.\nremarking that some business contacts reported that\nthey would be keen to retain workers even in the face of Participants observed that measures from surveys of\nslowing demand for output because of their recent ex- households and businesses as well as from financial marperiences of labor shortages and hiring challenges. With kets generally indicated that longer-term inflation expecthe labor force participation rate little changed since the tations remained well anchored, while short-term inflabeginning of 2022, some participants commented that tion expectations had come down. However, particilabor supply appeared to be constrained by structural pants stressed that the Committee’s ongoing monetary\nfactors such as early retirements, reduced availability or policy tightening to achieve a stance that will be suffiincreased cost of childcare, more costly transportation, ciently restrictive to return inflation to 2 percent is esand reduced immigration. Under an appropriately re- sential for ensuring that longer-term expectations restrictive path of monetary policy, participants expected main well anchored. Several participants commented\nlabor market supply and demand to come into better bal- that the longer inflation remained well above the 2 perance over time, easing upward pressures on nominal cent goal, the greater the risk that longer-term inflation\nwages and prices. In the context of achieving the Com- expectations could become unanchored. Such a develmittee’s broad-based and inclusive maximum-employ- opment, if it materialized, would make it much more\nment goal, a number of participants commented that as costly to bring inflation down to achieve the Committhe labor market moved into better balance, the unem- tee’s statutory objectives of maximum employment and\nployment rate for some demographic groups—particu- price stability.\nlarly African Americans and Hispanics—would likely inParticipants noted that since the November meeting, ficrease by more than the national average.\nnancial conditions had eased, with the market-implied\npath for the federal funds rate beyond 2023 and longer-\n\n____________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_3_–_1_4_, _2_0_22_______________________P_a_g_e_ _9\nterm yields coming down noticeably. A few participants In discussing the policy outlook, participants continued\nremarked that the current configuration of nominal to anticipate that ongoing increases in the target range\nyields, with longer-term yields lower than shorter-term for the federal funds rate would be appropriate to\nyields, had historically preceded recessions and hence achieve the Committee’s objectives. In determining the\nbore watching. However, a couple of them also noted pace of future increases in the target range, participants\nthat the current inversion of the yield curve could reflect, judged that it would be appropriate to take into account\nin part, that investors expect the nominal policy rate to the cumulative tightening of monetary policy, the lags\ndecline because of a fall in inflation over time. with which monetary policy affects economic activity\nand inflation, and economic and financial developments. Participants generally noted that the uncertainty associWith inflation staying persistently above the Commitated with their economic outlooks was high and that the\ntee’s 2 percent goal and the labor market remaining very\nrisks to the inflation outlook remained tilted to the uptight, all participants had raised their assessment of the\nside. Participants cited the possibility that price presappropriate path of the federal funds rate relative to their\nsures could prove to be more persistent than anticipated,\nassessment at the time of the September meeting. No\ndue to, for example, the labor market staying tight for\nparticipants anticipated that it would be appropriate to\nlonger than anticipated. Participants saw a number of\nbegin reducing the federal funds rate target in 2023. Paruncertainties surrounding the outlook for inflation stemticipants generally observed that a restrictive policy\nming from factors abroad, such as China’s relaxation of\nstance would need to be maintained until the incoming\nits zero-COVID policies, Russia’s continuing war\ndata provided confidence that inflation was on a susagainst Ukraine, and effects of synchronous policy firmtained downward path to 2 percent, which was likely to\ning by major central banks. A number of participants\ntake some time. In view of the persistent and unacceptjudged that the risks to the outlook for economic activity\nably high level of inflation, several participants comwere weighted to the downside. They noted that sources\nmented that historical experience cautioned against\nof such risks included the potential for more persistent\nprematurely loosening monetary policy.\ninflation inducing more restrictive policy responses, the\nprospect of unexpected negative shocks tipping the In light of the heightened uncertainty regarding the outeconomy into a recession in an environment of subdued looks for both inflation and real economic activity, most\ngrowth, and the possibility of households’ and busi- participants emphasized the need to retain flexibility and\nnesses’ concerns about the outlook restraining their optionality when moving policy to a more restrictive\nspending sufficiently to reduce aggregate output. stance. Participants generally noted that the Committee’s future decisions regarding policy would continue to\nIn their consideration of appropriate monetary policy acbe informed by the incoming data and their implications\ntions at this meeting, participants concurred that the\nfor the outlook for economic activity and inflation, and\nCommittee had made significant progress over the past\nthat the Committee would continue to make decisions\nyear in moving toward a sufficiently restrictive stance of\nmeeting by meeting.\nmonetary policy. Even so, participants agreed that inflation remained well above the Committee’s longer-run Participants reaffirmed their strong commitment to regoal of 2 percent, while the labor market remained very turning inflation to the Committee’s 2 percent objective.\ntight, contributing to upward pressures on wages and A number of participants emphasized that it would be\nprices. Against this backdrop, all participants agreed that important to clearly communicate that a slowing in the\nit was appropriate to raise the target range for the federal pace of rate increases was not an indication of any weakfunds rate 50 basis points at this meeting and to continue ening of the Committee’s resolve to achieve its pricethe process of reducing the Federal Reserve’s securities stability goal or a judgment that inflation was already on\nholdings, as described in the Plans for Reducing the Size a persistent downward path. Participants noted that, beof the Federal Reserve’s Balance Sheet that the Commit- cause monetary policy worked importantly through fitee issued in May. Participants observed that a slowing nancial markets, an unwarranted easing in financial conin the pace of rate increases at this meeting would better ditions, especially if driven by a misperception by the\nallow the Committee to assess the economy’s progress public of the Committee’s reaction function, would\ntoward the Committee’s goals of maximum employment complicate the Committee’s effort to restore price staand price stability, as monetary policy approached a bility. Several participants commented that the medians\nstance that was sufficiently restrictive to achieve these of participants’ assessments for the appropriate path of\ngoals. the federal funds rate in the Summary of Economic Projections, which tracked notably above market-based\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nmeasures of policy rate expectations, underscored the that is sufficiently restrictive to return inflation to 2 perCommittee’s strong commitment to returning inflation cent over time. Members agreed that, in determining the\nto its 2 percent goal. pace of future increases in the target range, they would\ntake into account the cumulative tightening of monetary\nParticipants discussed a number of risk-management\npolicy, the lags with which monetary policy affects ecoconsiderations related to the conduct of monetary polnomic activity and inflation, and economic and financial\nicy. Many participants highlighted that the Committee\ndevelopments. In addition, members agreed that they\nneeded to continue to balance two risks. One risk was\nwould continue reducing the Federal Reserve’s holdings\nthat an insufficiently restrictive monetary policy could\nof Treasury securities and agency debt and agency mortcause inflation to remain above the Committee’s target\ngage-backed securities, as described in the Plans for Refor longer than anticipated, leading to unanchored infladucing the Size of the Federal Reserve's Balance Sheet\ntion expectations and eroding the purchasing power of\nthat were issued in May. All members affirmed that the\nhouseholds, especially for those already facing difficulty\nCommittee is strongly committed to returning inflation\nmaking ends meet. The other risk was that the lagged\nto its 2 percent objective.\ncumulative effect of policy tightening could end up being more restrictive than is necessary to bring down in- Members agreed that, in assessing the appropriate stance\nflation to 2 percent and lead to an unnecessary reduction of monetary policy, they would continue to monitor the\nin economic activity, potentially placing the largest bur- implications of incoming information for the economic\ndens on the most vulnerable groups of the population. outlook. They would be prepared to adjust the stance of\nParticipants generally indicated that upside risks to the monetary policy as appropriate if risks emerge that could\ninflation outlook remained a key factor shaping the out- impede the attainment of the Committee’s goals. Memlook for policy. A couple of participants noted that risks bers agreed that their assessments will take into account\nto the inflation outlook were becoming more balanced. a wide range of information, including readings on pubParticipants generally observed that maintaining a re- lic health, labor market conditions, inflation pressures\nstrictive policy stance for a sustained period until infla- and inflation expectations, and financial and internation is clearly on a path toward 2 percent is appropriate tional developments.\nfrom a risk-management perspective. At the conclusion of the discussion, the Committee\nCommittee Policy Action voted to authorize and direct the Federal Reserve Bank\nIn their discussion of monetary policy for this meeting, of New York, until instructed otherwise, to execute\nmembers agreed that recent indicators pointed to mod- transactions in the SOMA in accordance with the folest growth in spending and production. Members also lowing domestic policy directive, for release at 2:00 p.m.:\nconcurred that job gains had been robust in recent\n“Effective December 15, 2022, the Federal\nmonths, and the unemployment rate had remained low. Open Market Committee directs the Desk to:\nMembers agreed that inflation had remained elevated,\nreflecting supply and demand imbalances related to the • Undertake open market operations as necpandemic, higher food and energy prices, and broader essary to maintain the federal funds rate in\nprice pressures. a target range of 4¼ to 4½ percent. Members observed that Russia’s war against Ukraine • Conduct overnight repurchase agreement\nwas causing tremendous human and economic hardship. operations with a minimum bid rate of\nThey also agreed that the war and related events were 4.5 percent and with an aggregate operation\ncontributing to upward pressure on inflation and were limit of $500 billion; the aggregate operaweighing on global economic activity. Members con- tion limit can be temporarily increased at\ncurred that they remained highly attentive to inflation the discretion of the Chair.\nrisks.\n• Conduct overnight reverse repurchase\nMembers agreed that the Committee seeks to achieve agreement operations at an offering rate of\nmaximum employment and inflation at the rate of 2 per- 4.3 percent and with a per-counterparty\ncent over the longer run. In support of these goals, limit of $160 billion per day; the\nmembers agreed to raise the target range for the federal per-counterparty limit can be temporarily\nfunds rate to 4¼ to 4½ percent. Members anticipated increased at the discretion of the Chair.\nthat ongoing increases in the target range would be appropriate in order to attain a stance of monetary policy\n\n____________________________M_i_n_u_te_s_ o_f_ _th_e_ M__e_e_ti_n_g_ o_f_ D__e_c_em__b_e_r_ 1_3_–_1_4_, _2_0_22______________________P__ag_e_ _1_1\n• Roll over at auction the amount of principal order to attain a stance of monetary policy that\npayments from the Federal Reserve’s hold- is sufficiently restrictive to return inflation to\nings of Treasury securities maturing in each 2 percent over time. In determining the pace of\ncalendar month that exceeds a cap of future increases in the target range, the Com-\n$60 billion per month. Redeem Treasury mittee will take into account the cumulative\ncoupon securities up to this monthly cap tightening of monetary policy, the lags with\nand Treasury bills to the extent that coupon which monetary policy affects economic activity\nprincipal payments are less than the and inflation, and economic and financial develmonthly cap. opments. In addition, the Committee will continue reducing its holdings of Treasury securi-\n• Reinvest into agency mortgage-backed seties and agency debt and agency mortgagecurities (MBS) the amount of principal paybacked securities, as described in the Plans for\nments from the Federal Reserve’s holdings\nReducing the Size of the Federal Reserve’s Balof agency debt and agency MBS received in\nance Sheet that were issued in May. The Comeach calendar month that exceeds a cap of\nmittee is strongly committed to returning infla-\n$35 billion per month.\ntion to its 2 percent objective.\n• Allow modest deviations from stated\nIn assessing the appropriate stance of monetary\namounts for reinvestments, if needed for\npolicy, the Committee will continue to monitor\noperational reasons.\nthe implications of incoming information for\n• Engage in dollar roll and coupon swap the economic outlook. The Committee would\ntransactions as necessary to facilitate settle- be prepared to adjust the stance of monetary\nment of the Federal Reserve’s agency MBS policy as appropriate if risks emerge that could\ntransactions.” impede the attainment of the Committee’s\ngoals. The Committee’s assessments will take\nThe vote also encompassed approval of the statement\ninto account a wide range of information, inbelow for release at 2:00 p.m.:\ncluding readings on public health, labor market\n“Recent indicators point to modest growth in conditions, inflation pressures and inflation exspending and production. Job gains have been pectations, and financial and international derobust in recent months, and the unemploy- velopments.”\nment rate has remained low. Inflation remains\nVoting for this action: Jerome H. Powell, John C.\nelevated, reflecting supply and demand imbalWilliams, Michael S. Barr, Michelle W. Bowman, Lael\nances related to the pandemic, higher food and\nBrainard, James Bullard, Susan M. Collins, Lisa D. Cook,\nenergy prices, and broader price pressures. Esther L. George, Philip N. Jefferson, Loretta J. Mester,\nRussia’s war against Ukraine is causing tremen- and Christopher J. Waller.\ndous human and economic hardship. The war\nVoting against this action: None.\nand related events are contributing to upward\npressure on inflation and are weighing on global To support the Committee’s decision to raise the target\neconomic activity. The Committee is highly at- range for the federal funds rate, the Board of Governors\ntentive to inflation risks. of the Federal Reserve System voted unanimously to\nraise the interest rate paid on reserve balances to 4.4 perThe Committee seeks to achieve maximum emcent, effective December 15, 2022. The Board of Govployment and inflation at the rate of 2 percent\nernors of the Federal Reserve System voted unanimously\nover the longer run. In support of these goals,\nto approve a ½ percentage point increase in the primary\nthe Committee decided to raise the target range\ncredit rate to 4.5 percent, effective December 15, 2022.5\nfor the federal funds rate to 4¼ to 4½ percent. The Committee anticipates that ongoing in- It was agreed that the next meeting of the Committee\ncreases in the target range will be appropriate in would be held on Tuesday–Wednesday, January 31–\n5 In taking this action, the Board approved requests to estab- eral Reserve Banks of Boston, New York, Philadelphia, Clevelish that rate submitted by the Boards of Directors of the Fed- land, Richmond, Atlanta, Chicago, St. Louis, Minneapolis,\nKansas City, Dallas, and San Francisco.\n\n_P_ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nFebruary 1, 2023. The meeting adjourned at 10:35 a.m.\non December 14, 2022. Notation Vote\nBy notation vote completed on November 22, 2022, the\nCommittee unanimously approved the minutes of the\nCommittee meeting held on November 1–2, 2022.\n_______________________\nJames A. Clouse\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20221214.pdf",
+    "action": "Raised",
+    "rate": "4.25%-4.50%",
+    "magnitude": "0.25 percentage points",
+    "forward_guidance": "The Fed signaled that ongoing rate increases will be appropriate to achieve a sufficiently restrictive policy stance to bring inflation back to 2%. Future decisions will depend on incoming data, the cumulative effects of past hikes, and economic and financial developments.",
+    "key_economic_factors": [
+      "Inflation remained elevated but showed signs of moderating, with October and November CPI data showing slower price increases",
+      "Strong labor market with robust job gains, low unemployment (3.7%), and elevated wage growth",
+      "Slowing economic growth, particularly in interest-sensitive sectors like housing, due to prior rate hikes",
+      "Financial conditions eased recently due to lower inflation expectations and declining long-term yields"
+    ],
+    "economic_outlook": "The Fed expects economic growth to slow significantly in 2023 to below trend, with inflation remaining unacceptably high but gradually declining. A sustained period of below-trend growth will be needed to bring inflation down. The unemployment rate is expected to rise modestly, especially among demographic groups like African Americans and Hispanics, as labor market imbalances slowly resolve.",
+    "market_impact": "Higher borrowing costs will continue to pressure businesses, homebuyers, and consumers, particularly through elevated mortgage and credit card rates. Financial markets may face volatility as investors assess the risk of over-tightening, but the Fed’s commitment to fighting inflation supports long-term confidence in price stability."
+  },
+  {
+    "date": "2022-11-02",
+    "title": "FOMC Meeting 2022-11-02",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nNovember 1–2, 2022\nA joint meeting of the Federal Open Market Committee Jose Acosta, Senior Communications Analyst, Division\nand the Board of Governors of the Federal Reserve Sys- of Information Technology, Board\ntem was held in the offices of the Board of Governors\nGene Amromin, Vice President, Federal Reserve Bank\non Tuesday, November 1, 2022, at 10:30 a.m. and conof Chicago\ntinued on Wednesday, November 2, 2022, at 9:00 a.m.1\nAlyssa Arute,2 Manager, Division of Reserve Bank\nAttendance Operations and Payment Systems, Board\nJerome H. Powell, Chair\nKartik B. Athreya, Executive Vice President, Federal\nJohn C. Williams, Vice Chair\nReserve Bank of Richmond\nMichael S. Barr\nMichelle W. Bowman Penelope A. Beattie, Section Chief, Office of the\nLael Brainard Secretary, Board\nJames Bullard\nJames P. Bergin, Deputy General Counsel, Federal\nSusan M. Collins\nReserve Bank of New York\nLisa D. Cook\nEsther L. George David Bowman, Senior Associate Director, Division of\nPhilip N. Jefferson Monetary Affairs, Board\nLoretta J. Mester\nIsabel Cairó, Principal Economist, Division of\nChristopher J. Waller\nMonetary Affairs, Board\nCharles L. Evans, Patrick Harker, Neel Kashkari, Lorie\nMark A. Carlson, Adviser, Division of Monetary\nK.Logan, and Helen E. Mucciolo, Alternate\nAffairs, Board\nMembers of the Committee\nMichele Cavallo, Principal Economist, Division of\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Monetary Affairs, Board\nDaly, Presidents of the Federal Reserve Banks of\nRichmond, Atlanta, and San Francisco, respectively Satyajit Chatterjee, Vice President, Federal Reserve\nBank of Philadelphia\nJames A. Clouse, Secretary\nMatthew M. Luecke, Deputy Secretary Daniel Cooper, Vice President, Federal Reserve Bank\nBrian J. Bonis, Assistant Secretary of Boston\nMichelle A. Smith, Assistant Secretary\nStephanie E. Curcuru, Deputy Director, Division of\nMark E. Van Der Weide, General Counsel\nInternational Finance, Board\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist Sally Davies,3 Senior Adviser, Division of International\nBeth Anne Wilson, Economist Finance, Board\nShaghil Ahmed, Brian M. Doyle, Carlos Garriga, Burcu Duygan-Bump, Special Adviser to the Board,\nJoseph W. Gruber, David E. Lebow, Ellis W. Division of Board Members, Board\nTallman, and William Wascher, Associate\nRochelle M. Edge, Deputy Director, Division of\nEconomists\nMonetary Affairs, Board\nPatricia Zobel, Manager pro tem, System Open Market\nEric M. Engen, Senior Associate Director, Division of\nAccount\nResearch and Statistics, Board\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 3 Attended opening remarks for Tuesday session only.\nthe “Board” in these minutes.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nEric C. Engstrom, Associate Director, Division of Julie Ann Remache, Policy and Market Monitoring\nMonetary Affairs, Board Head, Federal Reserve Bank of New York\nJon Faust, Senior Special Adviser to the Chair, Division Linda Robertson, Assistant to the Board, Division of\nof Board Members, Board Board Members, Board\nAndrew Figura, Associate Director, Division of Argia M. Sbordone, Research Department Head,\nResearch and Statistics, Board Federal Reserve Bank of New York\nGlenn Follette, Associate Director, Division of Samuel Schulhofer-Wohl, Senior Vice President,\nResearch and Statistics, Board Federal Reserve Bank of Dallas\nEtienne Gagnon, Assistant Director, Division of Chiara Scotti, Special Adviser to the Board, Division of\nMonetary Affairs, Board Board Members, Board\nJoshua Gallin, Senior Special Adviser to the Chair, Seth Searls,2 Associate Director, Federal Reserve Bank\nDivision of Board Members, Board of New York\nMichael S. Gibson, Director, Division of Supervision Nitish Ranjan Sinha, Special Adviser to the Board,\nand Regulation, Board Division of Board Members, Board\nDavid Glancy, Principal Economist, Division of Paul A. Smith, Deputy Associate Director, Division of\nMonetary Affairs, Board Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Gustavo A. Suarez, Assistant Director, Division of\nMonetary Affairs, Board Research and Statistics, Board\nMatteo Iacoviello, Senior Associate Director, Division Paula Tkac, Senior Vice President, Federal Reserve\nof International Finance, Board Bank of Atlanta\nJane E. Ihrig, Special Adviser to the Board, Division of Jeffrey D. Walker,2 Associate Director, Division of\nBoard Members, Board Reserve Bank Operations and Payment Systems,\nBoard\nMichael T. Kiley, Deputy Director, Division of\nFinancial Stability, Board Donielle A. Winford, Information Manager, Division\nof Monetary Affairs, Board\nAndreas Lehnert, Director, Division of Financial\nStability, Board Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nKurt F. Lewis, Special Adviser to the Board, Division\nof Board Members, Board Rebecca Zarutskie, Special Adviser to the Board,\nDivision of Board Members, Board\nLaura Lipscomb, Special Adviser to the Board,\nDivision of Board Members, Board Committee Ethics Discussion\nThe Chair began with a discussion of ethical standards\nMark Meder, First Vice President, Federal Reserve\nand acknowledged the great privilege and heavy responBank of Cleveland\nsibility that come with being entrusted to make policy\nAnn E. Misback, Secretary, Office of the Secretary, decisions. There was agreement that the Federal ReBoard serve can be effective only when there is a foundation of\npublic trust. Participants reaffirmed the importance of\nFernanda Nechio, Vice President, Federal Reserve\nholding themselves and their staffs accountable for\nBank of San Francisco\nknowing and following the high ethical standards that\nEdward Nelson, Senior Adviser, Division of Monetary are set in the Committee’s policies, including those on\nAffairs, Board financial transactions and disclosure and on external\ncommunications. Michael G. Palumbo, Senior Associate Director,\nDivision of Research and Statistics, Board Developments in Financial Markets and Open\nMarket Operations\nAndrea Raffo, Senior Vice President, Federal Reserve\nThe manager pro tem turned first to a discussion of fiBank of Minneapolis\nnancial market developments in the United States. Over\n\n____________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g _o_f_ N__o_v_em__b_e_r_ 1_–_2_, _2_0_2_2_______________________P_a_g_e_ _3\nthe period, financial conditions had tightened amid ele- The foreign exchange value of the dollar appreciated furvated volatility across financial markets. The market-im- ther over the period. Market participants perceived sevplied path of the policy rate rose, with the median federal eral Asian economies as engaging in foreign exchange\nfunds rate values in the September Summary of Eco- market interventions in response to rapid depreciations\nnomic Projections and other Federal Reserve communi- of local currencies. In the case of advanced economies,\ncations being viewed by market participants as indicating whose monetary policy tightening was well under way,\na commitment to sustaining a restrictive monetary policy market participants focused on communications perstance. With data received over the period also indicat- ceived as signaling a potentially slower pace of policy rate\ning higher-than-expected core inflation, market partici- increases in the period ahead.\npants placed high odds on a 75 basis point increase in\nThe manager pro tem turned next to developments in\nthe target range at the current meeting. Nonetheless,\nmoney markets and Federal Reserve operations. Usage\ncontacts were increasingly focused on the question of\nof the overnight reverse repurchase agreement\nwhen the Committee might slow the pace of future in-\n(ON RRP) facility remained fairly steady other than durcreases in light of the substantial tightening of financial\ning the period surrounding quarter-end. In the period\nconditions that had occurred over the year. Most reahead, the relative pace of decline in ON RRP facility\nspondents to the Open Market Desk’s surveys viewed a\nbalances and reserve balances would depend importantly\n50 basis point increase in the target range for the federal\non shifts in money market conditions. Recent developfunds rate at the December meeting as the most likely\nments, including with regard to the relationship between\noutcome. On net, nominal Treasury yields ended the\nON RRP facility balances and money market rates, sugperiod higher, reflecting both an upward revision in the\ngested that, over time, conditions could evolve in a manexpected path of the policy rate and higher estimated\nner that would lead to falling usage of the ON RRP faterm premiums. Investment-grade bond yields and\ncility. However, the manager pro tem noted that money\nmortgage interest rates moved up as well, to the highest\nmarket conditions could change somewhat more quickly\nlevels in many years.\nin the lead-up to year-end because of normal factors,\nThe manager pro tem turned next to a discussion of vol- such as a Treasury tax payment date in December that\natility in global financial markets. In September, an ex- could increase the Treasury General Account balance,\npansionary budget announced by the U.K. government and year-end position adjustments. This prospect could\nresulted in an extraordinary rise in yields on gilts (long- require money market participants to be more respondated U.K. government securities) and reduced gilt mar- sive to shifting liquidity conditions and to plan ahead for\nket liquidity. Reflecting its financial stability objective, the coming period. Current market quotes suggested exthe Bank of England initiated a temporary gilt purchase pectations of limited upward pressure on domestic\nprogram designed to address disorderly market condi- money market rates around year-end. In offshore dollar\ntions. These purchases and a subsequent cancellation of funding markets, the premium associated with borrowsome announced expansionary U.K. budgetary ing dollars was modestly higher than at similar points in\nmeasures resulted in a retracement of much of the earlier previous years. Regarding Federal Reserve net income,\nincrease in gilt yields. 11 Reserve Banks reported deferred assets totaling\n$6.3 billion in the latest H.4.1 statistical release, reflectElevated volatility in international financial markets coning the negative net income stemming from rising intertributed to volatility in U.S. core fixed-income markets.\nest expense. Many other central banks also faced negaIn markets for U.S. Treasury securities, some measures\ntive net income.\nof market-implied volatility approached pandemic-era\nlevels. Spreads of yields on agency mortgage-backed se- By unanimous vote, the Committee ratified the Desk’s\ncurities (MBS) over yields on Treasury securities wid- domestic transactions over the intermeeting period.\nened sharply, reflecting the sensitivity of these spreads There were no intervention operations in foreign currento increased volatility. The increased volatility appeared cies for the System’s account during the intermeeting peto contribute to a decline in measures of market liquidity riod.\nin core fixed-income markets, in particular around the\nStaff Review of the Economic Situation\nperiod associated with U.K. volatility, but market funcThe information available at the time of the Novemtioning remained orderly.\nber 1–2 meeting suggested that U.S. real gross domestic\nproduct (GDP) had increased at a moderate pace in the\nthird quarter after having declined over the first half of\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nthe year. Labor market conditions remained quite tight, Data pointed to weakening foreign economic activity in\nand consumer price inflation—as measured by the recent months, weighed down by the economic fallout\n12-month percentage change in the price index for per- of Russia’s war against Ukraine, headwinds in China, and\nsonal consumption expenditures (PCE)—remained ele- tighter financial conditions. In many advanced foreign\nvated. economies, high inflation and disruptions to energy supply contributed to a decline in real disposable incomes\nIn September, total nonfarm payroll employment posted\nand depressed consumer and business confidence. In\na solid gain that was somewhat slower than the pace seen\nresponse, fiscal authorities in Europe and Japan anin recent months, and the unemployment rate declined\nnounced packages intended to ease the burden of high\n0.2 percentage point to 3.5 percent. The unemployment\ninflation on consumers and businesses. In China, data\nrate for African Americans declined in September but\nindicated weaker momentum in economic activity and a\nwas more than 2 percentage points above the national\nfurther deterioration in the property market. Weaker\naverage; the unemployment rate for Hispanics declined\nglobal demand has also resulted in a pronounced slowto a level that was 0.3 percentage point above the nadown in manufacturing, which weighed on activity in extional measure. The labor force participation rate edged\nport-oriented emerging market economies in Asia. Condown in September, and the employment-to-population\nsumer price inflation rose further in October in many\nratio was unchanged. The private-sector job openings\nforeign economies, reflecting past increases in energy\nrate, as measured by the Job Openings and Labor Turnand food prices, but also a continued broadening of inover Survey, moved lower, on net, from July to Septemflationary pressure within core prices. In response to\nber but remained high. Nominal wage growth continued\nhigh inflation, many central banks further tightened\nto be rapid: Average hourly earnings rose 5.0 percent\nmonetary policy, albeit at a slower pace in some cases.\nover the 12 months ending in September, while the employment cost index (ECI) of hourly compensation in Staff Review of the Financial Situation\nthe private sector, which also includes benefit costs, rose Over the intermeeting period, U.S. Treasury yields and\n5.2 percent over this period. However, the three-month the market-implied federal funds rate path moved subchange in the ECI in September was noticeably lower stantially higher. Broad domestic equity prices were little\nthan the average pace seen over the first half of the year. changed, on net, amid high market volatility, while corporate bond yields increased notably. The rise in borConsumer price inflation remained elevated. Total PCE\nrowing costs appeared to have slowed the volume of fiprice inflation was 6.2 percent over the 12 months endnancing in many credit markets. Credit quality remained\ning in September, and core PCE inflation, which exsound overall, although there are some signs of deteriocludes changes in consumer energy prices and many\nration for lower-rated borrowers.\nconsumer food prices, was 5.1 percent over the same period. The trimmed mean measure of 12-month PCE The expected path of the federal funds rate implied by a\nprice inflation constructed by the Federal Reserve Bank straight read of financial market quotes rose notably\nof Dallas was 4.7 percent in September. The staff’s over the intermeeting period, largely reflecting more-recommon inflation expectations index, which combines strictive-than-expected monetary policy communicainformation from many indicators of inflation expecta- tions and data releases that pointed to inflation moving\ntions and inflation compensation, was little changed in down more slowly than previously expected. On net,\nthe third quarter but remained above pre-pandemic lev- nominal Treasury yields increased across the maturity\nels. spectrum. The increases in nominal yields at mediumand longer-term horizons were primarily accounted for\nReal PCE rose modestly in the third quarter. Residential\nby higher real yields, though inflation compensation\ninvestment dropped further, however, and business\nmeasures rose as well.\nfixed investment growth was held back by a decline in\nnonresidential structures investment. Government pur- Broad equity price indexes fell significantly early in the\nchases rose in the third quarter after having declined intermeeting period, with inflation news and monetary\nover the first half of the year. policy expectations likely being the main drivers of stock\nprice movements. However, equity prices later reThe nominal U.S. international trade deficit narrowed in\nbounded and ended the period essentially unchanged on\nthe third quarter. Net exports contributed positively to\nnet. One-month option-implied volatility on the\nreal GDP growth, as real exports stepped up while real\nS&P 500—the VIX—declined slightly, on net, but reimports declined.\nmained at the upper end of its range since mid-2020.\n\n____________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g _o_f_ N__o_v_em__b_e_r_ 1_–_2_, _2_0_2_2_______________________P_a_g_e_ _5\nConditions in short-term funding markets remained sta- Credit continued to be generally available to businesses\nble over the intermeeting period, with the September in- and households despite some signs of tightening lending\ncrease in the target range for the federal funds rate and standards in certain segments, but high borrowing costs\nthe associated increases in the Federal Reserve’s admin- reduced the demand for credit in many markets. Issuistered rates passing through quickly to overnight money ance of corporate bonds, although quite strong in early\nmarket rates. In secured markets, money market rates September, slowed significantly in late September and\nremained soft relative to the ON RRP offering rate, at- October. Gross institutional leveraged loan issuance detributed to subdued Treasury bill supply, elevated de- clined in September. Equity issuance and gross issuance\nmand for Treasury collateral, and investor demand for of municipal bonds remained weak in September and\nvery short-term assets amid uncertainty over the pace of October.\npolicy rate increases. Daily take-up in the ON RRP faBusiness loans at banks continued to expand in Septemcility remained elevated amid this softness in repurchase\nber but at a slower pace than observed in past months.\nagreement rates. Money market fund net yields rose\nIn the October Senior Loan Officer Opinion Survey on\nalong with the rise in administered rates, while retail\nBank Lending Practices (SLOOS), banks reported havbank deposit rates increased modestly on balance.\ning tightened C&I and commercial real estate (CRE)\nForeign asset prices were volatile over the intermeeting lending standards over the previous three months.\nperiod as investors grappled with the combination of a Meanwhile, issuance of commercial mortgage-backed\ndeteriorating global growth outlook and synchronous securities (CMBS) also slowed amid higher spreads.\npolicy tightening undertaken by major central banks in Credit appeared to remain generally available to most\nresponse to high inflation. Fiscal and political develop- small businesses, though the share of small firms reportments in the United Kingdom added to market volatility ing that it was more difficult to obtain loans than three\nbut left little net imprint. On balance, sovereign bond months ago continued its upward trend in September.\nyields in most advanced foreign economies rose modCredit remained available in the residential mortgage\nestly and equity prices were mixed. The U.S. dollar apmarket for borrowers who are able to pay high interest\npreciated against most major currencies, driven by widrates. The number of home-purchase and refinance\nening yield differentials between the United States and\nmortgage originations were about flat in August and\nthe rest of the world and further deterioration of the forSeptember but down significantly from late last year.\neign growth outlook. The Japanese yen weakened\nConsumer credit remained available for most borrowers\nagainst the dollar, on net, even though Japanese authorin July and August, with auto credit and credit card credit\nities intervened to support the yen. The Chinese\ngrowing at a robust pace. However, banks in the Octorenminbi depreciated significantly against the dollar as\nber SLOOS reported being less likely to approve auto\ncontinuation of the zero-COVID policy and increased\nand credit card loans to subprime and near-prime borinvestor concerns about longer-term growth prospects\nrowers compared with earlier this year.\nweighed on the currency. Investors continued to withdraw from dedicated emerging market economy and Eu- The credit quality of nonfinancial corporations showed\nropean funds amid further increases in U.S. Treasury signs of deterioration in some sectors but remained genyields and concerns over foreign economic growth. erally solid overall. The volume of corporate bond rating upgrades was roughly on par with that of downIn domestic credit markets, borrowing costs continued\ngrades in September. However, upgrades were concento rise over the intermeeting period. Yields for corpotrated in the investment-grade segment; in the specularate bonds and institutional leveraged loans increased.\ntive-grade segment, downgrades outpaced upgrades, and\nBank interest rates for commercial and industrial (C&I)\nmarket-implied expectations of defaults over the next\nloans continued the upward trend observed since the\nyear increased markedly. Default rates on corporate\nfirst quarter of 2022, while a rising proportion of small\nbonds and leveraged loans rose slightly from low levels.\nbusinesses reported facing increased borrowing costs in\nThe credit quality of C&I and CRE loans on banks’ balSeptember. Municipal bond yields increased across ratance sheets also remained sound. Delinquency rates for\nings categories. Residential mortgage rates rose further\nCRE loans in non-agency CMBS pools ticked up in Sepin the period following the September FOMC meeting,\ntember, as did indicators of future payment stress. Denearly reaching their highest levels since 2002. Interest\nlinquency rates on small business loans remained quite\nrates on existing credit card accounts continued to trend\nlow, and the credit quality of municipal securities reupward, reflecting increases in the federal funds rate that\nmained strong.\nwere quickly passed through to prime rates.\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nThe credit quality of most households also appeared to projection for core PCE price inflation in coming quarremain solid. Delinquencies on residential mortgage ters, reflecting their assessment that the factors that had\nloans continued to trend down, and the share of mort- boosted inflation since the middle of last year—most\ngages in foreclosure in August remained close to pre- notably, strong wage growth and the effect of supply\npandemic levels. Available data through the second constraints on prices—would persist for longer than\nquarter indicated that credit card and auto credit delin- previously thought. With the effects of supply–demand\nquency rates continued to rise; however, delinquencies imbalances in goods markets expected to unwind and lafor auto loans were near their pre-pandemic levels, and bor and product markets expected to become less tight,\nthose for credit cards remained well below pre-pandemic the staff continued to project that inflation would delevels. cline markedly over the next two years; in 2025, both total and core PCE price inflation were expected to be\nThe staff provided an update on its assessment of the\n2 percent.\nstability of the financial system. The staff noted that respondents to the Federal Reserve Bank of New York’s With inflation remaining stubbornly high, the staff consurvey of near-term risks judged that economic, finan- tinued to view the risks to the inflation projection as\ncial, and geopolitical risks had risen across the globe. skewed to the upside. For real activity, sluggish growth\nAmid this weaker outlook and higher interest rates, in real private domestic spending, a deteriorating global\nprices of risky assets generally fell, though real estate val- outlook, and tightening financial conditions were all seen\nuations remained elevated. Household borrowing was as salient downside risks to the projection for real activmoderate, and mortgage performance remained strong. ity; in addition, the possibility that a persistent reduction\nNonfinancial businesses’ leverage continued to decline, in inflation could require a greater-than-assumed\nand interest coverage ratios continued to increase; how- amount of tightening in financial conditions was seen as\never, further increases in borrowing costs could pose another downside risk. The staff, therefore, continued\nrisks to some borrowers’ ability to service their debts. In to judge that the risks to the baseline projection for real\nthe financial sector, the results of this year’s stress test activity were skewed to the downside and viewed the\ndemonstrated that large banks remain resilient to a sub- possibility that the economy would enter a recession\nstantial economic downturn, but there were indicators sometime over the next year as almost as likely as the\nof elevated leverage at hedge funds and other nonbank baseline.\nfinancial institutions. Short-term funding markets conParticipants’ Views on Current Conditions and the\ntinued to have structural vulnerabilities. Funding risks\nEconomic Outlook\nat domestic banks remained low, but prime money marIn their discussion of current economic conditions, parket funds, other cash-investment vehicles, open-end muticipants noted that recent indicators pointed to modest\ntual funds, and stablecoins all continued to be susceptigrowth of spending and production. Nonetheless, job\nble to disruptive redemptions.\ngains had been robust in recent months, and the unemStaff Economic Outlook ployment rate had remained low. Inflation remained elThe projection for U.S. economic activity prepared by evated, reflecting supply and demand imbalances related\nthe staff for the November FOMC meeting was weaker to the pandemic, higher food and energy prices, and\nthan the September forecast. Broad financial conditions broader price pressures. Participants recognized that\nwere expected to be considerably more restrictive over Russia’s war against Ukraine was causing tremendous\nthe projection period than in September, reflecting both human and economic hardship. The war and related\nrecent market moves and upward revisions to the staff’s events were creating additional upward pressure on inassumptions regarding the future course of monetary flation and were weighing on global economic activity.\npolicy based on recent Federal Reserve communications. Against this background, participants continued to be\nAs a result, output was expected to move below the highly attentive to inflation risks.\nstaff’s estimate of potential early in 2024 and to remain\nWith regard to current economic activity and the nearbelow potential in 2025. Likewise, the unemployment\nterm outlook, participants observed that although real\nrate was expected to be above the staff’s estimate of its\nGDP rebounded in the third quarter, recent data sugnatural rate in 2024 and 2025.\ngested that economic activity in the near term appeared\nOn a 12-month change basis, total PCE price inflation likely to expand at a pace below its trend growth rate.\nwas expected to be 5.3 percent in 2022 and core inflation Participants noted a softening in consumer and business\nwas expected to be 4.6 percent. The staff raised their spending growth, and some participants remarked that\n\n____________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g _o_f_ N__o_v_em__b_e_r_ 1_–_2_, _2_0_2_2_______________________P_a_g_e_ _7\nthere had been a notable slowing in interest rate-sensi- that the overall tightening of global financial conditions,\ntive sectors, particularly housing, in response to the along with energy prices and other headwinds, was contightening of financial conditions associated with the tributing to a slowdown in the growth rate of global real\nCommittee’s policy actions. With inflation remaining far GDP. Participants remarked that the foreign economic\ntoo high and showing few signs of moderating, partici- slowdown, in combination with a strong U.S. dollar, was\npants observed that a period of below-trend real GDP likely to weigh on the U.S. export sector, and several pargrowth would be helpful in bringing aggregate supply ticipants commented that there could be wider spillovers\nand aggregate demand into better balance, reducing in- to the U.S. economy.\nflationary pressures, and setting the stage for the susParticipants observed that the labor market had retained achievement of the Committee’s objectives of\nmained very tight, with the unemployment rate near a\nmaximum employment and price stability.\nhistorically low level, the number of job vacancies very\nIn their discussion of the household sector, participants high, a low pace of layoffs, robust employment gains,\nnoted that growth in consumer spending had softened and elevated nominal wage growth. Some participants\nrecently. Several participants remarked that there had remarked that employers in certain sectors, such as\nbeen a reduction in discretionary expenditures, especially health care, leisure and hospitality, or construction, faced\namong lower- and middle-income households, whose particularly acute labor shortages and that these shortpurchases were shifting toward lower-cost options. Par- ages were contributing to especially strong wage presticipants observed that, in aggregate, household-sector sures in those sectors. Participants commented on the\nbalance sheets were still strong and that this factor would labor market having remained strong to date, even\ncontinue to support consumer spending. A few partici- alongside the slowing in economic activity. A number\npants noted that some households had been running of participants remarked that some businesses were keen\ndown the additional savings they had accumulated dur- to retain workers after their recent experiences of labor\ning the pandemic and that there were reports of a rise in shortages and hiring challenges. These participants\nthe number of households experiencing financial strains. noted that this consideration had limited layoffs even as\nParticipants commented that higher mortgage interest the broader economy had softened or that this behavior\nrates had notably restrained housing activity. could limit layoffs if aggregate economic activity were to\nsoften further. Nevertheless, many participants noted\nWith regard to the business sector, participants noted\ntentative signs that the labor market might be moving\nthat growth in investment spending was modest. Several\nslowly toward a better balance of supply and demand;\nparticipants observed that business investment was bethese signs included a lower rate of job turnover and a\ning weighed down by tighter financial conditions, almoderation in nominal wage growth. Participants anticthough a few participants reported that some business\nipated that imbalances in the labor market would graducontacts indicated that their investment spending had\nally diminish and that the unemployment rate would\nbeen resilient. Some participants mentioned reports relikely rise somewhat from its current very low level,\nceived from business contacts of easing supply bottlewhile vacancies would likely fall.\nnecks, reflected in declines in shipping costs and delivery\ntimes, although the reported extent of these improve- Participants agreed that inflation was unacceptably high\nments varied across contacts. A few participants re- and was well above the Committee’s longer-run goal of\nmarked that, in instances in which supply constraints 2 percent. Some participants noted that the burden of\nhad eased, their business contacts found it easier to plan high inflation was falling disproportionally on low-inproduction or had diminished needs to maintain precau- come households, for whom necessities like food, entionary inventories. A couple of participants noted that ergy, and shelter make up a larger share of expenditures.\ndrought conditions in the Midwest were making some Many participants observed that price pressures had inwaterways, notably the Mississippi River System, less creased in the services sector and that, historically, price\nnavigable. These conditions were creating new supply pressures in this sector had been more persistent than\nconstraints and putting upward pressures on transporta- those in the goods sector. Some participants noted that\ntion costs and prices for farm products. the recent high pace of nominal wage growth, taken together with the recent low pace of productivity growth,\nParticipants observed that, with inflation elevated globwould, if sustained, be inconsistent with achievement of\nally, many central banks were tightening monetary policy\nthe 2 percent inflation objective. Several participants,\nsimultaneously, contributing to an overall tightening of\nhowever, commented on signs of a moderation in nomglobal financial conditions. Participants further noted\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ninal wage growth. Participants agreed that near-term in- the full effects of changes in financial conditions on agflation pressures were high, but some noted that lower gregate spending and the labor market, and then on incommodity prices or the expected reduced pressure on flation, likely took longer to materialize. With regard to\ngoods prices due to an easing of supply constraints current circumstances, many participants remarked that,\nshould contribute to lower inflation in the medium term. even though the tightening of monetary policy had\nSeveral participants remarked that rent increases on new clearly influenced financial conditions and had had noleases had been slowing in recent months, but partici- table effects in some interest rate-sensitive sectors, the\npants also noted that it would take some time for this timing of the effects on overall economic activity, the\ndevelopment to show up in PCE inflation. Several par- labor market, and inflation was still quite uncertain, with\nticipants summarized reports provided by business con- the full extent of the effects yet to be realized. Several\ntacts about their firms’ ability to pass on higher input participants observed that, because of the difficulties in\ncosts to their customers. These reports suggested that isolating the effects of monetary policy, changes in ecosome firms continued to have solid pricing power, while nomic structure, or increasing transparency over time rein other cases cost pass-through had become more dif- garding monetary policy decisions, the historical record\nficult. did not provide definitive evidence on the length of\nthese lags. In addition, some participants noted that the\nParticipants remarked that, overall, measures of mepost-pandemic dynamics of the economy may differ\ndium- and longer-term inflation expectations obtained\nfrom those prevailing prior to the pandemic.\nfrom surveys of households and businesses as well as\nfrom financial markets quotes appeared to have re- Participants generally noted that the uncertainty associmained well anchored. A couple of participants ob- ated with their economic outlooks was high and that the\nserved that longer-term inflation expectations were sta- risks to the inflation outlook remained tilted to the upble even as measures of near-term inflation expectations side. Participants observed that recent inflation had\nresponded to realized inflation in line with historical pat- been higher and more persistent than anticipated. Some\nterns. Participants noted that longer-term inflation ex- participants noted the risk that energy prices could rise\npectations were an important influence on inflation’s be- sharply again amid geopolitical tensions. A few particihavior and stressed that the Committee’s ongoing mon- pants commented that the ongoing tightness in the labor\netary policy tightening would be essential for ensuring market could lead to an emergence of a wage–price spithat these expectations remained well anchored. Several ral, even though one had not yet developed.\nparticipants expressed the concern that the longer inflaA number of participants judged that the risks regarding\ntion remained well above the 2 percent goal, the greater\nthe outlook for economic activity were weighted to the\nthe risk that longer-term inflation expectations could bedownside, with various global headwinds being promicome unanchored. Such a development, if it materialnently cited. These global headwinds included a slowized, would make it much more costly to bring inflation\ndown in economic activity occurring in China and the\ndown and to achieve the Committee’s statutory objecongoing international economic implications of Russia’s\ntives of maximum employment and price stability. A\nwar against Ukraine. Participants observed that, because\ncouple of participants discussed the high dispersion of\nof high inflation pressures prevailing globally, monetary\nlonger-term inflation expectations across respondents in\npolicy tightening was under way in many other econovarious surveys: These participants noted that the higher\nmies—a development likely to affect foreign economic\ndispersion may signal increased uncertainty about the inactivity and carrying the potential for spillovers to the\nflation outlook and was a reason not to be complacent\nU.S. economy.\nabout longer-term inflation expectations remaining well\nanchored. In their discussion of issues related to financial stability,\nparticipants noted the importance of orderly functioning\nParticipants discussed the length of the lags in the reof the market for U.S. Treasury securities for the transsponse of the economy to monetary policy actions, takmission of monetary policy, for meeting the financing\ning into account historical experience and the various esneeds of the federal government, and for the operation\ntimates of timing relationships provided in economic reof the global financial system. Participants observed\nsearch, as well as the high degree of uncertainty involved\nthat, despite elevated interest rate volatility and indicain applying the evidence on lags to the current situation.\ntions of strained liquidity conditions, the functioning of\nThey noted that monetary policy tightening typically\nthe Treasury securities market had been orderly. Noting\nproduced rapid effects on financial conditions but that\nthat the value of resilience of the market for Treasury\n\n____________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g _o_f_ N__o_v_em__b_e_r_ 1_–_2_, _2_0_2_2_______________________P_a_g_e_ _9\nsecurities was underlined by recent gilt market disrup- expectations well anchored—a situation that would help\ntions in the United Kingdom, a number of participants facilitate the return of inflation to the Committee’s\ndiscussed a range of issues that could be considered by longer-run goal of 2 percent. Nevertheless, with realized\nthe appropriate authorities regarding market resilience, inflation well above that goal and the labor market still\nincluding potential interactions of capital and liquidity very tight, participants agreed that ongoing increases in\nregulations with market activity, oversight of key market the target range for the federal funds rate would be apparticipants, clearing and settlement practices, and the propriate and would help keep longer-term inflation exrole and structure of the Federal Reserve’s standing fa- pectations well anchored. Participants noted that, with\ncilities. A few participants noted the importance of be- regard to both real economic activity and inflation, it\ning prepared to address disruptions in U.S. core market would take time for the full effects of monetary restraint\nfunctioning in ways that would not affect the stance of to be realized and that these lags complicated an assessmonetary policy, especially during episodes of monetary ment of the effects of monetary policy.\npolicy tightening. Several participants noted the risks\nIn discussing potential policy actions at upcoming meetposed by nonbank financial institutions amid the rapid\nings, participants reaffirmed their strong commitment to\nglobal tightening of monetary policy and the potential\nreturning inflation to the Committee’s 2 percent objecfor hidden leverage in these institutions to amplify\ntive, and they continued to anticipate that ongoing inshocks.\ncreases in the target range for the federal funds rate\nIn their consideration of appropriate monetary policy ac- would be appropriate in order to attain a sufficiently retions at this meeting, participants concurred that infla- strictive stance of policy to bring inflation down over\ntion remained well above the Committee’s longer-run time. Many participants commented that there was siggoal of 2 percent and the recent data on inflation pro- nificant uncertainty about the ultimate level of the fedvided very few signs that inflation pressures were abat- eral funds rate needed to achieve the Committee’s goals\ning. The economic expansion had slowed significantly and that their assessment of that level would depend, in\nfrom last year’s rapid pace, and recent indicators pointed part, on incoming data. Even so, various participants\nto modest growth in spending and production in the cur- noted that, with inflation showing little sign thus far of\nrent quarter. Despite the slowdown in growth, the labor abating, and with supply and demand imbalances in the\nmarket remained extremely tight, and nominal wage economy persisting, their assessment of the ultimate\ngrowth remained elevated. Against this backdrop, all level of the federal funds rate that would be necessary to\nparticipants agreed that it was appropriate to raise the achieve the Committee’s goals was somewhat higher\ntarget range for the federal funds rate 75 basis points at than they had previously expected.\nthis meeting and to continue the process of reducing the\nParticipants mentioned a number of considerations that\nFederal Reserve’s securities holdings, as described in the\nwould likely influence the pace of future increases in the\nPlans for Reducing the Size of the Federal Reserve’s Baltarget range for the federal funds rate. These considerance Sheet that the Committee issued in May. Particiations included the cumulative tightening of monetary\npants observed that the policy rate hike at this meeting\npolicy to date, the lags between monetary policy actions\nwas another step toward making the Committee’s monand the behavior of economic activity and inflation, and\netary policy stance sufficiently restrictive to help ease\neconomic and financial developments. A number of\nsupply and demand imbalances and to return inflation to\nparticipants observed that, as monetary policy ap2 percent over time.\nproached a stance that was sufficiently restrictive to\nIn their discussion of the effects of monetary policy ac- achieve the Committee’s goals, it would become approtions and communications to date, participants con- priate to slow the pace of increase in the target range for\ncurred that the Committee had taken forceful steps to the federal funds rate. In addition, a substantial majority\nmoderate aggregate demand in order to bring it into bet- of participants judged that a slowing in the pace of inter alignment with aggregate supply. Financial condi- crease would likely soon be appropriate. A slower pace\ntions had tightened significantly in response to the Com- in these circumstances would better allow the Commitmittee’s policy actions, and their effects were clearly ev- tee to assess progress toward its goals of maximum emident in the most interest rate-sensitive sectors of the ployment and price stability. The uncertain lags and\neconomy, including residential investment and some magnitudes associated with the effects of monetary polcomponents of business investment. Several partici- icy actions on economic activity and inflation were\npants commented that monetary policy actions and among the reasons cited regarding why such an assesscommunications had helped keep longer-term inflation ment was important. A few participants commented\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nthat slowing the pace of increase could reduce the risk creating additional upward pressure on inflation and\nof instability in the financial system. A few other partic- were weighing on global economic activity. Members\nipants noted that, before slowing the pace of policy rate concurred that they remained highly attentive to inflaincreases, it could be advantageous to wait until the tion risks.\nstance of policy was more clearly in restrictive territory\nMembers agreed that the Committee seeks to achieve\nand there were more concrete signs that inflation presmaximum employment and inflation at the rate of 2 persures were receding significantly.\ncent over the longer run. In support of these goals,\nWith monetary policy approaching a sufficiently restric- members agreed to raise the target range for the federal\ntive stance, participants emphasized that the level to funds rate to 3¾ to 4 percent. Members anticipated that\nwhich the Committee ultimately raised the target range ongoing increases in the target range would be approprifor the federal funds rate, and the evolution of the policy ate in order to attain a stance of monetary policy suffistance thereafter, had become more important consider- ciently restrictive to return inflation to 2 percent over\nations for achieving the Committee’s goals than the pace time. Members agreed to add language to this effect in\nof further increases in the target range. Participants the postmeeting statement, on the grounds that this\nagreed that communicating this distinction to the public would underscore the Committee’s view that a suffiwas important in order to reinforce the Committee’s ciently restrictive stance of monetary policy was needed\nstrong commitment to returning inflation to the 2 per- for achieving its dual-mandate goals. Members agreed\ncent objective. that, in determining the pace of future increases in the\ntarget range, they would take into account the cumulaParticipants discussed a number of risk-management\ntive tightening of monetary policy, the lags with which\nconsiderations related to the conduct of monetary polmonetary policy affected economic activity and inflation,\nicy. In light of the continuing broad-based and unacand economic and financial developments. Members\nceptably high level of inflation and upside risks to the\nagreed to add language to this effect in the postmeeting\ninflation outlook, participants remarked that purposestatement in order to convey explicitly the range of facfully moving to a more restrictive policy stance was contors that they would consider in determining future\nsistent with risk-management considerations. Some parmonetary policy actions. In addition, members agreed\nticipants observed that there had been an increase in the\nthat they would continue reducing the Federal Reserve’s\nrisk that the cumulative policy restraint would exceed\nholdings of Treasury securities, agency debt, and agency\nwhat was required to bring inflation back to 2 percent. MBS, as described in the Plans for Reducing the Size of\nSeveral participants commented that continued rapid\nthe Federal Reserve’s Balance Sheet that were issued in\npolicy tightening increased the risk of instability or disMay. All members affirmed that they were strongly\nlocations in the financial system. There was wide agreecommitted to returning inflation to its 2 percent objecment that heightened uncertainty regarding the outlooks\ntive.\nfor both inflation and real activity underscored the importance of taking into account the cumulative tighten- Members agreed that, in assessing the appropriate stance\ning of monetary policy, the lags with which monetary of monetary policy, they would continue to monitor the\npolicy affected economic activity and inflation, and eco- implications of incoming information for the economic\nnomic and financial developments. outlook. They would be prepared to adjust the stance of\nmonetary policy as appropriate if risks emerged that\nCommittee Policy Action\ncould impede the attainment of the Committee’s goals. In their discussion of monetary policy for this meeting,\nMembers agreed that their assessments will take into acmembers agreed that recent indicators had pointed to\ncount a wide range of information, including readings on\nmodest growth in spending and production. Members\npublic health, labor market conditions, inflation presalso concurred that job gains had been robust in recent\nsures and inflation expectations, and financial and intermonths, and the unemployment rate had remained low.\nnational developments. Members agreed that inflation had remained elevated,\nreflecting supply and demand imbalances related to the At the conclusion of the discussion, the Committee\npandemic, higher food and energy prices, and broader voted to authorize and direct the Federal Reserve Bank\nprice pressures. of New York, until instructed otherwise, to execute\ntransactions in the SOMA in accordance with the folMembers observed that Russia’s war against Ukraine\nlowing domestic policy directive, for release at 2:00 p.m.:\nwas causing tremendous human and economic hardship. They also agreed that the war and related events were\n\n____________________________M__in_u_t_e_s_ o_f_ t_h_e_ M__e_e_ti_n_g _o_f_ N__o_v_em__b_e_r_ 1_–_2_, _2_0_2_2______________________P__ag_e_ _1_1\n“Effective November 3, 2022, the Federal elevated, reflecting supply and demand imbalOpen Market Committee directs the Desk to: ances related to the pandemic, higher food and\nenergy prices, and broader price pressures.\n• Undertake open market operations as necessary to maintain the federal funds rate in Russia’s war against Ukraine is causing tremena target range of 3¾ to 4 percent. dous human and economic hardship. The war\nand related events are creating additional up-\n• Conduct overnight repurchase agreement\nward pressure on inflation and are weighing on\noperations with a minimum bid rate of\nglobal economic activity. The Committee is\n4 percent and with an aggregate operation\nhighly attentive to inflation risks.\nlimit of $500 billion; the aggregate operation limit can be temporarily increased at The Committee seeks to achieve maximum emthe discretion of the Chair. ployment and inflation at the rate of 2 percent\nover the longer run. In support of these goals,\n• Conduct overnight reverse repurchase\nthe Committee decided to raise the target range\nagreement operations at an offering rate of\nfor the federal funds rate to 3¾ to 4 percent.\n3.8 percent and with a per-counterparty\nThe Committee anticipates that ongoing inlimit of $160 billion per day; the per-councreases in the target range will be appropriate in\nterparty limit can be temporarily increased\norder to attain a stance of monetary policy that\nat the discretion of the Chair.\nis sufficiently restrictive to return inflation to\n• Roll over at auction the amount of principal 2 percent over time. In determining the pace of\npayments from the Federal Reserve’s hold- future increases in the target range, the Comings of Treasury securities maturing in each mittee will take into account the cumulative\ncalendar month that exceeds a cap of tightening of monetary policy, the lags with\n$60 billion per month. Redeem Treasury which monetary policy affects economic activity\ncoupon securities up to this monthly cap and inflation, and economic and financial develand Treasury bills to the extent that coupon opments. In addition, the Committee will conprincipal payments are less than the tinue reducing its holdings of Treasury securimonthly cap. ties and agency debt and agency mortgagebacked securities, as described in the Plans for\n• Reinvest into agency mortgage-backed seReducing the Size of the Federal Reserve’s Balcurities (MBS) the amount of principal payance Sheet that were issued in May. The Comments from the Federal Reserve’s holdings\nmittee is strongly committed to returning inflaof agency debt and agency MBS received in\ntion to its 2 percent objective.\neach calendar month that exceeds a cap of\n$35 billion per month. In assessing the appropriate stance of monetary\npolicy, the Committee will continue to monitor\n• Allow modest deviations from stated\nthe implications of incoming information for\namounts for reinvestments, if needed for\nthe economic outlook. The Committee would\noperational reasons.\nbe prepared to adjust the stance of monetary\n• Engage in dollar roll and coupon swap policy as appropriate if risks emerge that could\nimpede the attainment of the Committee’s\ntransactions as necessary to facilitate settlegoals. The Committee’s assessments will take\nment of the Federal Reserve’s agency MBS\ninto account a wide range of information, intransactions.”\ncluding readings on public health, labor market\nThe vote also encompassed approval of the statement\nconditions, inflation pressures and inflation exbelow for release at 2:00 p.m.:\npectations, and financial and international de-\n“Recent indicators point to modest growth in velopments.”\nspending and production. Job gains have been\nVoting for this action: Jerome H. Powell, John C.\nrobust in recent months, and the unemployWilliams, Michael S. Barr, Michelle W. Bowman, Lael\nment rate has remained low. Inflation remains\nBrainard, James Bullard, Susan M. Collins, Lisa D. Cook,\nEsther L. George, Philip N. Jefferson, Loretta J. Mester,\nand Christopher J. Waller.\n\n_P_ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nVoting against this action: None. 14, 2022. The meeting adjourned at 10:30 a.m. on November 2, 2022. To support the Committee’s decision to raise the target\nrange for the federal funds rate, the Board of Governors Notation Vote\nof the Federal Reserve System voted unanimously to By notation vote completed on October 11, 2022, the\nraise the interest rate paid on reserve balances to 3.9 per- Committee unanimously approved the minutes of the\ncent, effective November 3, 2022. The Board of Gov- Committee meeting held on September 20–21, 2022.\nernors of the Federal Reserve System voted unanimously\nto approve a ¾ percentage point increase in the primary\ncredit rate to 4 percent, effective November 3, 2022.4\n_______________________\nIt was agreed that the next meeting of the Committee James A. Clouse\nwould be held on Tuesday–Wednesday, December 13– Secretary\n4 In taking this action, the Board approved requests to estab- November 3, 2022, or the date such Reserve Banks inform the\nlish that rate submitted by the Boards of Directors of the Fed- Secretary of the Board of such a request. (Secretary’s note:\neral Reserve Banks of Boston, Cleveland, Richmond, Atlanta, Subsequently, the Federal Reserve Banks of New York, PhilChicago, St. Louis, Minneapolis, Dallas, and San Francisco. adelphia, and Kansas City were informed of the Board’s apThis vote also encompassed approval by the Board of Gover- proval of their establishment of a primary credit rate of 4 pernors of the establishment of a 4 percent primary credit rate by cent, effective November 3, 2022.)\nthe remaining Federal Reserve Banks, effective on the later of",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20221102.pdf",
+    "action": "Raised",
+    "rate": "3.75%-4.00%",
+    "magnitude": "0.75 percentage points",
+    "forward_guidance": "The Fed signaled that ongoing rate hikes will be necessary to achieve a sufficiently restrictive policy stance to bring inflation back to 2%. However, it indicated that a slower pace of increases will likely be appropriate soon to assess the impact of cumulative tightening.",
+    "key_economic_factors": [
+      "Inflation remained stubbornly high, with core PCE at 5.1% and no clear signs of sustained moderation",
+      "The labor market was extremely tight, with unemployment at 3.5% and elevated wage growth",
+      "Financial conditions had tightened significantly, especially in interest-rate-sensitive sectors like housing",
+      "Global factors including Russia’s war in Ukraine and China’s economic slowdown were adding upward pressure on inflation and weighing on growth"
+    ],
+    "economic_outlook": "The Fed expects below-trend economic growth in the near term, with real GDP likely to slow further. Inflation is projected to decline gradually over the next two years but remains well above the 2% target. The unemployment rate is expected to rise modestly from its current low level as labor market imbalances slowly ease.",
+    "market_impact": "Higher borrowing costs will continue to pressure businesses, homebuyers, and consumers, particularly in sectors like housing and auto loans. Financial markets should expect further volatility as the Fed moves toward a restrictive policy stance, though the pace of hikes may slow in coming months."
+  },
+  {
+    "date": "2022-09-21",
+    "title": "FOMC Meeting 2022-09-21",
+    "full_text": "_ _______________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nSeptember 20–21, 2022\nA joint meeting of the Federal Open Market Committee Jose Acosta, Senior Communications Analyst, Division\nand the Board of Governors of the Federal Reserve Sys- of Information Technology, Board\ntem was held in the offices of the Board of Governors\nDavid Altig, Executive Vice President, Federal Reserve\non Tuesday, September 20, 2022, at 1:00 p.m. and conBank of Atlanta\ntinued on Wednesday, September 21, 2022, at 9:00 a.m.1\nKartik B. Athreya, Executive Vice President, Federal\nAttendance\nReserve Bank of Richmond\nJerome H. Powell, Chair\nJohn C. Williams, Vice Chair Penelope A. Beattie,3 Section Chief, Office of the\nMichael S. Barr Secretary, Board\nMichelle W. Bowman\nJames P. Bergin, Deputy General Counsel, Federal\nLael Brainard\nReserve Bank of New York\nJames Bullard\nSusan M. Collins Camille Bryan, Senior Project Manager, Division of\nLisa D. Cook Monetary Affairs, Board\nEsther L. George\nMichele Cavallo, Principal Economist, Division of\nPhilip N. Jefferson\nMonetary Affairs, Board\nLoretta J. Mester\nChristopher J. Waller Stephanie E. Curcuru, Deputy Director, Division of\nInternational Finance, Board\nCharles L. Evans, Patrick Harker, Neel Kashkari, Lorie\nK. Logan, and Helen E. Mucciolo, Alternate Marnie Gillis DeBoer, Senior Associate Director,\nMembers of the Committee Division of Monetary Affairs, Board\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Sarah Devany, First Vice President, Federal Reserve\nDaly, Presidents of the Federal Reserve Banks of Bank of San Francisco\nRichmond, Atlanta, and San Francisco, respectively\nMichael Dotsey, Executive Vice President, Federal\nJames A. Clouse, Secretary Reserve Bank of Philadelphia\nMatthew M. Luecke, Deputy Secretary\nBurcu Duygan-Bump, Special Adviser to the Board,\nBrian J. Bonis, Assistant Secretary\nDivision of Board Members, Board\nMichelle A. Smith, Assistant Secretary\nMark E. Van Der Weide, General Counsel Rochelle M. Edge, Deputy Director, Division of\nTrevor A. Reeve, Economist Monetary Affairs, Board\nStacey Tevlin, Economist\nMatthew J. Eichner,4 Director, Division of Reserve\nBeth Anne Wilson, Economist\nBank Operations and Payment Systems, Board\nShaghil Ahmed, Joseph W. Gruber, Carlos Garriga, and\nJon Faust, Senior Special Adviser to the Chair, Division\nWilliam Wascher, Associate Economists\nof Board Members, Board\nPatricia Zobel,2 Manager pro tem, System Open Market\nAndrew Figura, Associate Director, Division of\nAccount\nResearch and Statistics, Board\n1 The Federal Open Market Committee is referenced as the 2 In the absence of the manager, the Committee’s Rules of\n“FOMC” and the “Committee” in these minutes; the Board Organization provide that the deputy manager acts as manager\nof Governors of the Federal Reserve System is referenced as pro tem.\nthe “Board” in these minutes. 3 Attended Tuesday’s session only.\n4 Attended through the discussion of developments in financial markets and open market operations.\n\n_P _ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nGlenn Follette, Associate Director, Division of Michelle M. Neal, Head of Markets, Federal Reserve\nResearch and Statistics, Board Bank of New York\nJoshua Gallin, Senior Special Adviser to the Chair, Edward Nelson, Senior Adviser, Division of Monetary\nDivision of Board Members, Board Affairs, Board\nMichael S. Gibson, Director, Division of Supervision Giovanni Olivei, Senior Vice President, Federal\nand Regulation, Board Reserve Bank of Boston\nLuca Guerrieri, Deputy Associate Director, Division of Anna Paulson, Executive Vice President, Federal\nFinancial Stability, Board Reserve Bank of Chicago\nDiana Hancock, Senior Associate Director, Division of Karen M. Pence,5 Deputy Associate Director, Division\nResearch and Statistics, Board of Research and Statistics, Board\nValerie S. Hinojosa, Section Chief, Division of Andrea Raffo, Senior Vice President, Federal Reserve\nMonetary Affairs, Board Bank of Minneapolis\nMatteo Iacoviello, Senior Associate Director, Division Linda Robertson, Assistant to the Board, Division of\nof International Finance, Board Board Members, Board\nJane E. Ihrig, Special Adviser to the Board, Division of Jeremy B. Rudd, Senior Adviser, Division of Research\nBoard Members, Board and Statistics, Board\nCallum Jones, Senior Economist, Division of Monetary Achilles Sangster II, Senior Information Manager,\nAffairs, Board Division of Monetary Affairs, Board\nEdward S. Knotek II, Senior Vice President, Federal John W. Schindler, Special Adviser to the Board,\nReserve Bank of Cleveland Division of Board Members, Board\nSylvain Leduc, Executive Vice President, Federal Samuel Schulhofer-Wohl, Senior Vice President,\nReserve Bank of San Francisco Federal Reserve Bank of Dallas\nAndreas Lehnert, Director, Division of Financial Seth Searls,4 Associate Director, Federal Reserve Bank\nStability, Board of New York\nPaul Lengermann, Assistant Director, Division of Nitish R. Sinha, Special Adviser to the Board, Division\nResearch and Statistics, Board of Board Members, Board\nKurt F. Lewis, Special Adviser to the Board, Division John J. Stevens, Senior Associate Director, Division of\nof Board Members, Board Research and Statistics, Board\nDan Li, Assistant Director, Division of Monetary Annette Vissing-Jørgensen, Senior Adviser, Division of\nAffairs, Board Monetary Affairs, Board\nLaura Lipscomb, Special Adviser to the Board, Jeffrey D. Walker,4 Associate Director, Division of\nDivision of Board Members, Board Reserve Bank Operations and Payment Systems,\nBoard\nDavid López-Salido, Senior Associate Director,\nDivision of Monetary Affairs, Board Min Wei, Senior Associate Director, Division of\nMonetary Affairs, Board\nJonathan P. McCarthy, Economic Research Advisor,\nFederal Reserve Bank of New York Paul R. Wood, Special Adviser to the Board, Division\nof Board Members, Board\nAnn E. Misback, Secretary, Office of the Secretary,\nBoard Nathaniel Wuerffel, Head of Domestic Markets,\nFederal Reserve Bank of New York\n5 Attended from the discussion of the economic and financial\nsituation through the end of Wednesday’s session.\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 2_0_–_2_1_, _2_0_2_2______________________P_a_g_e_ _3\nRebecca Zarutskie, Special Adviser to the Board, The manager pro tem turned next to a discussion of polDivision of Board Members, Board icy implementation. Balance sheet runoff had continued\nto proceed smoothly over the intermeeting period. With\nAndrei Zlate, Group Manager, Division of Monetary\ncaps on redemptions of Treasury securities and agency\nAffairs, Board\nmortgage-backed securities (MBS) doubling in SeptemDevelopments in Financial Markets and Open ber, the pace of balance sheet runoff was set to increase\nMarket Operations over coming months. The markets for Treasury securiThe manager pro tem turned first to a discussion of fi- ties and agency MBS continued to function in an orderly\nnancial market developments over the intermeeting pe- manner, though liquidity conditions in both markets reriod. U.S. financial conditions tightened over the period, mained low, reflecting elevated interest rate uncertainty.\nlargely reflecting an upward revision in investors’ outIn money markets, the 75 basis point increase in the tarlook for the path of the policy rate. Treasury yields\nget range at the July meeting passed through fully to\nclimbed substantially, with most of the upward move reovernight rates. Amid strong demand for short-term inflected in real yields. Equity prices initially rose amid\nvestments, take-up at the overnight reverse repurchase\nsecond-quarter earnings reports that were better than\nagreement (ON RRP) facility was relatively steady at elfeared but later retraced those gains in response to the\nevated levels.\nshifting policy outlook. Regarding international developments, yields in most advanced foreign economies The staff continued to anticipate that ON RRP take-up\n(AFEs) also rose sharply as a number of other central would decline in coming quarters from its currently elebanks lifted policy rates and indicated in their communi- vated levels as money market participants responded to\ncations that they would likely continue to tighten mone- shifting conditions. Issuance of short-term securities\ntary policy in order to address inflation pressures. The was likely to increase in coming periods, and, as more\nexchange value of the dollar appreciated notably, reach- clarity emerged in the economic and policy outlook, deing multidecade highs in real terms, as market partici- mand for short-term assets could moderate. Both of\npants perceived mounting economic challenges abroad. these developments would ease downward pressure on\nyields on safe short-term investments. The gradual reThe market-implied path of the federal funds rate shifted\nduction in ON RRP balances could also be facilitated by\nsharply higher after market participants interpreted Fedrising competition among banks in seeking deposits.\neral Reserve communications—particularly those proThe manager pro tem indicated that the staff would convided at the Jackson Hole symposium—along with intinue to monitor money market developments closely in\ncoming data, as indicating a more restrictive path of polorder to assess whether any frictions were emerging in\nicy than previously expected. Policy-sensitive rates sugthis process.\ngested that a 75 basis point increase in the target range\nfor the federal funds rate was widely expected to be de- The manager pro tem concluded with an update on opcided on at the Committee’s September meeting, with erational matters. As expected, Federal Reserve net insome chance of a 100 basis point move. In addition, the come turned negative in September. The staff expected\nmarket-implied path suggested reasonable odds of addi- that the size of the associated deferred asset would intional 75 basis point and 50 basis point rate increases at crease over time until net income turned positive, likely\nthe November and December meetings, respectively. in a few years. The Desk planned to begin aggregation\nMarket participants generally anticipated a further slow- of those agency MBS held in the System Open Market\ning in the pace of rate increases after December, with the Account (SOMA) that are not eligible to be commingled\npeak policy rate being reached in the first half of 2023. into Uniform MBS and, specifically, the Freddie Mac\nBeyond that period, the market-implied path of the fed- MBS that were issued before June 2019 and have a\neral funds rate sloped downward, likely reflecting down- 45-day payment delay; decisions about any additional agside risks to the policy rate path. The median respond- gregations would be made at a later date.\nent to the Open Market Desk surveys expected the polBy unanimous vote, the Committee ratified the Desk’s\nicy rate path to remain flat through 2023 after the peak\ndomestic transactions over the intermeeting period.\nrate was reached. On average, Desk survey respondents\nThere were no intervention operations in foreign currenassigned an almost 30 percent probability to a decline in\ncies for the System’s account during the intermeeting pereal gross domestic product (GDP) over 2022, nearly\nriod.\ndouble the probability assigned in the July survey.\n\n_P _ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nStaff Review of the Economic Situation and business fixed investment appeared to be rising at a\nThe information available at the time of the Septem- tepid pace.\nber 20–21 meeting suggested that U.S. real GDP was inReal goods exports stepped up in June and then rose furcreasing at a modest pace in the third quarter after havther in July, led by increases in exports of industrial suping declined over the first half of the year. Labor deplies. By contrast, real goods imports stepped down in\nmand remained strong, and the labor market continued\nJune and then fell sharply in July, driven by a large deto be very tight. Recent monthly readings indicated that\ncline in consumer goods imports. Exports and imports\nconsumer price inflation—as measured by the 12-month\nof services continued to be held back by an incomplete\npercentage change in the price index for personal conrecovery of international travel. The nominal U.S. intersumption expenditures (PCE)—remained elevated.\nnational trade deficit continued to narrow in June and\nTotal nonfarm payroll employment posted robust gains July. Altogether, net exports contributed positively to\nin July and August at an average pace that was only GDP growth in the second quarter and appeared on\nslightly below what was seen over the first half of the track to make another positive contribution in the third\nyear. The unemployment rate edged up, on net, from quarter.\n3.6 percent in June to 3.7 percent in August. The unemData pointed to weak foreign growth in recent months,\nployment rate for African Americans increased over this\nweighed down by the global reverberations from Rusperiod, while the rate for Hispanics moved up slightly on\nsia’s war against Ukraine and a loss of momentum in the\nnet; both rates were noticeably higher than the national\nChinese economy. In Europe, further disruptions to the\naverage. The labor force participation rate and\nsupply of energy exacerbated declines in real disposable\nemployment-to-population ratio both rose, on net, from\nincomes and in consumer and business confidence, reJune to August. The private-sector job openings rate, as\nstraining economic activity. In China, recent indicators\nmeasured by the Job Openings and Labor Turnover Sursuggest only a partial rebound from the effects of earlier\nvey, moved slightly lower from May to July but remained\nsevere COVID-19-related lockdowns as well as increasat a high level. Nominal wage growth continued to be\ning concerns about the property sector. Weaker growth\nrapid and broad based: Average hourly earnings rose\nin China and the broader global economy also weighed\n5.2 percent over the 12 months ending in August, while\non export-oriented emerging market economies in Asia.\nthe employment cost index of hourly compensation in\nConsumer price inflation rose further in August in many\nthe private sector, which also includes benefit costs, rose\nforeign economies, reflecting past increases in energy\n5.5 percent over the 12 months ending in June, 2.4 perand food prices, but also a continued broadening of incentage points faster than the year-earlier pace.\nflationary pressure to core prices. With inflation persisConsumer price inflation remained elevated. Total PCE tently high, many central banks continued to tighten\nprice inflation was 6.3 percent over the 12 months end- monetary policy.\ning in July, and core PCE price inflation, which excludes\nStaff Review of the Financial Situation\nchanges in consumer energy prices and many consumer\nOver the intermeeting period, U.S. Treasury yields and\nfood prices, was 4.6 percent over the same period. The\nthe market-implied federal funds rate path moved\ntrimmed mean measure of 12-month PCE price inflahigher. Broad domestic equity price indexes decreased\ntion constructed by the Federal Reserve Bank of Dallas\nslightly, on balance, but market volatility remained elewas 4.4 percent in July. In August, the 12-month change\nvated. Credit remained widely available to most types of\nin the consumer price index (CPI) was 8.3 percent, while\nborrowers, but increases in borrowing costs appeared to\ncore CPI inflation was 6.3 percent over the same period.\ndamp the demand for credit in some markets in recent\nSurvey-based measures of short-run inflation expectamonths. Measures of current loan performance for\ntions declined in recent weeks, while measures of longerbusinesses and most households remained generally staterm inflation expectations remained roughly stable or\nble. However, more recently, expectations of future\nmoved lower.\ncredit quality for businesses deteriorated slightly, and deAvailable spending indicators, including the August re- linquency rates rose for some types of credit owed by\ntail sales report, suggested that real PCE was on track to households with low credit scores.\npost a modest gain in the third quarter. However, the\nThe expected path of the federal funds rate—implied by\nlatest housing market data pointed to another sharp cona straight read of financial market quotes—rose in the\ntraction in residential investment in the third quarter,\nperiod since the July FOMC meeting, largely reflecting\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 2_0_–_2_1_, _2_0_2_2______________________P_a_g_e_ _5\nmore-restrictive-than-expected monetary policy com- Yields on Japanese government securities, however,\nmunications amid stronger-than-expected economic ended the period little changed, as the Bank of Japan redata and ongoing concerns about high inflation. On net, affirmed its accommodative monetary policy stance.\nnominal Treasury yields increased significantly across Measures of foreign inflation compensation were volathe maturity spectrum. The increases in nominal Treas- tile amid large swings in European natural gas prices but\nury yields were primarily accounted for by rising real increased moderately on net. The U.S. dollar appreciyields, while inflation compensation measures declined ated further against most major currencies, reaching\nsubstantially at short horizons and remained relatively multi-decade highs against the euro, the British pound,\nlittle changed at medium- and longer-term horizons. and the Japanese yen. The dollar’s strength largely reflected increasing investor concerns about the global\nBroad equity price indexes decreased slightly, on net, as\ngrowth outlook as well as widening interest rate differsubstantial early gains arising from investors’ improved\nentials between the United States and Japan. Growth\nperceptions about the inflation outlook and better-thanconcerns also weighed on foreign equity prices, which\nfeared second-quarter earnings were more than offset by\ndeclined moderately. Outflows from funds dedicated to\nlater losses arising from expectations that the Committee\nemerging markets continued at a modest pace, and credit\nwould follow a more restrictive policy than previously\nspreads in emerging market economies narrowed someexpected. One-month option-implied volatility on the\nwhat on net. S&P 500—the VIX—increased somewhat, on net, and\nremained elevated by historical norms, partly reflecting In domestic credit markets, borrowing costs continued\ninvestor uncertainty and risks associated with higher in- to rise over the intermeeting period. Yields on both corflation and the expected move to a restrictive policy porate bonds and institutional leveraged loans increased.\nstance. Corporate bond spreads narrowed slightly, on Bank interest rates for commercial and industrial (C&I)\nnet, and remained roughly at the midpoints of their his- and commercial real estate (CRE) loans also increased.\ntorical distributions. Reflecting increases in both policy Among small businesses that borrow on a regular basis,\nrates and corporate bond spreads, yields on corporate the share of firms facing higher borrowing costs continbonds rose significantly since the start of the year. Mu- ued to climb through August. Municipal bond yields innicipal bond spreads over comparable-maturity Treasury creased across ratings categories. Borrowing costs for\nyields widened a touch. residential mortgage loans increased and reached their\nhighest levels since 2008. Interest rates on most credit\nConditions in short-term funding markets remained stacard accounts continued to move higher, in line with the\nble over the intermeeting period, with the July increase\nrise in the federal funds rate, and auto loan interest rates\nin the Federal Reserve’s administered interest rates passrose steadily through August.\ning through quickly to other money market rates. Although secured overnight rates firmed slightly later in Credit remained generally available to businesses and\nthe intermeeting period, they remained soft relative to households, but high borrowing costs appeared to rethe ON RRP offering rate—a configuration that market duce the demand for credit, resulting in lower financing\nparticipants attributed to relatively low Treasury bill sup- volumes in some markets. Issuance of nonfinancial corply combined with strong investor demand for short- porate bonds slowed further in July from the weak levels\ndated instruments amid uncertainty about the future seen in the second quarter but rebounded somewhat in\npath of the policy rate. Consistent with continued soft- August and so far in September. Gross institutional levness in repurchase agreement rates, daily take-up in the eraged loan issuance increased modestly in July from\nON RRP facility remained elevated. Spreads on lower- subdued levels but continued to be weak in August. Eqrated short-term commercial paper changed little on net. uity issuance remained depressed, while issuance of muBank deposit rates continued to increase modestly in nicipal bonds was sluggish over the summer and so far\nAugust, following a lagged response to increases in the in September.\nfederal funds rate, while money market mutual funds’\nAccording to the July Senior Loan Officer Opinion Surnet yields rose along with the increases in short-term\nvey on Bank Lending Practices, banks tightened credit\nrates.\nstandards on C&I lending for the first time in two years,\nSovereign yields in most AFEs rose notably over the in- but C&I loans on banks’ balance sheets expanded at a\ntermeeting period as major central banks raised their strong pace in July and August, reflecting strong demand\npolicy rates and communicated a tighter stance of future from nonfinancial businesses. CRE loans on banks’ balpolicy in the face of persistent inflationary pressures.\n\n_P _ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nance sheets also continued to grow robustly, but issu- weaker than the July forecast. However, the staff’s estiance of commercial mortgage-backed securities (CMBS) mate of potential output in recent history was revised\nslowed in July from its strong pace earlier in the year. down significantly in response to continued disappointCredit availability to small businesses appeared to be ing productivity growth and the sluggish gains in labor\ntightening somewhat. The share of small firms reporting force participation seen so far this year; moreover, this\nthat it was more difficult to obtain loans continued its lower trajectory for potential output was expected to\nupward trend in August but remained lower than its his- persist throughout the forecast period. As a result, the\ntorical average. staff’s estimate of the output gap was revised up considerably this year, and while the staff projection still had\nCredit in the residential mortgage market remained availthe output gap closing in coming years, the level of outable for high-credit-score borrowers. Credit availability\nput was expected to be slightly above potential at the end\nfor low-credit-score borrowers continued to ease\nof 2025. Likewise, the unemployment rate was expected\nthrough July but remained modestly tight—close to preto rise more slowly than in the July projection and to be\npandemic averages. However, the volumes of both\nslightly below the staff’s estimate of its natural rate at the\nhome-purchase and refinance mortgage originations\nend of 2025.\nplunged in July amid rising mortgage rates. Consumer\ncredit remained available to most households in June On a 12-month change basis, total PCE price inflation\nand July, but about half of the respondents in the Federal was expected to be 5.1 percent in 2022, and core inflaReserve Bank of New York’s Survey of Consumer Ex- tion was expected to be 4.3 percent. Although the staff\npectations indicated that it was harder to obtain credit continued to project that core inflation would step down\nthan it was a year earlier and that they expected it to be- over the next two years—reflecting the anticipated resocome even harder over the next year. lution of supply–demand imbalances and a labor market\nthat was expected to become less tight—core inflation\nThe credit quality of nonfinancial corporations remained\nwas revised up in each year of the projection. In 2025,\ngenerally strong, with low default rates for both corpocore inflation was expected to be 2.1 percent. Total\nrate bonds and leveraged loans. The volume of rating\nPCE price inflation was expected to decline to 2.6 perupgrades in the corporate bond market outpaced that of\ncent in 2023 as core inflation slowed and energy prices\ndowngrades in July and August, but, so far in September,\ndeclined. Total PCE inflation was expected to move\nthese relative volumes reversed. The volume of rating\ndown further in 2024, to 2 percent, and to remain at\ndowngrades in the leveraged loan market continued to\n2 percent in 2025.\nexceed that of upgrades. Credit quality for C&I and\nCRE loans on banks’ balance sheets also remained The staff continued to judge that the risks to the baseline\nsound, as delinquency rates remained at low levels projection for real activity were skewed to the downside.\nthrough June. However, banks increased loan loss pro- In addition to Russia’s war in Ukraine, weakening activvisions somewhat in the second quarter. Delinquency ity abroad, and ongoing supply chain bottlenecks, the\nrates on CRE loans securitized into CMBS remained un- possibility that a persistent reduction in inflation could\nchanged in July, delinquency rates on small business require a greater-than-assumed amount of tightening in\nloans stayed quite low after edging up, and the credit financial conditions was viewed by the staff as a salient\nquality of municipal securities remained strong. downside risk to their forecast for real activity. The staff\nviewed the risks to the inflation projection as skewed to\nHousehold credit quality stayed broadly solid but conthe upside on the grounds that supply conditions might\ntinued to worsen for some types of credit owed by bornot improve as much as expected and energy prices\nrowers with low credit scores. Mortgage delinquencies\nmight rise sharply again. The staff also pointed to the\ntrended down in recent months, and the share of mortpossibility that wage increases could put a greater-thangages in foreclosure remained low in July. By contrast,\nexpected amount of upward pressure on price inflation\ncredit card and auto credit delinquency rates rose over\nand the possibility that inflation expectations could bethe second quarter, particularly among subprime borcome unanchored given the large rise in inflation seen\nrowers, with subprime auto loan delinquency rates reover the past year as additional upside risks to the inflabounding notably to slightly above their historical avertion forecast.\nages. Staff Economic Outlook\nThe projection for U.S. economic activity prepared by\nthe staff for the September FOMC meeting was slightly\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 2_0_–_2_1_, _2_0_2_2______________________P_a_g_e_ _7\nParticipants’ Views on Current Conditions and the In their discussion of the household sector, participants\nEconomic Outlook noted that consumer spending grew moderately, reflectIn conjunction with this FOMC meeting, participants ing strength in the labor market, the elevated level of\nsubmitted their projections of the most likely outcomes household savings accumulated during the pandemic,\nfor real GDP growth, the unemployment rate, and infla- and a strong aggregate household-sector balance sheet.\ntion for each year from 2022 through 2025 and over the Several participants noted that spending appeared to\nlonger run, based on their individual assessments of ap- have held up relatively well, especially among higher-inpropriate monetary policy, including the path of the fed- come households. These participants also noted that the\neral funds rate. The longer-run projections represented composition of spending by low-to-moderate-income\neach participant’s assessment of the rate to which each households—who were affected to a greater degree by\nvariable would be expected to converge, over time, un- high food, energy, and shelter prices—was changing,\nder appropriate monetary policy and in the absence of with discretionary expenditures being cut and purchases\nfurther shocks to the economy. A Summary of Eco- shifting to lower-cost options. Participants observed\nnomic Projections was released to the public following that the notable slowdown in residential investment and\nthe conclusion of the meeting. other interest-sensitive spending had continued, reflecting the effect of the Committee’s monetary policy acIn their discussion of current economic conditions, partions and tighter financial conditions.\nticipants noted that recent indicators had pointed to\nmodest growth in spending and production. Job gains With regard to the business sector, participants observed\nhad been robust in recent months, and the unemploy- that growth in investment spending appeared modest.\nment rate had remained low. Inflation remained ele- Several participants mentioned that manufacturing activvated, reflecting supply and demand imbalances related ity had slowed. A couple of participants noted that busito the pandemic, higher food and energy prices, and nesses were constrained in undertaking new capital probroader price pressures. Participants recognized that jects, as they faced higher financing costs, persistent\nRussia’s war against Ukraine was causing tremendous challenges associated with supply bottlenecks, and hiring\nhuman and economic hardship. Participants judged that difficulties resulting from the continued tightness of the\nthe war and related events were creating additional up- labor market.\nward pressure on inflation and were weighing on global\nParticipants discussed how they perceived challenging\neconomic activity. Against this background, participants\nsupply conditions to be evolving. Many participants reremained highly attentive to inflation risks.\nmarked that their business contacts were reporting signs\nWith regard to the economic outlook, participants noted of relief in supply bottlenecks, such as declines in shipthat recent data pointed to modest growth in economic ping costs and delivery times and rising inventories,\nactivity over the second half of this year. Participants while several participants saw little improvement in the\nobserved that recent indicators of consumer spending supply situation. Participants saw supply bottlenecks as\nand business investment suggested modest increases in likely continuing for a while longer, and a couple comthose spending categories but noted that activity in in- mented that constraints on production were increasingly\nterest-sensitive sectors weakened appreciably. Partici- taking the form of labor shortages rather than parts\npants revised down their projections of real GDP shortages.\ngrowth for this year from their projections in June. SevParticipants observed that the labor market had reeral participants noted that the continued strength in the\nmained very tight, as evidenced by a historically low unlabor market, as well as the data on gross domestic inemployment rate, elevated job vacancies and quit rates,\ncome, raised the possibility that the current GDP data\na low pace of layoffs, robust employment gains, and high\ncould understate the strength in economic activity this\nnominal wage growth. A few participants remarked that\nyear. Participants generally anticipated that the U.S.\nemployers facing particularly acute labor shortages were\neconomy would grow at a below-trend pace in this and\nthose associated with professional occupations, service\nthe coming few years, with the labor market becoming\nindustries, skilled trades, and smaller firms. Some parless tight, as monetary policy assumed a restrictive stance\nticipants noted a number of developments consistent\nand global headwinds persisted. Participants noted that\nwith the labor market moving toward better balance, ina period of below-trend real GDP growth would help\ncluding a lower rate of job turnover, a moderation in emreduce inflationary pressures and set the stage for the\nployment growth, and an increase in the labor force parsustained achievement of the Committee’s objectives of\nticipation rate for prime-age workers. However, several\nmaximum employment and price stability.\n\n_P _ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nparticipants assessed that the scope for further improve- With respect to the medium term, participants judged\nment in labor force participation was likely limited, es- that inflation pressures would gradually recede in compecially in view of the sizable contribution that retire- ing years. Various factors were cited as likely to contribments had made to the previous decline in the participa- ute to this outcome, including the Committee’s tightention rate. ing of its policy stance, a gradual easing of supply and\ndemand imbalances in labor and product markets, and\nParticipants anticipated that the supply and demand imthe likelihood that weaker consumer demand would rebalances in the labor market would gradually diminish\nsult in a reduction of business profit margins from their\nand the unemployment rate would likely rise somewhat,\ncurrent elevated levels. A few participants reported that\nimportantly reflecting the effects of tighter monetary\nbusiness contacts in certain retail sectors—such as used\npolicy. Participants judged that a softening in the labor\ncars and apparel—were planning to cut prices in order\nmarket would be needed to ease upward pressures on\nto help reduce their inventories. Several participants\nwages and prices. Participants expected that the transicommented that while households across the income\ntion toward a softer labor market would be accompanied\ndistribution were burdened by elevated inflation, those\nby an increase in the unemployment rate. Several comat the lower end of the income distribution were particmented that they considered it likely that the transition\nularly harmed, as a larger share of their income was spent\nwould occur primarily through reduced job vacancies\non housing and other necessities.\nand slower job creation. A couple of participants remarked that, in light of challenges in hiring, businesses In assessing inflation expectations, participants noted\nmight be less willing to reduce their staffing levels in the that longer-term expectations appeared to remain well\nevent of a weakening in general economic activity. A anchored, as reflected in a broad range of surveys of\nfew participants particularly stressed the high uncer- households, businesses, and forecasters as well as\ntainty associated with the expected future path of the un- measures obtained from financial markets. Participants\nemployment rate and commented that the unemploy- remarked that the Committee’s affirmation of its strong\nment rate could rise by considerably more than in the commitment to its price-stability objective, together with\nstaff forecast. its forceful policy actions, had likely helped keep longerrun inflation expectations anchored. Some stressed that\nParticipants observed that inflation remained unaccepta more prolonged period of elevated inflation would inably high and well above the Committee’s longer-run\ncrease the risk of inflation expectations becoming unangoal of 2 percent. Participants commented that recent\nchored, making it much more costly to bring inflation\ninflation data generally had come in above expectations\ndown. A few participants discussed the increased disand that, correspondingly, inflation was declining more\npersion of longer-term inflation expectations across reslowly than they had previously been anticipating. Price\nspondents in various surveys, with an increase in the\npressures had remained elevated and had persisted\nnumber of respondents reporting relatively low expectaacross a broad array of product categories. Energy\ntions of future inflation acknowledged as a key driver of\nprices had declined in recent months but remained conthe increased dispersion but with a couple of participants\nsiderably higher than in 2021, and upside risks to energy\nciting higher inflation expectations among some survey\nprices remained. Several participants noted the continrespondents as a cause for concern and a reason not to\nued elevated rates of increase in core goods prices.\nbe complacent about longer-term inflation expectations\nThese participants considered this development as poremaining well anchored.\ntentially indicating that the shift of household spending\nfrom goods to services might be having a smaller effect Participants agreed that the uncertainty associated with\non goods prices than they expected or that the supply their economic outlooks was high and that risks to their\nbottlenecks and labor shortages were taking longer to be inflation outlook were weighted to the upside. Some\nresolved. Participants commented that they expected in- participants noted rising labor tensions, a new round of\nflation pressures to persist in the near term. Numerous global energy price increases, further disruptions in supcontributing factors were cited as supporting this view, ply chains, and a larger-than-expected pass-through of\nincluding labor market tightness and the resulting up- wage increases into price increases as potential shocks\nward pressure on nominal wages, continuing supply that, if they materialized, could compound an already\nchain disruptions, and the persistent nature of increases challenging inflation problem. A number of participants\nin services prices, particularly shelter prices. commented that a wage–price spiral had not yet developed but cited its possible emergence as a risk.\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 2_0_–_2_1_, _2_0_2_2______________________P_a_g_e_ _9\nParticipants broadly judged the risks to real GDP growth Several participants noted that, particularly in the current\nto be weighted to the downside, with various global highly uncertain global economic and financial environheadwinds most prominently cited as contributing fac- ment, it would be important to calibrate the pace of furtors. These global headwinds included heightened risk ther policy tightening with the aim of mitigating the risk\nof recession in Europe, a slowdown in economic activity of significant adverse effects on the economic outlook.\noccurring in China, and the ongoing global economic Participants observed that, as the stance of monetary\nimplications of Russia’s war against Ukraine. Several policy tightened further, it would become appropriate at\nparticipants noted that the monetary policy tightening some point to slow the pace of policy rate increases\nunder way in many other economies would affect global while assessing the effects of cumulative policy adjustfinancial markets and foreign real GDP growth, with the ments on economic activity and inflation. Many participotential for spillovers to the U.S. economy. pants indicated that, once the policy rate had reached a\nsufficiently restrictive level, it likely would be appropriIn their consideration of the appropriate stance of monate to maintain that level for some time until there was\netary policy, participants concurred that the labor market\ncompelling evidence that inflation was on course to rewas very tight and that inflation was far above the Comturn to the 2 percent objective. Participants noted that,\nmittee’s 2 percent inflation objective. Participants obin keeping with the Committee’s Plans for Reducing the\nserved that recent indicators of production and spending\nSize of the Federal Reserve’s Balance Sheet, balance\nhad pointed to modest growth, while job gains had been\nsheet runoff had moved up to its maximum planned\nrobust and the unemployment rate had remained low.\npace in September and would continue at that pace. Against this backdrop, all participants agreed that it was\nThey further observed that a significant reduction in the\nappropriate to raise the target range for the federal funds\nCommittee’s holdings of securities was in progress and\nrate 75 basis points at this meeting and to continue the\nthat this process was contributing to the move to a reprocess of reducing the Federal Reserve’s securities\nstrictive policy stance. A couple of participants reholdings, as described in the Plans for Reducing the Size\nmarked that, after the process of balance sheet reduction\nof the Federal Reserve’s Balance Sheet that the Commitwas well under way, it would be appropriate for the\ntee issued in May. Policymakers observed that the rate\nCommittee to consider sales of agency MBS in order to\nhike at this meeting was another step toward making the\nenable suitable progress toward a longer-run SOMA\nCommittee’s monetary policy stance sufficiently restricportfolio composed primarily of Treasury securities.\ntive to help ease supply and demand imbalances and to\nbring inflation back to 2 percent. Participants reaffirmed In their assessment of the effects of policy actions and\ntheir strong commitment to returning inflation to the communications to date, participants concurred that the\nCommittee’s 2 percent objective, with many stressing Committee’s actions to raise expeditiously the target\nthe importance of staying on this course even as the la- range for the federal funds rate demonstrated its resolve\nbor market slowed. to lower inflation to 2 percent and to keep inflation expectations anchored at levels consistent with that longerIn discussing potential policy actions at upcoming meetrun goal. Participants noted that the Committee’s comings, participants continued to anticipate that ongoing\nmitment to restoring price stability, together with its purincreases in the target range for the federal funds rate\nposeful policy actions and communications, had conwould be appropriate to achieve the Committee’s objectributed to a notable tightening of financial conditions\ntives. Participants judged that the Committee needed to\nover the past year that would likely help reduce inflation\nmove to, and then maintain, a more restrictive policy\npressures by restraining aggregate demand. Participants\nstance in order to meet the Committee’s legislative manobserved that this tightening had led to substantial indate to promote maximum employment and price stabilcreases in real interest rates across the maturity specity. Many participants noted that, with inflation well\ntrum. Most participants remarked that, although some\nabove the Committee’s 2 percent objective and showing\ninterest-sensitive categories of spending—such as houslittle sign so far of abating, and with supply and demand\ning and business fixed investment—had already started\nimbalances in the economy continuing, they had raised\nto respond to the tightening of financial conditions, a\ntheir assessment of the path of the federal funds rate that\nsizable portion of economic activity had yet to display\nwould likely be needed to achieve the Committee’s goals.\nmuch response. They noted also that inflation had not\nParticipants judged that the pace and extent of policy\nyet responded appreciably to policy tightening and that\nrate increases would continue to depend on the implicaa significant reduction in inflation would likely lag that\ntions of incoming information for the outlook for economic activity and inflation and on risks to the outlook.\n\n_P _ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nof aggregate demand. Participants observed that a pe- They also agreed that the war and related events were\nriod of real GDP growth below its trend rate, very likely creating additional upward pressure on inflation and\naccompanied by some softening in labor market condi- were weighing on global economic activity. Members\ntions, was required. They agreed that, by moving its pol- remarked that they remained highly attentive to inflation\nicy purposefully toward an appropriately restrictive risks.\nstance, the Committee would help ensure that elevated\nIn their assessment of the monetary policy stance necesinflation did not become entrenched and that inflation\nsary for achieving the Committee’s maximum-employexpectations did not become unanchored. These policy\nment and price-stability goals, the Committee decided to\nmoves would therefore prevent the far greater economic\nraise the target range for the federal funds rate to 3 to\npain associated with entrenched high inflation, including\n3¼ percent and anticipated that ongoing increases in the\nthe even tighter policy and more severe restraint on ecotarget range would be appropriate. In addition, memnomic activity that would then be needed to restore price\nbers agreed that the Committee would continue reducstability.\ning its holdings of Treasury securities and agency debt\nIn light of the broad-based and unacceptably high level and agency MBS, as described in the Plans for Reducing\nof inflation, the intermeeting news of higher-than- the Size of the Federal Reserve’s Balance Sheet issued in\nexpected inflation, and upside risks to the inflation out- May.\nlook, participants remarked that purposefully moving to\nMembers agreed that, in assessing the appropriate stance\na restrictive policy stance in the near term was consistent\nof monetary policy, they would continue to monitor the\nwith risk-management considerations. Many particiimplications of incoming information for the economic\npants emphasized that the cost of taking too little action\noutlook and that they would be prepared to adjust the\nto bring down inflation likely outweighed the cost of takstance of monetary policy as appropriate if risks emerged\ning too much action. Several participants underlined the\nthat could impede the attainment of the Committee’s\nneed to maintain a restrictive stance for as long as necgoals. They also noted that their assessments would take\nessary, with a couple of these participants stressing that\ninto account a wide range of information, including\nhistorical experience demonstrated the danger of premreadings on public health, labor market conditions, inaturely ending periods of tight monetary policy designed\nflation pressures and inflation expectations, and financial\nto bring down inflation. Several participants observed\nand international developments. Members affirmed that\nthat as policy moved into restrictive territory, risks\nthe Committee was strongly committed to returning inwould become more two-sided, reflecting the emergence\nflation to its 2 percent objective.\nof the downside risk that the cumulative restraint in aggregate demand would exceed what was required to At the conclusion of the discussion, the Committee\nbring inflation back to 2 percent. A few of these partic- voted to authorize and direct the Federal Reserve Bank\nipants noted that this possibility was heightened by fac- of New York, until instructed otherwise, to execute\ntors beyond the Committee’s actions, including the transactions in the SOMA in accordance with the foltightening of monetary policy stances abroad and the lowing domestic policy directive, for release at 2:00 p.m.:\nweakening global economic outlook, that were also likely\n“Effective September 22, 2022, the Federal\nto restrain domestic economic activity in the period\nOpen Market Committee directs the Desk to:\nahead.\n Undertake open market operations as necCommittee Policy Action\nessary to maintain the federal funds rate in\nIn their discussion of monetary policy for this meeting,\na target range of 3 to 3¼ percent.\nmembers agreed that recent indicators had pointed to\nmodest growth in spending and production. Members  Conduct overnight repurchase agreement\nalso concurred that job gains had been robust in recent operations with a minimum bid rate of\nmonths and the unemployment rate had remained low. 3.25 percent and with an aggregate operaMembers agreed that inflation remained elevated, re- tion limit of $500 billion; the aggregate opflecting supply and demand imbalances related to the eration limit can be temporarily increased at\npandemic, higher food and energy prices, and broader the discretion of the Chair.\nprice pressures.\n Conduct overnight reverse repurchase\nMembers observed that Russia’s war against Ukraine agreement operations at an offering rate of\nwas causing tremendous human and economic hardship. 3.05 percent and with a per-counterparty\n\n_ __________________________M__i_n_u_te_s_ o_f_ t_h_e_ M__e_e_ti_n_g_ o_f_ S_e_p_t_e_m_b_e_r_ 2_0_–_2_1_, _2_0_2_2_____________________P__ag_e_ _1_1\nlimit of $160 billion per day; the The Committee seeks to achieve maximum emper-counterparty limit can be temporarily ployment and inflation at the rate of 2 percent\nincreased at the discretion of the Chair. over the longer run. In support of these goals,\nthe Committee decided to raise the target range\n Roll over at auction the amount of principal\nfor the federal funds rate to 3 to 3¼ percent and\npayments from the Federal Reserve’s holdanticipates that ongoing increases in the target\nings of Treasury securities maturing in each\nrange will be appropriate. In addition, the Comcalendar month that exceeds a cap of\nmittee will continue reducing its holdings of\n$60 billion per month. Redeem Treasury\nTreasury securities and agency debt and agency\ncoupon securities up to this monthly cap\nmortgage-backed securities, as described in the\nand Treasury bills to the extent that coupon\nPlans for Reducing the Size of the Federal Reprincipal payments are less than the\nserve’s Balance Sheet that were issued in May.\nmonthly cap. The Committee is strongly committed to re-\n Reinvest into agency mortgage-backed se- turning inflation to its 2 percent objective.\ncurities (MBS) the amount of principal payIn assessing the appropriate stance of monetary\nments from the Federal Reserve’s holdings\npolicy, the Committee will continue to monitor\nof agency debt and agency MBS received in\nthe implications of incoming information for\neach calendar month that exceeds a cap of\nthe economic outlook. The Committee would\n$35 billion per month.\nbe prepared to adjust the stance of monetary\n Allow modest deviations from stated policy as appropriate if risks emerge that could\namounts for reinvestments, if needed for impede the attainment of the Committee’s\noperational reasons. goals. The Committee’s assessments will take\ninto account a wide range of information, in-\n Engage in dollar roll and coupon swap\ncluding readings on public health, labor market\ntransactions as necessary to facilitate settleconditions, inflation pressures and inflation exment of the Federal Reserve’s agency MBS\npectations, and financial and international detransactions.”\nvelopments.”\nThe vote also encompassed approval of the statement\nVoting for this action: Jerome H. Powell, John C.\nbelow for release at 2:00 p.m.:\nWilliams, Michael S. Barr, Michelle W. Bowman, Lael\n“Recent indicators point to modest growth in Brainard, James Bullard, Susan M. Collins, Lisa D. Cook,\nspending and production. Job gains have been Esther L. George, Philip N. Jefferson, Loretta J. Mester,\nrobust in recent months, and the unemploy- and Christopher J. Waller.\nment rate has remained low. Inflation remains\nVoting against this action: None.\nelevated, reflecting supply and demand imbalances related to the pandemic, higher food and To support the Committee’s decision to raise the target\nenergy prices, and broader price pressures. range for the federal funds rate, the Board of Governors\nof the Federal Reserve System voted unanimously to\nRussia’s war against Ukraine is causing tremenraise the interest rate paid on reserve balances to\ndous human and economic hardship. The war\n3.15 percent, effective September 22, 2022. The Board\nand related events are creating additional upof Governors of the Federal Reserve System voted\nward pressure on inflation and are weighing on\nunanimously to approve a ¾ percentage point increase\nglobal economic activity. The Committee is\nin the primary credit rate to 3.25 percent, effective Sephighly attentive to inflation risks.\ntember 22, 2022.6\n6 In taking this action, the Board approved requests to estab- of September 22, 2022, or the date such Reserve Banks inform\nlish that rate submitted by the boards of directors of the Fed- the Secretary of the Board of such a request. (Secretary’s note:\neral Reserve Banks of Boston, Philadelphia, Cleveland, Rich- Subsequently, the Federal Reserve Banks of New York, Minmond, Atlanta, Chicago, St. Louis, Kansas City, and Dallas. neapolis, and San Francisco were informed of the Board’s apThis vote also encompassed approval by the Board of Gover- proval of their establishment of a primary credit rate of\nnors of the establishment of a 3.25 percent primary credit rate 3.25 percent, effective September 22, 2022.)\nby the remaining Federal Reserve Banks, effective on the later\n\n_P _ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nIt was agreed that the next meeting of the Committee\nwould be held on Tuesday–Wednesday, November 1–2,\n2022. The meeting adjourned at 10:20 a.m. on September 21, 2022. Notation Vote\nBy notation vote completed on August 16, 2022, the\nCommittee unanimously approved the minutes of the\nCommittee meeting held on July 26–27, 2022.\n_______________________\nJames A. Clouse\nSecretary",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20220921.pdf",
+    "action": "Raised",
+    "rate": "3.00%-3.25%",
+    "magnitude": "0.75 percentage points",
+    "forward_guidance": "The Fed signaled that ongoing increases in the federal funds rate will be appropriate to combat high inflation, with future moves dependent on incoming economic data. They emphasized a commitment to maintaining a restrictive policy stance until there is clear evidence inflation is returning to the 2% target.",
+    "key_economic_factors": [
+      "Inflation remained unacceptably high, with both headline and core PCE inflation well above the 2% target",
+      "Strong labor market conditions, including robust job gains and low unemployment, were sustaining upward pressure on wages and prices",
+      "Supply and demand imbalances, including persistent supply chain disruptions and labor shortages, continued to fuel inflation",
+      "Global risks such as the war in Ukraine, slowing growth in China, and tighter monetary policy abroad were weighing on the outlook"
+    ],
+    "economic_outlook": "The Fed expects U.S. economic growth to be modest in the second half of 2022 and below trend in coming years as tighter monetary policy takes effect. The labor market remains very tight, but participants anticipate it will gradually soften, with the unemployment rate likely rising. Inflation is expected to decline slowly over the next few years but remains a top concern, with risks skewed to the upside.",
+    "market_impact": "Higher borrowing costs will continue to pressure businesses, homebuyers, and consumers, particularly in interest-sensitive sectors like housing and autos. Financial markets will likely remain volatile as investors assess the pace of future rate hikes and the risk of an economic slowdown or recession."
+  },
+  {
+    "date": "2022-07-27",
+    "title": "FOMC Meeting 2022-07-27",
+    "full_text": "________________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJuly 26–27, 2022\nA joint meeting of the Federal Open Market Committee Patricia Zobel, Deputy Manager, System Open Market\nand the Board of Governors of the Federal Reserve Sys- Account\ntem was held in the offices of the Board of Governors\non Tuesday, July 26, 2022, at 10:30 a.m. and continued Ann E. Misback, Secretary, Office of the Secretary,\non Wednesday, July 27, 2022, at 9:00 a.m.1 Board\nAttendance Andreas Lehnert, Director, Division of Financial\nJerome H. Powell, Chair Stability, Board\nJohn C. Williams, Vice Chair\nMichael S. Barr Jennifer J. Burns, Deputy Director, Division of\nMichelle W. Bowman Supervision and Regulation, Board; Sally Davies,\nLael Brainard Deputy Director, Division of International\nJames Bullard Finance, Board; Rochelle M. Edge, Deputy\nSusan M. Collins Director, Division of Monetary Affairs, Board\nLisa D. Cook\nEsther L. George Jon Faust and Joshua Gallin, Senior Special Advisers to\nPhilip N. Jefferson the Chair, Division of Board Members, Board\nLoretta J. Mester\nChristopher J. Waller Burcu Duygan-Bump, Jane E. Ihrig, Kurt F. Lewis,\nLaura Lipscomb, John W. Schindler, Nitish R. Meredith Black, Charles L. Evans, Patrick Harker, Neel Sinha, Paul R. Wood, and Rebecca Zarutskie,\nKashkari, and Helen E. Mucciolo,2 Alternate Special Advisers to the Board, Division of Board\nMembers of the Committee Members, Board\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Linda Robertson, Assistant to the Board, Division of\nDaly, Presidents of the Federal Reserve Banks of Board Members, Board\nRichmond, Atlanta, and San Francisco, respectively\nWilliam F. Bassett, Senior Associate Director, Division\nJames A. Clouse, Secretary of Financial Stability, Board\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary Edward Nelson, Senior Adviser, Division of Monetary\nMark E. Van Der Weide, General Counsel Affairs, Board; Jeremy B. Rudd, Senior Adviser,\nTrevor A. Reeve, Economist Division of Research and Statistics, Board\nStacey Tevlin, Economist\nBeth Anne Wilson, Economist Andrew Figura, Associate Director, Division of\nResearch and Statistics, Board; Christopher J. Gust,\nShaghil Ahmed, Brian M. Doyle, Joseph W. Gruber, Associate Director, Division of Monetary Affairs,\nDavid E. Lebow, Ellis W. Tallman, and William Board; Jeffrey D. Walker,3 Associate Director,\nWascher, Associate Economists Division of Reserve Bank Operations and Payment\nSystems, Board\nLorie K. Logan, Manager, System Open Market\nAccount\n1 The Federal Open Market Committee is referenced as the 2 Elected as an Alternate by the Federal Reserve Bank of New\n“FOMC” and the “Committee” in these minutes; the Board York, effective July 15, 2022.\nof Governors of the Federal Reserve System is referenced as 3 Attended through the discussion of developments in finanthe “Board” in these minutes. cial markets and open market operations.\n\n_P_ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nPatrick E. McCabe and Norman J. Morin, Deputy James F. Dolmas, Economic Policy Advisor and Senior\nAssociate Directors, Division of Research and Economist, Federal Reserve Bank of Dallas\nStatistics, Board\nNina Boyarchenko, Department Head, Federal Reserve\nDavid Arseneau, Assistant Director, Division of Bank of New York\nFinancial Stability, Board; Giovanni Favara and\nEtienne Gagnon, Assistant Directors, Division of Jonathan Heathcote, Monetary Advisor, Federal\nMonetary Affairs, Board Reserve Bank of Minneapolis\nPenelope A. Beattie,4 Section Chief, Office of the Federico Mandelman, Research Economist and\nSecretary, Board; Valerie S. Hinojosa, Section Advisor, Federal Reserve Bank of Atlanta\nChief, Division of Monetary Affairs, Board\nDevelopments in Financial Markets and Open\nAlyssa Arute,3 Manager, Division of Reserve Bank Market Operations\nOperations and Payment Systems, Board The deputy manager turned first to a discussion of financial market developments. Financial markets over\nSriya L. Anbil,5 Group Manager, Division of Monetary the intermeeting period reflected elevated uncertainty\nAffairs, Board about the outlook. Most market participants appeared\nto view a moderation of inflation and slower, but still\nFabian Winkler, Principal Economist, Division of positive, economic growth ahead as the most likely sceMonetary Affairs, Board nario. However, investors appeared to be increasingly\nattentive to downside risks to the economy in light of\nPeter M. Garavuso, Senior Information Manager, the potential for shocks from abroad and the continued\nDivision of Monetary Affairs, Board upside surprises to inflation. On net, financial conditions eased modestly over the peDavid Na and Anthony Sarver, Senior Financial\nriod but remained substantially tighter than at the start\nInstitution and Policy Analysts, Division of\nof the year. Treasury yields fell, reflecting expectations\nMonetary Affairs, Board\nof slower growth as well as a decline in inflation compensation. Respondents to the Open Market Desk’s surBrett Takacs, Senior Communications Analyst,\nveys of primary dealers and market participants marked\nDivision of Information Technology, Board\ndown their growth forecasts for 2022 and 2023 and attached higher odds than in the June survey to the possiBecky C. Bareford, First Vice President, Federal\nbility that the U.S. economy could enter a recession in\nReserve Bank of Richmond\ncoming quarters. Kartik B. Athreya, Michael Dotsey, and Michelle M. Market participants perceived falling commodity\nNeal, Executive Vice Presidents, Federal Reserve prices—particularly for oil—and the FOMC’s commitBanks of Richmond, Philadelphia, and New York, ment to bringing inflation down as pointing to lower inrespectively flation ahead. Market-based measures of near-dated inflation compensation declined and continued to suggest\nJames P. Bergin, Spencer Krane, and Giovanni Olivei, that inflation would ease in coming quarters. In the\nSenior Vice Presidents, Federal Reserve Banks of Desk surveys, respondents also expected inflation to deNew York, Chicago, and Boston, respectively cline substantially in 2023 but assigned meaningful probabilities to a wide range of potential outcomes, including\nWilliam D. Dupor, Vice President, Federal Reserve scenarios involving continued elevated rates of inflation. Bank of St. Louis Far-forward market-based measures of inflation comAndrew Foerster, Senior Research Advisor, Federal\nReserve Bank of San Francisco\n4 Attended Tuesday’s session only. 5 Attended from the discussion of the economic and financial\nsituation through the end of Wednesday’s session.\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_6_–_2_7_,_ 2_0_2_2_________________________P_a_g_e_ _3\npensation fell over the period. These measures contin- sheet runoff proceeded. The deputy manager noted that\nued to suggest that inflation would return over time to this process would involve adjustments across a number\nthe Committee’s 2 percent objective. of markets and that the staff would continue to monitor\ndevelopments in money markets closely. In their assessment of the policy outlook, market participants expected significant policy tightening in coming Regarding expectations for the evolution of the Federal\nmeetings as the Committee continued to respond to the Reserve’s balance sheet, market participants expected\ncurrent elevated level of inflation. Nearly all respond- the Committee to increase the monthly caps on System\nents to the Desk survey anticipated a 75 basis point in- Open Market Account (SOMA) redemptions beginning\ncrease in the target range at the current meeting, and in September, as announced in the Plans for Reducing\nmost expected a 50 basis point increase in September to the Size of the Federal Reserve’s Balance Sheet issued in\nfollow. The market-implied path of the federal funds May. Treasury coupon principal payments would first\nrate indicated a peak policy rate of around 3.4 percent, fall below the $60 billion cap in September, with the resignificantly lower than at the time of the June meeting. mainder of redemptions met with maturities of Treasury\nThe market-implied path suggested expectations that the bills. Paydowns of agency mortgage-backed securities\npolicy rate would fall thereafter. Most respondents to (MBS) were projected to fall below the higher Septemthe Desk survey expected the federal funds rate to re- ber cap of $35 billion beginning in September.\nmain above the survey’s longer-run policy rate of\nThe deputy manager ended with an update on SOMA\n2.4 percent through the end of 2024, but, on average, renet income. Staff projections suggested that net income\nspondents placed significant probabilities on lower rate\nwould likely turn negative in coming months. That deoutcomes.\nvelopment would be reflected in a temporary deferred\nRegarding developments abroad, central banks in ad- asset on Reserve Bank balance sheets. Any deferred asvanced foreign economies (AFEs) had quickened the set would not affect the Committee’s ability to implepace of policy tightening in order to address above-tar- ment monetary policy, and the deferred asset would be\nget inflation. Eight advanced-economy central banks extinguished over time as net income turned positive\nraised their policy rates over the period. Along lines sim- again in later years.\nilar to U.S. developments, market-implied policy rates in\nBy unanimous vote, the Committee ratified the Desk’s\nmost AFEs fell at longer horizons and reflected expecdomestic transactions over the intermeeting period.\ntations that policy rates would reach peak levels by early\nThere were no intervention operations in foreign curren2023. In contrast to central banks in other advanced\ncies for the System’s account during the intermeeting peeconomies, the Bank of Japan confirmed its commitriod.\nment to accommodative policy. In this environment, the\nexchange value of the dollar appreciated further, surpas- Staff Review of the Economic Situation\nsing its March 2020 peak against advanced-economy The information available at the time of the July 26–27\ncurrencies. meeting suggested that U.S. real gross domestic product\n(GDP) had declined over the first half of the year. HowThe deputy manager next turned to a discussion of\never, the labor market continued to be very tight, and\nmoney markets and Desk operations. The 75 basis point\nlabor demand remained strong. Consumer price inflaincrease in the target range at the June meeting passed\ntion—as measured by the 12-month percentage change\nthrough fully to the federal funds rate and other overin the price index for personal consumption expendinight rates. Although downward pressure on overnight\ntures (PCE)—remained elevated in May, and available\nsecured rates had persisted, the pronounced softness obinformation suggested that inflation was still elevated in\nserved in the past intermeeting period had abated to\nJune.\nsome degree. The overnight reverse repurchase agreement (ON RRP) facility continued to support policy im- Total nonfarm payroll employment posted a solid gain\nplementation, and balances remained elevated. The dep- in June at a pace that was similar to that seen in April\nuty manager anticipated that, in the near term, the evo- and May. The unemployment rate was unchanged in\nlution of take-up at the ON RRP facility would continue June at 3.6 percent. The unemployment rate for African\nto depend on changes in the supply of safe, short-term Americans moved lower in June, while the rate for Hisinvestments, and the demand for such investments by panics was unchanged; both rates were noticeably higher\nmoney market mutual funds (MMMFs). ON RRP bal- than the national average. The labor force participation\nances were expected to decline over time as balance rate and the employment-to-population ratio both ticked\n\n_P_ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ndown in June. The private-sector job openings rate, as June, mostly reflecting past increases in energy and food\nmeasured by the Job Openings and Labor Turnover Sur- prices, but also a continued broadening of price presvey, declined further in May but remained at a high level. sures to core goods and services. Many foreign central\nNominal wage growth continued to be rapid and broad banks tightened monetary policy to address high inflabased, with average hourly earnings having risen 5.1 per- tion.\ncent over the 12 months ending in June. Staff Review of the Financial Situation\nReal goods exports edged down in May after growing Over the intermeeting period, nominal and real Treasury\nrobustly in March and April. Real goods imports con- yields declined significantly, reportedly reflecting intinued to step down from the exceptionally strong creased investor concerns about downside risks to the\nMarch readings, driven by declines in imports of con- growth outlook as well as a decline in inflation compensumer goods and capital goods. Exports and imports of sation. Sovereign yields in AFEs declined notably. The\nservices continued to be held back by an incomplete re- market-implied federal funds rate path for the next few\ncovery of international travel. The nominal U.S. inter- meetings rose but moved down noticeably at longer honational trade deficit narrowed for a second consecutive rizons. Broad equity price indexes were higher, on net,\nmonth in May from its record size in March. The avail- while credit spreads widened. Major foreign equity price\nable data suggest that net exports contributed positively indexes edged higher, on net, and the exchange value of\nto GDP growth in the second quarter. the dollar continued to appreciate. Amid the decline in\nTreasury yields, longer-term borrowing costs declined\nConsumer price inflation remained elevated. Total PCE\nfor households and businesses with higher credit ratings,\nprice inflation was 6.3 percent over the 12 months endand while credit availability remained generally available,\ning in May, and core PCE price inflation, which excludes\nit appeared to tighten for most businesses and some\nchanges in consumer energy prices and many consumer\nhouseholds.\nfood prices, was 4.7 percent over the same period. The\ntrimmed mean measure of 12-month PCE price infla- Broad equity price indexes were higher over the intertion constructed by the Federal Reserve Bank of Dallas meeting period, amid heightened volatility. Declines in\nwas 4.0 percent in May, 2.1 percentage points higher interest rates likely supported stock prices over the pethan its year-earlier rate of increase. In June, the riod, while some positive earnings releases suggested to\n12-month change in the consumer price index (CPI) was investors a less pessimistic corporate outlook. One9.1 percent, while core CPI inflation was 5.9 percent month option-implied volatility on the S&P 500 index—\nover the same period. Survey-based measures of short- the VIX—decreased but remained significantly above its\nrun inflation expectations remained elevated; by con- pre-pandemic levels. Yields on corporate bonds detrast, some measures of longer-term inflation expecta- clined notably across the credit spectrum, but corporate\ntions moved lower in recent weeks. bond spreads ended the period slightly wider. Spreads\non municipal bonds widened slightly as yields declined\nAvailable indicators suggested that real PCE rose at a\nby less than those of comparable-maturity Treasury semodest pace in the second quarter, while business incurities.\nvestment, residential investment, and government purchases all posted declines. Manufacturing output moved Conditions in short-term funding markets were stable\nlower in May and June, and forward-looking indicators since the previous FOMC meeting, with the June inof manufacturing activity weakened broadly. crease in the Federal Reserve’s administered rates passing through promptly to overnight money markets. SeForeign economic growth slowed notably in the second\ncured overnight rates remained soft relative to the ON\nquarter, as COVID-19-related lockdowns led to a sharp\nRRP offering rate, with the downward pressure on rates\ncontraction in China and Russia’s war against Ukraine\nattributed to continuing declines in net Treasury bill istook a toll on foreign activity, especially in Europe. Insuance, elevated demand for collateral in the form of\ndicators for June showed the Chinese economy reTreasury securities, and MMMFs maintaining very short\nbounding as the lockdowns were eased. The global\nportfolio maturities amid uncertainty about the neareconomy, however, continued to face headwinds from\nterm outlook for policy rate increases. Consistent with\ndisruptions to the supply of energy, elevated political unthe downward pressure on repo rates, daily take-up in\ncertainties in Europe, and tighter global monetary and\nthe ON RRP facility increased. Spreads on lower-rated\nfinancial conditions. Although most commodity prices\nshort-term commercial paper (CP) narrowed modestly,\nmoved lower from elevated levels in recent weeks, foron net. Bank core deposit rates moved up very little in\neign consumer price inflation continued to rise through\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_6_–_2_7_,_ 2_0_2_2_________________________P_a_g_e_ _5\nresponse to the Federal Reserve’s increase in adminis- The credit quality of nonfinancial corporations remained\ntered rates following the June FOMC meeting, while strong with low volumes of defaults on corporate bonds\nMMMFs’ net yields rose, reflecting the increases in in May and on leveraged loans in June. The volume of\nshort-term rates over recent months. rating downgrades on speculative-grade credit in the corporate bond market was similar to that of upgrades in\nInvestors’ concerns about global economic growth inJune, while for leveraged loans, the volume of downtensified amid weaker-than-expected data on economic\ngrades exceeded the volume of upgrades in May and\nactivity and uncertainty about the supply of natural gas\nJune. The credit quality for C&I and CRE loans on\nfrom Russia to Europe. Sovereign yields and mediumbanks’ books remained sound. However, respondents\nterm inflation compensation measures in major AFEs,\nin the July Senior Loan Officer Opinion Survey on Bank\nmost notably in the euro area, moved down, with yields\nLending Practices (SLOOS) indicated increased conlargely reversing the sharp increase that occurred just becerns about credit quality in the near future as reasons\nfore the June FOMC meeting. In the euro area, periphfor their expectation of a tightening in lending standards\neral sovereign spreads were little changed following the\nover the second half of 2022. Delinquency rates on CRE\nwidely anticipated announcement by the European Cenloans in CMBS declined in June, delinquency rates on\ntral Bank of its Transmission Protection Instrument that\nsmall business loans were little changed, and the credit\ncould be activated to counter disorderly conditions in\nquality of municipal securities remained strong. The\neuro-area bond markets. Major foreign equity price incredit quality of households stayed solid. Residential\ndexes were volatile but generally edged higher, on net,\nmortgage delinquencies and the share of mortgages in\nsupported by declines in sovereign yields. The dollar apforbearance trended down. Credit card and auto credit\npreciated somewhat further against most currencies and\ndelinquency rates rose somewhat over the first quarter\nparticularly against the euro as yield differentials between\nbut remained subdued by recent historical standards.\nthe United States and the euro area widened. Most Latin\nAmerican currencies depreciated against the dollar, in Business loans at banks expanded at a rapid pace in May\npart reflecting the decline in global commodity prices. and June, despite higher interest rates and a more uncertain economic outlook. C&I loans on banks’ books conIn domestic credit markets, longer-term borrowing costs\ntinued to grow robustly, with the July SLOOS citing reafor households and businesses with higher credit ratings\nsons of increased demand by customers to finance indeclined over the intermeeting period but borrowing\nventory and accounts receivable. However, issuance of\ncosts for lower rated firms were higher, on net. The\nboth agency and non-agency CMBS slowed significantly\ncredit quality of businesses, municipalities, and housein June. Credit appeared to be available to most small\nholds remained stable. Credit remained generally availbusinesses, although the share of small firms reporting\nable, though credit availability appeared to tighten for\nthat it was difficult to obtain loans increased. Credit in\nmost businesses and for some households.\nthe residential mortgage market remained widely availaBorrowing costs linked to shorter-term interest rates ble for borrowers with higher credit ratings but tight for\ngenerally increased, largely as a result of expectations of households with low credit scores. Volumes of hometighter monetary policy. Bank interest rates for both purchase mortgage originations declined in May and\ncommercial and industrial (C&I) and commercial real es- mortgage refinance volumes continued to fall. Contate (CRE) loans increased in May and were close to pre- sumer credit remained broadly available to households\npandemic levels. Yields on institutional leveraged loans in April and May but respondents in the Federal Reserve\nand newly issued commercial mortgage-backed securi- Bank of New York’s Survey of Consumer Expectations\nties (CMBS) increased amid financial market volatility indicated that it was harder to get credit in recent\nand growing concerns about an economic slowdown. months. That said, auto loans outstanding continued to\nSmall businesses that borrow on a regular basis faced grow at a robust pace in April and May but credit card\nnotably higher borrowing costs in June. Interest rates balances moderated somewhat in May and June.\non most existing credit card accounts and on auto loans\nThe staff provided an update on its assessment of the\ncontinued to trend upward. In contrast to many other\nstability of the financial system and, on balance, characborrowing rates, residential mortgage rates fell since the\nterized the vulnerabilities of the U.S. financial system as\nJune FOMC meeting, in line with the drop in longermoderate, down from notable in January.\nterm yields, but remained near their highest levels since\n2010. Equity and corporate debt prices declined significantly\nsince the last assessment, reflecting concerns over slower\n\n_P_ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ngrowth and lower risk appetite in corporate markets. Staff Economic Outlook\nDeclining risk appetite has also led to sharp declines in The projection for U.S. economic activity prepared by\nthe price of some digital assets. The staff noted that dig- the staff for the July FOMC meeting was noticeably\nital assets tended to be volatile. The staff also high- weaker than the June forecast, reflecting the economy’s\nlighted the financial stability considerations associated reduced momentum and current and prospective finanwith rapid growth in stablecoins, including their vulner- cial conditions that were expected to provide less supability to runs and the opacity of many aspects of their port to aggregate demand growth. As a result, while the\noperations. Residential real estate prices continued to projected level of real GDP remained above potential\nrise, and the staff noted that although valuations have this year, the gap was expected to have closed by the secbeen elevated, mortgage underwriting standards have ond half of 2023. Similarly, the unemployment rate was\nbeen stronger than in previous house-price cycles. CRE projected to start rising in the second half of 2022 and\nprices continued to rise, and valuation pressures ap- to reach the staff’s estimate of its natural rate at the end\npeared to be increasing. of next year. The staff assessed that households were in a better posi- Total PCE price inflation was expected to be 4.8 percent\ntion than in the mid-2000s to weather a downturn in in 2022, and core inflation was expected to be 4.0 perhouse prices, noting that mortgage debt growth has sig- cent. Core PCE price inflation was expected to step\nnificantly lagged growth in house prices, leaving house- down to 2.6 percent in 2023 and to 2.0 percent in 2024;\nholds with substantial equity cushions. Moreover, for the projected deceleration in core prices was attributable\nmuch of the past decade, most new mortgage debt had to the anticipated resolution of supply–demand imbalbeen added by borrowers with prime credit scores. In ances, a labor market that was expected to become less\naddition, the staff assessed that business leverage was tight over the projection period, and a projected decline\nhigh, but businesses maintained ample cash on hand and in import price inflation. Total PCE inflation was extheir credit quality remained strong. Further, the ability pected to decline to 2.2 percent in 2023 and to 1.9 perof most firms to service their debt was at a historically cent in 2024, reflecting the anticipated slowing in core\nhigh level, as measured by the interest coverage ratio. inflation and a projected rapid deceleration in consumer\nfood and energy prices in coming quarters. The staff assessed that leverage in the financial sector\nremained moderate. Recent declines in bank capital ra- The staff continued to judge that the risks to the baseline\ntios were due to higher volatility, interest rate increases, projection for real activity were skewed to the downside,\nand loan growth, but the recently concluded stress tests noting that supply chain bottlenecks, Russia’s war\nsuggested that participating banks could absorb losses against Ukraine, weak incoming data on spending, and\nfrom a severe recession without breaching regulatory the tightening in financial conditions since the start of\nminimums, and some banks were expected to increase the year supported this assessment. The staff viewed the\ntheir capital ratios later this year. Leverage at hedge risks to the inflation projection as skewed to the upside\nfunds and life insurance companies remained relatively given the persistent upward surprises seen in the inflahigh. tion data, the possibility that inflation expectations\nwould become unanchored as a result of the large inMarket liquidity had deteriorated in the oil and equities\ncrease in actual inflation over the past year, and the risk\nmarkets since January, but market functioning continued\nthat supply conditions would not improve as much as\nto be orderly. Yields offered by MMMFs were well\nthe baseline projection assumed.\nabove those offered by banks, and the staff noted that\nthis yield differential would attract inflows to MMMFs. Participants’ Views on Current Conditions and the\nNoting the structural vulnerabilities associated with Economic Outlook\nMMMFs, the staff highlighted the need to monitor the In their discussion of current economic conditions, parsize and fragility of this sector and the progress of the ticipants noted that recent indicators of spending and\nSecurity and Exchange Commission’s recently proposed production had softened. Nonetheless, job gains had\nreforms. The staff noted that open-end bond and loan been robust in recent months, and the unemployment\nmutual funds, which are also vulnerable to large-scale in- rate had remained low. Inflation remained elevated, revestor withdrawals, had experienced outflows as interest flecting supply and demand imbalances related to the\nrates rose. These outflows had proceeded in an orderly pandemic, higher food and energy prices, and broader\nmanner. price pressures. Participants recognized that Russia’s\nwar against Ukraine was causing tremendous human and\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_6_–_2_7_,_ 2_0_2_2_________________________P_a_g_e_ _7\neconomic hardship. Participants judged that the war and house prices on home affordability. Participants anticirelated events were creating additional upward pressure pated that this slowdown in housing activity would conon inflation and were weighing on global economic ac- tinue and also expected higher borrowing costs to lead\ntivity. Against this background, participants stated that to a slowing in other interest-sensitive household exthey were highly attentive to inflation risks. penditures, such as purchases of durable goods. With regard to current economic activity, participants With respect to the business sector, participants noted\nnoted that consumer expenditures, housing activity, that investment spending had likely declined in the secbusiness investment, and manufacturing production had ond quarter. In addition, business survey data and inforall decelerated from the robust rates of growth seen in mation received from contacts indicated that manufac2021. The labor market, however, remained strong. turing orders and production had fallen in some DisParticipants observed that indicators of spending and tricts. Heightened uncertainty, concerns about inflation,\nproduction suggested that the second quarter of this year tighter financial conditions, and a cutback in consumer\nhad seen a broad-based softening in economic activity. spending had led firms to downgrade economic proMany participants remarked that some of the slowing, spects. Some participants noted that their contacts were\nparticularly in the housing sector, reflected the emerging reporting that businesses were in the process of reevaluresponse of aggregate demand to the tightening of finan- ating their capital expenditure plans, though a few parcial conditions associated with the ongoing firming of ticipants stated that some contacts had reported a degree\nmonetary policy. The unwinding of the large-scale sup- of short-term momentum in business activity arising\nport to consumer spending provided by pandemic-re- from existing orders and from the implementation of exlated fiscal policy actions, the inflation-induced reduc- pansion plans made before the tightening of financial\ntion in real disposable income, and the move down in conditions. A few participants indicated that some busithe demand for some products from the elevated levels ness contacts had assessed that demand and supply were\nseen in earlier stages of the pandemic had also all led to beginning to come into better balance. Even so, conslower growth in households’ expenditures. In addition, tacts in many areas continued to report major supply\na deterioration in the foreign economic outlook and a chain disruptions and anticipated that these were likely\nstrong dollar were contributing to a weakening of exter- to continue while also indicating that there were signs of\nnal demand. Participants anticipated that U.S. real GDP improvement in supply conditions in some areas.\nwould expand in the second half of the year, but many\nParticipants observed that the labor market remained\nexpected that growth in economic activity would be at a\nstrong, with the unemployment rate very low, job vacanbelow-trend pace, as the period ahead would likely see\ncies and quits close to historically high levels, and an elthe response of aggregate demand to tighter financial\nevated rate of nominal wage growth. Many participants\nconditions become stronger and more broad based. Paralso noted, however, that there were some tentative\nticipants noted that a period of below-trend GDP\nsigns of a softening outlook for the labor market: These\ngrowth would help reduce inflationary pressures and set\nsigns included increases in weekly initial unemployment\nthe stage for the sustained achievement of the Commitinsurance claims, reductions in quit rates and vacancies,\ntee’s objectives of maximum employment and price staslower growth in payrolls than earlier in the year, and\nbility.\nreports of cutbacks in hiring in some sectors. In addiIn their discussion of the household sector, participants tion, although nominal wage growth remained strong accommented that they were seeing many signs in the data, cording to a wide range of measures, there were some\nand hearing reports from business contacts, of slower signs of a leveling off or edging down. In some Districts,\ngrowth in consumer spending. Although the aggregate contacts had suggested that labor demand–supply imbalbalance sheet for the household sector was strong and ances might be diminishing, with firms being more sucthe unemployment rate was low, consumer sentiment cessful in hiring and retaining workers and under less\nhad deteriorated, and households were reportedly be- pressure to raise wages. Some participants noted that\ncoming more cautious in their expenditure decisions in the contribution that increases in labor supply could\nlight of uncertainty about the economic outlook and the make to reducing labor market imbalances was likely\nreduction in purchasing power induced by price rises, limited, especially as the scope for labor force participaparticularly increases in the prices of essentials such as tion to pick up was constrained by the ongoing movefood, housing, and transportation. Participants also ob- ment of the large baby-boom cohort into their retireserved that housing activity had weakened notably, re- ment years, while others highlighted factors holding\nflecting the impact of higher mortgage interest rates and down participation that could wane in the future, such\n\n_P_ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nas continuing pandemic-related concerns. Participants noted that the high cost of living was an especially great\nobserved that, in part because of tighter financial condi- burden on low- and middle-income households. Partictions and an associated moderation in the growth of ag- ipants agreed that there was little evidence to date that\ngregate demand, growth in employment would likely inflation pressures were subsiding. They judged that inslow further in the period ahead. They noted that this flation would respond to monetary policy tightening and\ndevelopment would help bring labor demand and supply the associated moderation in economic activity with a\ninto better balance, reducing upward pressures on nom- delay and would likely stay uncomfortably high for some\ninal wage growth and aiding the return of inflation to time. Participants also observed that in some product\n2 percent. Several participants observed that the mod- categories, the rate of price increase could well pick up\neration in labor market conditions might well lag the further in the short run, with sizable additional increases\nslowdown in economic activity. Participants remarked in residential rental expenses being especially likely.\nthat a moderation in labor market conditions would\nParticipants noted that supply bottlenecks were continlikely involve a decline in the number of job openings as\nuing to contribute to price pressures. There were, howwell as a moderate increase in unemployment from the\never, some signs of gradual improvement in the supply\ncurrent very low rate. A couple of participants indicated\nsituation—including improved availability of certain key\nthat firms were keen to retain workers—a factor that\nmaterials, less upward pressure on input prices, and a decould limit the increase in layoffs associated with a slowcline in delivery times. Contacts reported that there were\ning labor market.\nnevertheless substantial continuing challenges. ParticiParticipants noted that indicators of spending and pro- pants judged that it would take considerable time for\nduction pointed to less underlying strength in economic supply constraints to be resolved, and a few suggested\nactivity than was suggested by indicators of labor market that full resolution of supply difficulties would take\nactivity. With employment growth still strong, the weak- longer than they previously assessed. Several particiening in spending data implied unusually large negative pants stressed that improvements in supply would be\nreadings on labor productivity growth for the year so far. helpful but by themselves could not be relied on to reParticipants remarked that the strength of the labor mar- solve the supply and demand imbalances in the economy\nket suggested that economic activity may be stronger sufficiently rapidly. Participants emphasized that a slowthan implied by the current GDP data, with several par- ing in aggregate demand would play an important role in\nticipants raising the possibility that the discrepancy reducing inflation pressures. They expected that the apmight ultimately be resolved by GDP being revised up- propriate firming of monetary policy and an eventual\nward. Several participants also observed, however, that easing of supply and demand imbalances would bring inthe labor market might not be as tight as some indicators flation back down to levels consistent with the Commitsuggested, and they noted that data provided by the pay- tee’s longer-run objective and keep longer-term inflation\nroll processor ADP and employment as reported in the expectations well anchored. Participants discussed a\nhousehold survey both seemed to imply a softer labor number of factors likely to be helpful in bringing inflamarket than that suggested by the still-robust growth in tion back down to 2 percent. In addition to the Compayroll employment as reported in the establishment mittee’s ongoing policy firming and anchored longersurvey. term inflation expectations, these included competitive\npressures restraining price increases, the apparent abParticipants observed that inflation remained unacceptsence of a wage–price spiral, the tightening of monetary\nably high and was well above the Committee’s longerpolicy abroad, and the impact of the appreciation of the\nrun goal of 2 percent. In light of the high CPI reading\ndollar on import prices. However, they continued to\nfor June, participants noted that PCE inflation was likely\nview commodity price developments as a potential\nto have increased further in that month. Participants\nsource of upward pressure on inflation.\nfurther observed that inflationary pressures were broad\nbased, a pattern reflected in large one-month increases Participants noted that expectations of inflation were an\nin the trimmed mean CPI and core CPI measures. Par- important influence on the behavior of actual inflation\nticipants remarked that, although recent declines in gas- and stressed that moving to an appropriately restrictive\noline prices would likely help produce lower headline in- stance of policy was essential for avoiding an unanchorflation rates in the short term, declines in the prices of ing of inflation expectations. Such an unanchoring\noil and some other commodities could not be relied on would make achieving the Committee’s statutory objecas providing a basis for sustained lower inflation, as tives of maximum employment and price stability much\nthese prices could quickly rebound. Participants also more difficult. In assessing the current state of inflation\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_6_–_2_7_,_ 2_0_2_2_________________________P_a_g_e_ _9\nexpectations, participants noted that recent readings on landscapes or the need to look at a broad range of posmarket-based measures of inflation compensation were sible outcomes, including scenarios involving elevated\nconsistent with longer-term inflation expectations re- inflation and rising interest rates, when assessing finanmaining anchored near 2 percent. They judged that this cial vulnerabilities and stability. Some participants combehavior of longer-term inflation expectations was likely mented on the financial stability challenges posed by digpartly due to the actual and expected firming of mone- ital assets. They noted that these assets, including statary policy and also likely reflected downward revisions blecoins, were subject to vulnerabilities—such as runs,\nto the growth of aggregate demand expected in coming fire sales, and excessive leverage—similar to those assoyears. In addition, several participants assessed that the ciated with more traditional assets. While the recent turCommittee’s ongoing monetary policy tightening was moil in digital asset markets had not spread to other asset\nhelping alleviate concerns among market participants classes, these participants saw digital assets’ rising imand wage and price setters that elevated inflation would portance and growing interconnectedness with other\nbecome entrenched. Several participants observed that segments of the financial system as underscoring the\nrecent readings on survey measures of inflation expecta- need to establish a robust supervisory and regulatory\ntions were broadly consistent with the Committee’s framework for this industry that would appropriately\n2 percent longer-run inflation objective, although a few limit potential systemic risks. A few participants menparticipants noted that household surveys were indicat- tioned the need to strengthen the oversight and regulaing increasing divergences in views about the likely tion of certain types of nonbank financial institutions.\nlonger-run rate of inflation. Several participants noted that capital at some of the\nlargest banks had declined in recent quarters. These parIn their discussion of risks, participants emphasized that\nticipants emphasized that it was important that the largthey were highly attentive to inflation risks and were\nest banks have strong capital positions and that approclosely monitoring developments regarding both inflapriate settings of regulatory and supervisory tools can\ntion and inflation expectations. Uncertainty about the\nhelp deliver that outcome. A couple of these particimedium-term course of inflation remained high, and the\npants highlighted the potential role that usage of the\nbalance of inflation risks remained skewed to the upside,\ncountercyclical capital buffer could play in this context.\nwith several participants highlighting the possibility of\nfurther supply shocks arising from commodity markets. In their consideration of the appropriate stance of monParticipants saw the risks to the outlook for real GDP etary policy, participants concurred that the labor market\ngrowth as primarily being to the downside. These down- was very tight and that inflation was far above the Comside risks included the possibility that the tightening in mittee’s 2 percent inflation objective. Participants noted\nfinancial conditions would have a larger negative effect that recent indicators of spending and production had\non economic activity than anticipated, that there would softened, while, by contrast, job gains had been robust\nbe further pandemic-related economic disruptions, or and the unemployment rate had remained low. Against\nthat geopolitical and global economic developments this backdrop, all participants agreed that it was approwould lead to additional adverse economic or financial priate to raise the target range for the federal funds rate\ndisturbances. 75 basis points at this meeting and to continue the process of reducing the Federal Reserve’s securities holdSeveral of the participants who commented on issues reings, as described in the Plans for Reducing the Size of\nlated to financial stability noted that, on balance, asset\nthe Federal Reserve’s Balance Sheet that the Committee\nvaluations had eased from elevated levels in recent\nissued in May. Participants observed that, following this\nmonths. High levels of capital and liquidity overall in\nmeeting’s policy rate hike, the nominal federal funds rate\nthe banking system, healthy household balance sheets,\nwould be within the range of their estimates of its\nand the adoption of stronger mortgage underwriting\nlonger-run neutral level. Even so, with inflation elevated\nstandards following the Global Financial Crisis were also\nand expected to remain so over the near term, some parcited among the factors that fostered financial stability\nticipants emphasized that the real federal funds rate\nin the current environment. Several participants noted\nwould likely still be below shorter-run neutral levels after\nthat financial market liquidity had been low in some arthis meeting’s policy rate hike.\neas but that market functioning had, nonetheless, been\norderly. Several participants emphasized the importance In discussing potential policy actions at upcoming meetof avoiding complacency when assessing financial vul- ings, participants continued to anticipate that ongoing\nnerabilities amid ever-changing economic and financial increases in the target range for the federal funds rate\n\n_P_ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nwould be appropriate to achieve the Committee’s objec- to raise the policy rate further, to appropriately restrictives. With inflation remaining well above the Commit- tive levels, if inflation were to run higher than expected.\ntee’s objective, participants judged that moving to a re- Participants judged that a significant risk facing the\nstrictive stance of policy was required to meet the Com- Committee was that elevated inflation could become enmittee’s legislative mandate to promote maximum em- trenched if the public began to question the Committee’s\nployment and price stability. Participants concurred that resolve to adjust the stance of policy sufficiently. If this\nthe pace of policy rate increases and the extent of future risk materialized, it would complicate the task of returnpolicy tightening would depend on the implications of ing inflation to 2 percent and could raise substantially\nincoming information for the economic outlook and the economic costs of doing so. Many participants rerisks to the outlook. Participants judged that, as the marked that, in view of the constantly changing nature\nstance of monetary policy tightened further, it likely of the economic environment and the existence of long\nwould become appropriate at some point to slow the and variable lags in monetary policy’s effect on the econpace of policy rate increases while assessing the effects omy, there was also a risk that the Committee could\nof cumulative policy adjustments on economic activity tighten the stance of policy by more than necessary to\nand inflation. Some participants indicated that, once the restore price stability. These participants highlighted\npolicy rate had reached a sufficiently restrictive level, it this risk as underscoring the importance of the Commitlikely would be appropriate to maintain that level for tee’s data-dependent approach to judging the pace and\nsome time to ensure that inflation was firmly on a path magnitude of policy firming over coming quarters.\nback to 2 percent. Participants reaffirmed their strong commitment to reParticipants concurred that, in expeditiously raising the turning inflation to the Committee’s 2 percent objective.\npolicy rate, the Committee was acting with resolve to Participants agreed that a return of inflation to the 2 perlower inflation to 2 percent and anchor inflation expec- cent objective was necessary for sustaining a strong labor\ntations at levels consistent with that longer-run goal. market. Participants remarked that it would likely take\nParticipants noted that the Committee’s credibility with some time for inflation to move down to the Commitregard to bringing inflation back to the 2 percent objec- tee’s objective. Participants added that the course of intive, together with its forceful policy actions and com- flation would be influenced by various nonmonetary facmunications, had already contributed to a notable tight- tors, including developments associated with Russia’s\nening of financial conditions that would likely help re- war against Ukraine and with supply chain disruptions.\nduce inflation pressures by restraining aggregate de- Participants recognized that policy firming could slow\nmand. Participants pointed to some evidence suggesting the pace of economic growth, but they saw the return of\nthat policy actions and communications about the future inflation to 2 percent as critical to achieving maximum\npath of the federal funds rate were starting to affect the employment on a sustained basis.\neconomy, most visibly in interest-sensitive sectors. ParCommittee Policy Action\nticipants generally judged that the bulk of the effects on\nIn their discussion of monetary policy for this meeting,\nreal activity had yet to be felt because of lags associated\nmembers agreed that recent indicators of spending and\nwith the transmission of monetary policy, and that while\nproduction had softened. Members also concurred that,\na moderation in economic growth should support a renonetheless, job gains had been robust in recent months\nturn of inflation to 2 percent, the effects of policy firmand the unemployment rate had remained low. Meming on consumer prices were not yet apparent in the\nbers agreed that inflation remained elevated, reflecting\ndata. A number of participants posited that some of the\nsupply and demand imbalances related to the pandemic,\neffects of policy actions and communications were\nhigher food and energy prices, and broader price presshowing up more rapidly than had historically been the\nsures. In describing the sources of elevated inflation,\ncase, because the expeditious removal of policy accommembers judged it pertinent to add a reference to higher\nmodation and supporting communications already had\nfood prices to the statement because of the notable rise\nled to a significant tightening of financial conditions.\nin these prices and the importance of food items in\nIn light of elevated inflation and the upside risks to the households’ budgets.\noutlook for inflation, participants remarked that moving\nMembers concurred that Russia’s war against Ukraine\nto a restrictive stance of the policy rate in the near term\nwas causing tremendous human and economic hardship.\nwould also be appropriate from a risk-management perThey also agreed that the war and related events were\nspective because it would better position the Committee\ncreating additional upward pressure on inflation and\n\n______________________________M__in_u_t_e_s _o_f_ t_h_e _M__ee_t_in_g_ _o_f _J_u_ly_ 2_6_–_2_7_,_ 2_0_2_2________________________P__ag_e_ _1_1\nwere weighing on global economic activity. Members limit of $500 billion; the aggregate operaremarked that they remained highly attentive to inflation tion limit can be temporarily increased at\nrisks. Amid evidence that COVID-related lockdowns in the discretion of the Chair. China had generally been lifted and had affected supply\n• Conduct overnight reverse repurchase\nchains only modestly, members generally considered it\nagreement operations at an offering rate of\nappropriate to omit from the July statement the sentence\n2.3 percent and with a per-counterparty\nthat appeared in the June statement indicating that these\nlimit of $160 billion per day; the per-counlockdowns were likely to exacerbate supply chain disrupterparty limit can be temporarily increased\ntions.\nat the discretion of the Chair. In their assessment of the monetary policy stance neces-\n• Roll over at auction the amount of principal\nsary for achieving the Committee’s maximum-employpayments from the Federal Reserve’s holdment and price-stability goals, the Committee decided to\nings of Treasury securities maturing in the\nraise the target range for the federal funds rate to 2¼ to\ncalendar months of July and August that ex2½ percent and anticipated that ongoing increases in the\nceeds a cap of $30 billion per month. Retarget range would be appropriate. In addition, memdeem Treasury coupon securities up to this\nbers agreed that the Committee would continue reducmonthly cap and Treasury bills to the extent\ning the Federal Reserve’s holdings of Treasury securities\nthat coupon principal payments are less\nand agency debt and agency MBS, as described in the\nthan the monthly cap. Plans for Reducing the Size of the Federal Reserve’s Balance Sheet that were issued in May. • Starting in the calendar month of September, roll over at auction the amount of prinMembers agreed that, in assessing the appropriate stance\ncipal payments from the Federal Reserve’s\nof monetary policy, they would continue to monitor the\nholdings of Treasury securities maturing in\nimplications of incoming information for the economic\neach calendar month that exceeds a cap of\noutlook and that they would be prepared to adjust the\n$60 billion per month. Redeem Treasury\nstance of monetary policy as appropriate in the event\ncoupon securities up to this monthly cap\nthat risks emerged that could impede the attainment of\nand Treasury bills to the extent that coupon\nthe Committee’s goals. They also concurred that their\nprincipal payments are less than the\nassessments would take into account a wide range of inmonthly cap.\nformation, including readings on public health, labor\nmarket conditions, inflation pressures and inflation ex- • Reinvest into agency mortgage-backed sepectations, and financial and international develop- curities (MBS) the amount of principal payments. Members affirmed that the Committee was ments from the Federal Reserve’s holdings\nstrongly committed to returning inflation to its 2 percent of agency debt and agency MBS received in\nobjective. the calendar months of July and August that\nexceeds a cap of $17.5 billion per month. At the conclusion of the discussion, the Committee\nvoted to authorize and direct the Federal Reserve Bank • Starting in the calendar month of Septemof New York, until instructed otherwise, to execute ber, reinvest into agency MBS the amount\ntransactions in the SOMA in accordance with the fol- of principal payments from the Federal Relowing domestic policy directive, for release at 2:00 p.m.: serve’s holdings of agency debt and agency\nMBS received in each calendar month that\n“Effective July 28, 2022, the Federal Open Marexceeds a cap of $35 billion per month.\nket Committee directs the Desk to:\n• Undertake open market operations as nec-\n• Allow modest deviations from stated\namounts for reinvestments, if needed for\nessary to maintain the federal funds rate in\noperational reasons.\na target range of 2¼ to 2½ percent.\n• Conduct overnight repurchase agreement\n• Engage in dollar roll and coupon swap\ntransactions as necessary to facilitate settleoperations with a minimum bid rate of\nment of the Federal Reserve’s agency MBS\n2.5 percent and with an aggregate operation\ntransactions.”\n\n_P_ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nThe vote also encompassed approval of the statement goals. The Committee’s assessments will take\nbelow for release at 2:00 p.m.: into account a wide range of information, including readings on public health, labor market\n“Recent indicators of spending and production\nconditions, inflation pressures and inflation exhave softened. Nonetheless, job gains have\npectations, and financial and international debeen robust in recent months, and the unemvelopments.”\nployment rate has remained low. Inflation remains elevated, reflecting supply and demand Voting for this action: Jerome H. Powell, John C.\nimbalances related to the pandemic, higher food Williams, Michael S. Barr, Michelle W. Bowman, Lael\nand energy prices, and broader price pressures. Brainard, James Bullard, Susan M. Collins, Lisa D. Cook,\nEsther L. George, Philip N. Jefferson, Loretta J. Mester,\nRussia’s war against Ukraine is causing tremenand Christopher J. Waller.\ndous human and economic hardship. The war\nand related events are creating additional up- Voting against this action: None.\nward pressure on inflation and are weighing on\nTo support the Committee’s decision to raise the target\nglobal economic activity. The Committee is\nrange for the federal funds rate, the Board of Governors\nhighly attentive to inflation risks.\nof the Federal Reserve System voted unanimously to\nThe Committee seeks to achieve maximum em- raise the interest rate paid on reserve balances to 2.4 perployment and inflation at the rate of 2 percent cent, effective July 28, 2022. The Board of Governors\nover the longer run. In support of these goals, of the Federal Reserve System voted unanimously to apthe Committee decided to raise the target range prove a ¾ percentage point increase in the primary\nfor the federal funds rate to 2¼ to 2½ percent credit rate to 2.5 percent, effective July 28, 2022.6\nand anticipates that ongoing increases in the tarIt was agreed that the next meeting of the Committee\nget range will be appropriate. In addition, the\nwould be held on Tuesday–Wednesday, September 20–\nCommittee will continue reducing its holdings\n21, 2022. The meeting adjourned at 10:35 a.m. on\nof Treasury securities and agency debt and\nJuly 27, 2022.\nagency mortgage-backed securities, as described\nin the Plans for Reducing the Size of the Federal Notation Vote\nReserve’s Balance Sheet that were issued in By notation vote completed on July 5, 2022, the ComMay. The Committee is strongly committed to mittee unanimously approved the minutes of the Comreturning inflation to its 2 percent objective. mittee meeting held on June 14–15, 2022. In assessing the appropriate stance of monetary\npolicy, the Committee will continue to monitor\nthe implications of incoming information for\nthe economic outlook. The Committee would _______________________\nbe prepared to adjust the stance of monetary James A. Clouse\npolicy as appropriate if risks emerge that could Secretary\nimpede the attainment of the Committee’s\n6 In taking this action, the Board approved requests to estab- of July 28, 2022, or the date such Reserve Banks inform the\nlish that rate submitted by the boards of directors of the Fed- Secretary of the Board of such a request. (Secretary’s note:\neral Reserve Banks of Boston, New York, Philadelphia, Cleve- Subsequently, the Federal Reserve Banks of St. Louis, Minneland, Richmond, Atlanta, Chicago, Dallas, and San Francisco. apolis, and Kansas City were informed of the Board’s approval\nThis vote also encompassed approval by the Board of Gover- of their establishment of a primary credit rate of 2.5 percent,\nnors of the establishment of a 2.5 percent primary credit rate effective July 28, 2022.)\nby the remaining Federal Reserve Banks, effective on the later",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20220727.pdf",
+    "action": "Raised",
+    "rate": "2.25%-2.50%",
+    "magnitude": "0.75 percentage points",
+    "forward_guidance": "The Fed signaled that ongoing increases in the federal funds rate will be appropriate to combat high inflation, with future moves dependent on incoming economic data. It emphasized a commitment to returning inflation to its 2% target and indicated that a restrictive policy stance is likely needed in the near term.",
+    "key_economic_factors": [
+      "Inflation remained elevated, with broad-based price pressures and a recent surge in food prices",
+      "Strong labor market with robust job gains and low unemployment, though signs of softening were emerging",
+      "Slowing economic activity, with weaker spending and production data in the second quarter",
+      "Global risks including Russia’s war against Ukraine and supply chain disruptions continuing to weigh on the outlook"
+    ],
+    "economic_outlook": "The Fed expects economic growth to continue in the second half of the year but at a below-trend pace. Inflation is projected to remain high in the near term, with core PCE inflation expected to decline gradually toward 2% by 2024. The unemployment rate is forecast to rise modestly through 2023 as labor market imbalances ease.",
+    "market_impact": "Higher borrowing costs will continue to pressure businesses and consumers, particularly in interest-sensitive sectors like housing and durable goods. Financial markets may face volatility as investors adjust to the prospect of further rate hikes and a restrictive monetary policy stance."
+  },
+  {
+    "date": "2022-06-15",
+    "title": "FOMC Meeting 2022-06-15",
+    "full_text": "_ _______________________________________________________________________________________P_a_g_e_ _1\nMinutes of the Federal Open Market Committee\nJune 14–15, 2022\nA joint meeting of the Federal Open Market Committee Lorie K. Logan, Manager, System Open Market\nand the Board of Governors of the Federal Reserve Sys- Account\ntem was held in the offices of the Board of Governors\non Tuesday, June 14, 2022, at 11:00 a.m. and continued Patricia Zobel, Deputy Manager, System Open Market\non Wednesday, June 15, 2022, at 9:00 a.m.1 Account\nAttendance Ann E. Misback, Secretary, Office of the Secretary,\nJerome H. Powell, Chair Board\nJohn C. Williams, Vice Chair\nMichelle W. Bowman Matthew J. Eichner,2 Director, Division of Reserve\nLael Brainard Bank Operations and Payment Systems, Board;\nJames Bullard Michael S. Gibson, Director, Division of\nLisa D. Cook Supervision and Regulation, Board; Andreas\nEsther L. George Lehnert, Director, Division of Financial Stability,\nPhilip N. Jefferson Board\nLoretta J. Mester\nChristopher J. Waller Daniel M. Covitz, Deputy Director, Division of\nResearch and Statistics, Board; Sally Davies,\nMeredith Black, Charles L. Evans, Patrick Harker, Deputy Director, Division of International\nNaureen Hassan, and Neel Kashkari, Alternate Finance, Board; Rochelle M. Edge, Deputy\nMembers of the Committee Director, Division of Monetary Affairs, Board;\nMichael T. Kiley, Deputy Director, Division of\nThomas I. Barkin, Raphael W. Bostic, and Mary C. Financial Stability, Board\nDaly, Presidents of the Federal Reserve Banks of\nRichmond, Atlanta, and San Francisco, respectively Jon Faust and Joshua Gallin, Senior Special Advisers to\nthe Chair, Division of Board Members, Board\nKenneth C. Montgomery, Interim President of the\nFederal Reserve Bank of Boston Burcu Duygan-Bump, Jane E. Ihrig, Kurt F. Lewis,\nNitish R. Sinha, and Paul R. Wood, Special\nJames A. Clouse, Secretary Advisers to the Board, Division of Board\nMatthew M. Luecke, Deputy Secretary Members, Board\nBrian J. Bonis, Assistant Secretary\nMichelle A. Smith, Assistant Secretary Linda Robertson, Assistant to the Board, Division of\nMark E. Van Der Weide, General Counsel Board Members, Board\nTrevor A. Reeve, Economist\nStacey Tevlin, Economist Marnie Gillis DeBoer3 and David López-Salido, Senior\nBeth Anne Wilson, Economist Associate Directors, Division of Monetary Affairs,\nBoard; Diana Hancock and John J. Stevens, Senior\nShaghil Ahmed, Brian M. Doyle, Carlos Garriga, Associate Directors, Division of Research and\nJoseph W. Gruber, Ellis W. Tallman, and William Statistics, Board\nWascher, Associate Economists\n1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-\n“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.\nof Governors of the Federal Reserve System is referenced as 3 Attended Tuesday’s session only.\nthe “Board” in these minutes.\n\n_P _ag_e_ _2_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nEdward Nelson and Robert J. Tetlow,4 Senior Advisers, James P. Bergin, Marc Giannoni, Giovanni Olivei,\nDivision of Monetary Affairs, Board Paolo A. Pesenti, and Robert G. Valletta, Senior\nVice Presidents, Federal Reserve Banks of New\nChristopher J. Gust, Associate Director, Division of York, Dallas, Boston, New York, and San\nMonetary Affairs, Board Francisco, respectively\nShane M. Sherlund, Deputy Associate Director, Roc Armenter, Vice President, Federal Reserve Bank of\nDivision of Research and Statistics, Board Philadelphia\nGiovanni Favara and Etienne Gagnon,3 Assistant Alisdair G. McKay, Senior Research Economist,\nDirectors, Division of Monetary Affairs, Board; Federal Reserve Bank of Minneapolis\nPaul Lengermann and Byron Lutz, Assistant\nDirectors, Division of Research and Statistics, Developments in Financial Markets and Open\nBoard Market Operations\nThe manager of the System Open Market Account\nPenelope A. Beattie,3 Section Chief, Office of the (SOMA) turned first to a discussion of financial develSecretary, Board; Valerie S. Hinojosa, Section opments. Over the intermeeting period, there were sigChief, Division of Monetary Affairs, Board nificant swings in asset prices, and financial conditions\ntightened, on net, as market participants assessed incomAlyssa Arute,2 Manager, Division of Reserve Bank ing information about the economy. In the United\nOperations and Payment Systems, Board States, near-term policy rate expectations shifted markedly toward the end of the period, particularly after the\nAyelen Banegas and Anna Orlik,3 Principal release of the May consumer price index (CPI) report. Economists, Division of Monetary Affairs, Board; Ahead of the release of the report, market expectations\nStephen F. Lin, Principal Economist, Division of reflected a broad consensus that there would be 50 basis\nResearch and Statistics, Board point rate increases at both the June and July FOMC\nmeetings. After the release of the higher-than-expected\nGiovanni Nicolò, Arsenios Skaperdas, and Hiroatsu inflation data, policy-sensitive rates pointed instead to a\nTanaka, Senior Economists, Division of Monetary considerable probability of 75 basis point moves at both\nAffairs, Board; Cisil Sarisoy, Senior Economist, the June and July meetings. The market-implied path of\nDivision of International Finance, Board the federal funds rate moved higher at longer horizons\nas well. Market participants noted elevated uncertainty\nAchilles Sangster II, Senior Information Manager, about the economic and monetary policy outlook. Division of Monetary Affairs, Board\nAcross the yield curve, rates on nominal Treasury securities ended the period significantly higher, primarily reDavid Na, Senior Financial Institution and Policy\nflecting the revision in the outlook for monetary policy\nAnalyst, Division of Monetary Affairs, Board\nand the associated rise in real yields. Market-based\nmeasures of inflation compensation continued to indiJose Acosta, Senior Communications Analyst, Division\ncate expectations that inflation would decline notably in\nof Information Technology, Board\ncoming quarters, and measures of medium-term inflation compensation fell over the intermeeting period. Kathleen O. Paese, First Vice President, Federal\nMarket participants reported that while liquidity condiReserve Bank of St. Louis\ntions in the market for Treasury securities had been affected by the elevated volatility in rates and larger trades\nDavid Altig, Kartik B. Athreya, Michelle M. Neal, and\nwere having an increased effect on pricing, overall marAnna Paulson, Executive Vice Presidents, Federal\nket functioning had held up. Responding to higher inReserve Banks of Atlanta, Richmond, New York,\nand Chicago, respectively\n4 Attended from the discussion of the economic and financial\nsituation through the end of Wednesday’s session.\n\n_ _____________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_4_–_1_5,_ 2_0_2_2_________________________P_a_g_e_ _3\nterest rates and some concerns about the growth out- under the initial monthly caps on redemptions of\nlook, equity prices moved substantially lower over the $30 billion for Treasury securities and $17.5 billion for\nperiod. agency debt and agency mortgage-backed securities\n(MBS). Under current staff projections, the SOMA\nThe manager turned next to a discussion of developportfolio was anticipated to decline roughly $400 billion\nments related to foreign central banks. Most major forby the end of 2022. As noted in the recent SOMA aneign central banks were proceeding on a path of removnual report and reported in the Board’s first-quarter fiing policy accommodation in order to address elevated\nnancial statements for the Federal Reserve System, the\nlevels of inflation. Several—including those of Canada,\nSOMA portfolio had an unrealized loss, reflecting the\nAustralia, and New Zealand—had raised their policy\nincrease in longer-term interest rates. Unrealized losses\nrates 50 basis points over the intermeeting period, and\nhad no implications for Federal Reserve income and\nsome signaled the potential need for more forceful tightwould eventually fall to zero as securities reached maening in order to address inflation risks. The European\nturity. The staff projected that SOMA net income would\nCentral Bank (ECB) announced an end to its asset purdecline and potentially turn negative, with increases in\nchase program and signaled an intention to lift policy\nthe target range lifting the interest expense on some liarates in July. Meanwhile, the stance of monetary policy\nbilities, and that this eventuality could result in a deferred\nin Japan was generally expected to remain highly accomasset entry on the Federal Reserve’s balance sheet. Neimodative, though recent upward pressure on Japanese\nther unrealized losses on the Federal Reserve’s existing\ngovernment bond yields had led the Bank of Japan\nsecurities portfolio nor negative net income would im-\n(BOJ) to step up its efforts to defend its yield curve conpair the implementation of monetary policy or the Fedtrol target. On balance, market participants were foeral Reserve’s ability to achieve its dual-mandate objeccused on the largely synchronous shift toward monetary\ntives.\npolicy tightening across most advanced economies. On other operational matters, the deputy manager noted\nRegarding money market developments, the manager\nthat, over the intermeeting period, the Desk onboarded\nnoted that the 50 basis point increase in the target range\nthree depository institutions as new counterparties for\nat the May FOMC meeting passed through to the effecthe standing repo facility (SRF), resulting in a total of\ntive federal funds rate and was also transmitted to other\nnine depository institutions approved, to date, as SRF\novernight rates. The federal funds rate held steady at\ncounterparties.\n83 basis points throughout the period, while the Secured\nOvernight Financing Rate softened, on net, falling to the By unanimous vote, the Committee ratified the Desk’s\nbottom of the federal funds target range later in the pe- domestic transactions over the intermeeting period.\nriod. Contacts attributed the downward pressure on se- There were no intervention operations in foreign currencured rates to high liquidity levels and declining Treasury cies for the System’s account during the intermeeting pebill supply, as well as elevated uncertainty about the in- riod.\nterest rate path, which had increased demand for shortStaff Review of the Economic Situation\nterm investments. In this environment, participation in\nThe information available at the time of the June 14–15\nthe overnight reverse repurchase agreement (ON RRP)\nmeeting suggested that U.S. real gross domestic product\nfacility increased, and a greater share of activity in over-\n(GDP) was rebounding to a moderate rate of increase in\nnight private repurchase agreement (repo) markets was\nthe second quarter after having declined in the first quarconducted by lenders who lacked access to the facility.\nter. The labor market remained very tight, but there\nThe manager noted that, if ON RRP usage continued to\nwere some signs that momentum was slowing. Conrise, it may be appropriate at some point to consider fursumer price inflation—as measured by the 12‑month\nther lifting the per-counterparty limit. Over the longer\npercentage change in the price index for personal conterm, ON RRP usage was expected to fall, with the resumption expenditures (PCE)—remained elevated in\nduction in the size of the Federal Reserve’s balance sheet\nApril, and available information suggested that inflation\nresulting in a gradual rise in money market rates relative\nwas still elevated in May.\nto the ON RRP rate. Total nonfarm payroll employment rose solidly in April\nThe deputy manager turned next to a discussion of Fedand May, though the pace of increase was slower than in\neral Reserve operations and related topics. In accordthe first quarter, and the unemployment rate remained\nance with the directive to the Open Market Desk, the\nunchanged at 3.6 percent. The unemployment rates for\nreduction in SOMA securities holdings began in June,\nAfrican Americans and for Hispanics were little\n\n_P _ag_e_ _4_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nchanged, on net, though both rates remained noticeably declining in the previous two months, following some\nhigher than the national average. On net, the labor force normalization in categories such as soybeans and pharparticipation rate edged down between March and May, maceuticals, which can exhibit large and idiosyncratic\nwhile the employment-to-population ratio was un- changes. Exports and imports of services continued to\nchanged. The private-sector job openings rate, as meas- be held back by an incomplete recovery of international\nured by the Job Openings and Labor Turnover Survey, travel. The nominal U.S. international trade deficit widedged lower in April but remained at a high level. Nom- ened to a record size in March and then reversed that\ninal wage growth remained elevated, with average hourly widening in April.\nearnings having risen 5.2 percent over the 12 months\nIncoming data suggested that the global reverberations\nending in May, and the increases were widespread across\nfrom lockdown measures to deal with the spread of the\nindustries. COVID-19 virus in China and the Russian invasion of\nConsumer price inflation remained elevated. Total PCE Ukraine slowed foreign economic growth. In China, acprice inflation was 6.3 percent over the 12 months end- tivity indicators pointed to a sizable restraint on ecoing in April, and core PCE price inflation, which ex- nomic activity. The Russian invasion of Ukraine contincludes changes in consumer energy prices and many ued to have an imprint on foreign activity, with persisconsumer food prices, was 4.9 percent over the same pe- tent stresses in global commodity markets and declining\nriod. The trimmed mean measure of 12‑month PCE consumer and business confidence, especially in Europe.\nprice inflation constructed by the Federal Reserve Bank Inflation abroad moved higher, driven by further inof Dallas was 3.8 percent in April, nearly 2 percentage creases in consumer energy and food prices as well as\npoints higher than its year-earlier rate of increase. In some additional broadening of price pressures to core\nMay, the 12-month change in the CPI was 8.6 percent, goods and services. Central banks around the world furwhile core CPI inflation was 6.0 percent over the same ther tightened their monetary policy stances to curb high\nperiod. Measures of inflation expectations derived from inflation.\nsurveys of professional forecasters and of consumers\nStaff Review of the Financial Situation\ngenerally suggested that inflation was expected to remain\nOver the intermeeting period, U.S. Treasury yields and\nhigh in the short run but then fall back toward levels\nthe market-implied federal funds rate path moved subconsistent with a longer-run rate of 2 percent.\nstantially higher on net. Broad domestic equity price inProduction and spending indicators were mixed but gen- dexes declined considerably, on balance, amid elevated\nerally remained strong. Consumer spending and indus- market volatility. In most advanced foreign economies\ntrial production posted sizable gains in April. However, (AFEs), sovereign yields also increased further, and forretail sales declined in May, data on home sales and sin- eign equity price indexes moved lower. Despite further\ngle-family housing starts moved down in April, some in- increases in borrowing costs, financing conditions in dodicators of manufacturing activity weakened in May, and mestic credit markets remained generally accommodathe University of Michigan Surveys of Consumers meas- tive. The credit quality of firms, municipalities, and\nure of consumer sentiment decreased noticeably in the households remained largely stable, although the outpreliminary June reading. Supply disruptions appeared look for credit quality had begun to deteriorate someto have improved in some sectors (such as general mer- what.\nchandise retailers) but to have deteriorated in others\nSince the previous FOMC meeting, 2-, 5-, and 10-year\n(such as materials for home construction). On balance,\nnominal Treasury yields increased considerably on net.\nthe available indicators suggested that private domestic\nEarly in the intermeeting period, Treasury yields moved\nfinal purchases were increasing at a slower pace in the\nlower amid rising concerns about a weakening U.S.\nsecond quarter than in the first quarter. And with the\ngrowth outlook and Federal Reserve communications\navailable trade data for April pointing to a rebound in\nperceived as lowering the chances of large policy rate\nexports and a moderation in import growth in the sechikes at upcoming meetings. However, yields increased\nond quarter, GDP growth appeared to be rebounding\nlate in the period, with economic data releases largely beafter having declined in the first quarter.\ning interpreted as highlighting the possibility of a more\nRegarding trade, real imports of goods stepped back in aggressive tightening of monetary policy. The expected\nApril from their exceptional strength in March, driven federal funds rate path—implied by a straight read of\nby a decline in consumer goods imports. By contrast, overnight index swap quotes—also increased notably on\nreal goods exports grew in both March and April after balance. Real yields increased more than their nominal\n\n_ _____________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_4_–_1_5,_ 2_0_2_2_________________________P_a_g_e_ _5\ncounterparts, while inflation compensation implied by creased uncertainty about the path of policy rates. ConTreasury Inflation-Protected Securities declined. cerns about the global growth outlook weighed on equity prices, and the broad dollar edged up. Implied eqBroad equity price indexes fell sharply over the interuity price volatility remained at elevated levels. Japanese\nmeeting period on net. The stock price declines were\nyields and equity prices, however, ended the period\nlargely associated with mixed corporate earnings news\nabout unchanged, as the BOJ reaffirmed its accommoearly in the period and increasing concerns about the\ndative monetary policy stance. Sovereign bond spreads\neconomic outlook amid global policy tightening. Oneover German bund yields for euro-area peripheral counmonth option-implied volatility on the S&P 500 index—\ntries widened further. These moves were partially rethe VIX—increased moderately, on balance, remaining\ntraced following an unscheduled meeting of the ECB on\nelevated relative to its historical distribution and signifiJune 15, at which the ECB indicated that it would take\ncantly above average pre-pandemic levels. Spreads on\naction to address potential fragmentation risk in euroinvestment-grade and, to a greater extent, speculativearea sovereign bond markets. Outflows from emerging\ngrade corporate bonds widened notably, on net, reachmarket-dedicated funds intensified in early May, espeing levels comparable with those at the end of 2018.\ncially from local currency bond funds, and credit spreads\nThis widening of spreads was associated with increased\nin emerging market economies widened moderately.\nconcerns about the outlook for corporate credit amid\nmonetary policy tightening. Since the previous FOMC In domestic credit markets, financing conditions for\nmeeting, spreads on municipal bonds narrowed substan- most businesses and households remained generally actially, on net, moving near levels observed for several commodative over the intermeeting period. Credit reyears before the pandemic, as investor demand exhibited mained widely available, particularly to higher-rated\nsome recovery over much of the period from earlier firms and consumers with higher credit scores. Gross\nweak levels. nonfinancial corporate bond issuance slowed in May, especially among speculative-grade issuers, amid elevated\nConditions in short-term funding markets remained stamarket volatility and high yields. Gross institutional levble over the intermeeting period, with the May increase\neraged loan issuance decelerated and initial public offerin the Federal Reserve’s administered rates passing\ning volumes remained extremely slow in May, while\nthrough promptly to overnight money market rates.\ngross issuance of municipal bonds remained robust. Spreads on longer-tenor commercial paper (CP) and negotiable certificates of deposit narrowed moderately, Commercial and industrial (C&I) and commercial real\nwith no signs of spillovers beyond the stablecoin market estate (CRE) loans on banks’ balance sheets expanded at\nfollowing the collapse of a large algorithmic stablecoin. a rapid pace in April and May. Issuance of both agency\nIndeed, CP outstanding increased slightly over the pe- and non-agency commercial mortgage-backed securities\nriod. Money market fund (MMF) net yields across all (CMBS) stepped down slightly in May from its strong\nfund types rose notably, as increases in administered pace earlier in the year. Small business loan originations\nrates passed through to money market instruments. Se- through April were in line with pre-pandemic levels and\ncured overnight rates softened significantly relative to indicated that credit appeared to be available.\nthe ON RRP offering rate since the May FOMC meetResidential mortgage credit remained widely available\ning, with the downward pressure on rates attributed to\nthrough May for most borrowers. While refinance volcontinuing declines in net Treasury bill issuance, eleumes continued trending lower in April and May amid\nvated demand for collateral in the form of Treasury sehigher mortgage rates, outstanding balances of home eqcurities, and MMFs maintaining very short portfolio mauity lines of credit at commercial banks posted the first\nturities amid uncertainty about the pace of anticipated\nsignificant increase in more than a decade, likely reflectpolicy rate increases. Consistent with the downward\ning a substitution by homeowners away from cash-out\npressure on repo rates, daily take-up in the ON RRP farefinances. In consumer credit markets, auto loans outcility increased further.\nstanding grew at a robust pace in the first quarter, conSovereign yields in most AFEs rose over the intermeet- sistent with a rebound in auto sales, but slowed in April\ning period amid investors’ concerns about further infla- and May. Credit card balances at commercial banks rose\ntionary pressures and major central banks’ policy com- in April at the fastest pace seen in recent decades, but\nmunications suggesting a firmer stance of policy. Inter- growth slowed in May.\nest rate volatility in AFEs increased, consistent with in-\n\n_P _ag_e_ _6_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nBorrowing costs had continued to increase in many sec- remainder of the year. However, monetary policy was\ntors since the previous FOMC meeting. Yields on non- assumed to be less accommodative than in the previous\nfinancial corporate bonds remained well above pre- projection, and the recent and prospective tightening of\npandemic levels, and new issuance spreads for institu- financial conditions led the staff to reduce its GDP\ntional leveraged loans ticked up in May. Bank interest growth forecast for the second half of 2022 and for\nrates for both C&I and CRE loans also increased. 2023. The level of real GDP was still expected to remain\nAmong small businesses that borrow on a regular basis, well above potential over the projection period, though\nthe share facing higher borrowing costs rose in both the gap was projected to narrow significantly this year\nApril and May. Borrowing costs for residential mortgage and to narrow a little further next year. Labor market\nloans increased significantly over the intermeeting pe- conditions also were expected to remain very tight, albeit\nriod, in line with the increases in MBS and Treasury somewhat less so than in the previous projection.\nyields, reaching their highest levels since 2010. In conWith regard to PCE price inflation, the staff revised up\nsumer credit markets, rates on auto loans and new credit\nits projection for the second half of 2022 in response to\ncard offers continued to trend upward.\nstronger-than-expected wage growth and the staff’s asDespite the historically low volumes of defaults on both sessment that the boost to inflation from supply–\ncorporate bonds and leveraged loans in April, in the later demand imbalances in the economy, including in food\nweeks of the intermeeting period the volume of credit and energy markets, would be more persistent than prerating downgrades of leveraged loans exceeded the vol- viously assumed. All told, total PCE price inflation was\nume of upgrades. In addition, market indicators of fu- expected to be 5.0 percent in 2022, while core inflation\nture default expectations of businesses deteriorated to was expected to be 4.1 percent. PCE price inflation was\nsome extent, as investors appeared to mark down their then expected to step down to 2.4 percent in 2023 and\nassessment of the macroeconomic outlook. to 2.0 percent in 2024, as energy prices were forecast to\ndecline and as supply–demand imbalances were proCredit quality of business loans on banks’ books rejected to diminish because of slowing aggregate demand\nmained sound, with C&I and CRE delinquency rates\nand an easing of supply constraints. Similarly, core incontinuing to be low through March. Nonetheless,\nflation was projected to slow to 2.6 percent in 2023 and\nbanks allocated net positive loan loss provisions in the\nto 2.2 percent in 2024.\nfirst quarter of this year. This development reversed a\npattern of loan loss reserves being released throughout The staff continued to judge that the risks to the baseline\nlast year and reflected concerns about the credit quality projection for real activity were skewed to the downside\noutlook. Delinquency rates on CMBS and small busi- and that the risks to the inflation projection were skewed\nness loans continued to decline, and the credit quality of to the upside. The staff judged that the ongoing war in\nmunicipal securities remained strong. Ukraine remained a possible source of even greater upward pressure on energy and commodity prices, while\nHousehold credit quality remained solid, with the share\nthe war and adverse developments associated with\nof consumers with subprime credit scores still near hisChina’s zero-COVID policy were both perceived as intorical lows. In addition, mortgage delinquencies and\ncreasing the risk that supply chain disruptions and prothe share of mortgages in forbearance both continued to\nduction constraints would be further exacerbated in the\ntrend down in recent months. While nonprime auto\nUnited States and abroad.\nloan delinquency rates edged down a touch in the first\nquarter, credit card delinquency rates for account hold- Participants’ Views on Current Conditions and the\ners with below-prime credit scores inched up from low Economic Outlook\nlevels. The sizable increases in credit card purchase vol- In conjunction with this FOMC meeting, participants\numes through March were roughly offset by high levels submitted their projections of the most likely outcomes\nof credit card payments, thus increasing household bor- for real GDP growth, the unemployment rate, and inflarowing only slightly. tion for each year from 2022 through 2024 and over the\nlonger run based on their individual assessments of apStaff Economic Outlook\npropriate monetary policy, including the path of the fedThe projection for U.S. economic activity prepared by\neral funds rate. The longer-run projections represented\nthe staff for the June FOMC meeting implied a trajectory\neach participant’s assessment of the rate to which each\nfor real GDP that was lower than in the May projection.\nvariable would be expected to converge, over time, unThe staff continued to project that GDP growth would\nder appropriate monetary policy and in the absence of\nrebound in the second quarter and remain solid over the\n\n_ _____________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_4_–_1_5,_ 2_0_2_2_________________________P_a_g_e_ _7\nfurther shocks to the economy. A Summary of Eco- Participants stressed the need to adjust the stance of polnomic Projections (SEP) was released to the public fol- icy in response to incoming information regarding the\nlowing the conclusion of the meeting. evolution of these and other factors. In their discussion of current economic conditions, par- In their discussion of the household sector, participants\nticipants noted that overall economic activity appeared indicated that consumption spending had remained roto have picked up after edging down in the first quarter. bust, in part reflecting strong balance sheets in the\nJob gains had been robust in recent months, and the un- household sector and a tight labor market. Several paremployment rate had remained low. Inflation remained ticipants noted that household spending patterns apelevated, reflecting supply and demand imbalances re- peared to be shifting away from goods to services. Sevlated to the pandemic, higher energy prices, and broader eral participants indicated that some of their contacts reprice pressures. Participants recognized that the inva- ported that the pace of consumer spending, though\nsion of Ukraine by Russia was causing tremendous hu- strong, was beginning to moderate. One reason cited\nman and economic hardship for the Ukrainian people. for this moderation was that the purchasing power of\nParticipants judged that the invasion and related events households was being reduced by higher prices for food,\nwere creating additional upward pressure on inflation energy, and other essentials. Participants generally exand were weighing on global economic activity. In ad- pected higher mortgage interest rates to contribute to\ndition, participants indicated that COVID-related lock- further declines in home sales, and a couple of particidowns in China were likely to exacerbate supply chain pants noted that housing activity in their Districts had\ndisruptions. Against this background, participants stated begun to slow noticeably. Against the backdrop of rising\nthat they were highly attentive to inflation risks. borrowing costs and higher gasoline and food prices, a\ncouple of participants commented that consumer sentiWith regard to the economic outlook, participants noted\nment had dropped notably in June, according to the prethat recent indicators suggested that real GDP growth\nliminary reading in the Michigan survey.\nwas expanding in the current quarter, with consumption\nspending remaining strong. Participants generally With respect to the business sector, participants objudged that growth in business fixed investment ap- served that their contacts generally reported that sales\npeared to be slowing, and activity in the housing sector remained strong, although some contacts indicated that\nappeared to be softening, in part as a result of a sharp sales had begun to slow and that they had become less\nrise in mortgage rates. Correspondingly, participants in- optimistic about the outlook. In many industries, the\ndicated that they had revised down their projections of ability of firms to meet demand continued to be limited\nreal GDP growth for this year, consistent with ongoing by labor shortages and supply chain bottlenecks. Firms\nsupply chain disruptions and tighter financial conditions. relying on international sources for their inputs were\nParticipants noted that the imbalance between supply seen as encountering particularly acute supply chain disand demand across a wide range of product markets was ruptions. Supply constraints, labor shortages, and rising\ncontributing to upward pressure on inflation. They saw input costs were also reportedly limiting energy and agan appropriate firming of monetary policy and associ- ricultural producers’ ability to take advantage of the\nated tighter financial conditions as playing a central role higher prices of their products by investing and expandin helping address this imbalance and in supporting the ing their production capacity. Similarly, a few particiFederal Reserve’s goals of maximum employment and pants noted that, in other sectors of the economy, their\nprice stability. An easing of supply bottlenecks, a further contacts reported that they were postponing investment\nrise in labor force participation, and the waning effects or construction projects because of rising input and fiof pandemic-related fiscal policy support were cited as nancing costs. With supply challenges still widespread,\nadditional factors that could help reduce the supply– contacts continued to assess that supply constraints\ndemand imbalances in the economy and therefore lower overall were significant, and many of them judged that\ninflation over the next few years. That said, the timing these constraints were likely to persist for some time.\nand magnitude of these effects were uncertain. ParticiParticipants noted that the demand for labor continued\npants saw little evidence to date of a substantial improveto outstrip available supply across many parts of the\nment in supply constraints, and some of them judged\neconomy. They observed that various indicators\nthat the economic effects of these constraints were likely\npointed to a very tight labor market. These indicators\nto persist longer than they had previously anticipated.\nincluded an unemployment rate near a 50-year low, job\nvacancies at historical highs, and elevated nominal wage\n\n_P _ag_e_ _8_____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\ngrowth. Additionally, most business contacts had con- their contacts had reported that low- and moderatetinued to report persistent wage pressures as well as dif- income consumers were shifting purchases to lower-cost\nficulties in hiring and retaining workers. However, some goods. Participants also stressed that persistently high\ncontacts reported that, because of previous wage hikes, inflation would impede the achievement of maximum\nhiring and retention had improved and pressure for ad- employment on a sustained basis.\nditional wage increases appeared to be receding. Participants judged that strong aggregate demand, toEmployment growth, while moderating somewhat from gether with supply constraints that had been larger and\nits pace earlier in the year, had remained robust. Several longer lasting than expected, continued to contribute to\nparticipants observed that labor force participation re- price pressures across a broad array of goods and sermained below its pre-pandemic level because of the un- vices. They noted that the surge in prices of oil and\nusually large number of retirements during the pandemic other commodities associated with Russia’s invasion of\nand judged that the labor force participation rate was un- Ukraine was boosting gasoline and food prices and putlikely to move up considerably in the near term. A cou- ting additional upward pressure on inflation. Participle of participants raised the possibility that tight labor pants commented on the global nature of inflation presmarkets would spur investment in automation by firms, sures, and a few of them added that many foreign central\nboosting labor productivity. banks were also firming the stance of monetary policy. Several participants judged that a shift in spending from\nWhile labor markets were anticipated to remain tight in\ngoods to services was likely to be associated with less\nthe near term, participants expected labor demand and\nupward pressure on prices in the goods sector, but also\nsupply to come into better balance over time, helping to\nan intensification of upward pressure on prices in the\nease upward pressure on wages and prices. As in the\nservices sector. Participants had revised up their PCE\ncase of product markets, they anticipated that an approinflation projections for 2022 in their June SEP submispriate firming of monetary policy would play a central\nsions, largely in response to higher-than-expected inflarole in helping address imbalances in the labor market.\ntion readings and the slower anticipated resolution of\nWith the tightness in labor markets anticipated to diminsupply constraints. They expected that the appropriate\nish over time, participants generally expected the unemfirming of monetary policy and an eventual easing of\nployment rate to increase, as the median projection of\nsupply and demand imbalances would bring inflation\nthe unemployment rate in the June SEP showed a gradback down to levels roughly consistent with the Comual rise over the next few years, reaching 4.1 percent in\nmittee’s longer-run objectives by 2024 and keep longer2024. In light of the very high level of job vacancies, a\nterm inflation expectations well anchored.\nnumber of participants judged that the expected moderation in labor demand relative to supply might primarily Participants observed that some measures of inflation\naffect vacancies and have a less significant effect on the expectations had moved up recently, including the staff\nunemployment rate. index of common inflation expectations and the expectations of inflation over the next 5 to 10 years provided\nParticipants noted that inflation remained much too\nin the Michigan survey. With respect to market-based\nhigh and observed that it continued to run well above\nmeasures, however, a few participants noted that methe Committee’s longer-run 2 percent objective, with todium-term measures of inflation compensation fell over\ntal PCE prices having risen 6.3 percent over the\nthe intermeeting period and longer-term measures were\n12 months ending in April. They also observed that the\nunchanged. While measures of longer-term inflation ex12-month change in the CPI in May came in above expectations derived from surveys of households, profespectations. Participants were concerned that the May\nsional forecasters, and market participants were generCPI release indicated that inflation pressures had yet to\nally judged to be broadly consistent with the Commitshow signs of abating, and a number of them saw it as\ntee’s longer-run 2 percent inflation objective, many parsolidifying the view that inflation would be more persisticipants raised the concern that longer-run inflation extent than they had previously anticipated. They compectations could be beginning to drift up to levels inconmented on the hardship caused by elevated inflation,\nsistent with the 2 percent objective. These participants\nwith low- and moderate-income households especially\nnoted that, if inflation expectations were to become\naffected. These households had to spend more of their\nunanchored, it would be more costly to bring inflation\nbudgets on essentials such as food, energy, and housing\nback down to the Committee’s objective.\nand were less able to bear the rapidly rising costs of these\nessentials. In that context, some participants noted that\n\n_ _____________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_4_–_1_5,_ 2_0_2_2_________________________P_a_g_e_ _9\nIn their discussion of risks, participants emphasized that the next meeting. Participants concurred that the ecothey were highly attentive to inflation risks and were nomic outlook warranted moving to a restrictive stance\nclosely monitoring developments regarding both infla- of policy, and they recognized the possibility that an\ntion and inflation expectations. Most agreed that risks even more restrictive stance could be appropriate if eleto inflation were skewed to the upside and cited several vated inflation pressures were to persist.\nsuch risks, including those associated with ongoing supParticipants noted that, with the federal funds rate exply bottlenecks and rising energy and commodity prices.\npected to be near or above estimates of its longer-run\nParticipants judged that uncertainty about economic\nlevel later this year, the Committee would then be well\ngrowth over the next couple of years was elevated. In\npositioned to determine the appropriate pace of further\nthat context, a couple of them noted that GDP and gross\npolicy firming and the extent to which economic develdomestic income had been giving conflicting signals reopments warranted policy adjustments. They also recently regarding the pace of economic growth, making it\nmarked that the pace of rate increases and the extent of\nchallenging to determine the economy’s underlying mofuture policy tightening would depend on the incoming\nmentum. Most participants assessed that the risks to the\ndata and the evolving outlook for the economy. Many\noutlook for economic growth were skewed to the downparticipants noted that the Committee’s credibility with\nside. Downside risks included the possibility that a furregard to bringing inflation back to the 2 percent objecther tightening in financial conditions would have a\ntive, together with previous communications, had been\nlarger negative effect on economic activity than anticihelpful in shifting market expectations of future policy\npated as well as the possibilities that the Russian invasion\nand had already contributed to a notable tightening of\nof Ukraine and the COVID-related lockdowns in China\nfinancial conditions that would likely help reduce inflawould have larger-than-expected effects on economic\ntion pressures by restraining aggregate demand. Particigrowth.\npants recognized that ongoing policy firming would be\nIn their consideration of the appropriate stance of mon- appropriate if economic conditions evolved as expected.\netary policy, participants concurred that the labor market\nAt the current juncture, with inflation remaining well\nwas very tight, inflation was well above the Committee’s\nabove the Committee’s objective, participants remarked\n2 percent inflation objective, and the near-term inflation\nthat moving to a restrictive stance of policy was required\noutlook had deteriorated since the time of the May meetto meet the Committee’s legislative mandate to promote\ning. Against this backdrop, almost all participants agreed\nmaximum employment and price stability. In addition,\nthat it was appropriate to raise the target range for the\nsuch a stance would be appropriate from a risk managefederal funds rate 75 basis points at this meeting. One\nment perspective because it would put the Committee in\nparticipant favored a 50 basis point increase in the target\na better position to implement more restrictive policy if\nrange at this meeting instead of 75 basis points. All parinflation came in higher than expected. Many particiticipants judged that it was appropriate to continue the\npants judged that a significant risk now facing the Comprocess of reducing the size of the Federal Reserve’s balmittee was that elevated inflation could become enance sheet, as described in the Plans for Reducing the\ntrenched if the public began to question the resolve of\nSize of the Federal Reserve’s Balance Sheet that the\nthe Committee to adjust the stance of policy as warCommittee issued in May. In light of elevated inflation\nranted. On this matter, participants stressed that appropressures and signs of deterioration in some measures of\npriate firming of monetary policy, together with clear\ninflation expectations, all participants reaffirmed their\nand effective communications, would be essential in restrong commitment to returning inflation to the Comstoring price stability.\nmittee’s 2 percent objective. Participants observed that\na return of inflation to the 2 percent objective was nec- Participants remarked that developments associated\nessary for creating conditions conducive to a sustainably with Russia’s invasion of Ukraine, the COVID-related\nstrong labor market over time. lockdowns in China, and other factors restraining supply\nconditions would affect the inflation outlook and that it\nIn discussing potential policy actions at upcoming meetwould likely take some time for inflation to move down\nings, participants continued to anticipate that ongoing\nto the Committee’s 2 percent objective. Participants also\nincreases in the target range for the federal funds rate\njudged that maintaining a strong labor market during the\nwould be appropriate to achieve the Committee’s objecprocess of bringing inflation down to 2 percent would\ntives. In particular, participants judged that an increase\ndepend on many factors affecting demand and supply.\nof 50 or 75 basis points would likely be appropriate at\nParticipants recognized that policy firming could slow\n\n_P _ag_e_ _1_0____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nthe pace of economic growth for a time, but they saw tions, members also agreed to remove the previous statethe return of inflation to 2 percent as critical to achieving ment language that had indicated an expectation that apmaximum employment on a sustained basis. propriate policy would result in a return of inflation to\n2 percent and a strong labor market. Committee Policy Action\nIn their discussion of monetary policy for this meeting, Members agreed that, in assessing the appropriate stance\nmembers agreed that overall economic activity appeared of monetary policy, they would continue to monitor the\nto have picked up after edging down in the first quarter. implications of incoming information for the economic\nJob gains had been robust in recent months, and the un- outlook and that they would be prepared to adjust the\nemployment rate had remained low. Members also stance of monetary policy as appropriate in the event\nagreed that inflation remained elevated, reflecting supply that risks emerged that could impede the attainment of\nand demand imbalances related to the pandemic, higher the Committee’s goals. They also concurred that their\nenergy prices, and broader price pressures. assessments would take into account a wide range of information, including readings on public health, labor\nMembers concurred that the invasion of Ukraine by\nmarket conditions, inflation pressures and inflation exRussia was causing tremendous human and economic\npectations, and financial and international develophardship. Members agreed that the invasion and related\nments.\nevents were creating additional upward pressure on inflation and were weighing on global economic activity. At the conclusion of the discussion, the Committee\nWith the effects of the invasion of Ukraine by Russia voted to authorize and direct the Federal Reserve Bank\nalready materializing, members considered it appropriate of New York, until instructed otherwise, to execute\nto omit from the June statement the sentence conveying transactions in the SOMA in accordance with the folthe high uncertainty associated with the implications of lowing domestic policy directive, for release at 2:00 p.m.:\nthe invasion for the U.S. economy. Members also agreed\n“Effective June 16, 2022, the Federal Open\nthat COVID-related lockdowns in China were likely to\nMarket Committee directs the Desk to:\nexacerbate supply chain disruptions. In light of these\ndevelopments, members remarked that they remain  Undertake open market operations as nechighly attentive to the upside risks to inflation and would essary to maintain the federal funds rate in\nbe nimble in responding to incoming data and the evolv- a target range of 1½ to 1¾ percent.\ning outlook.\n Conduct overnight repurchase agreement\nIn their assessment of the monetary policy stance neces- operations with a minimum bid rate of\nsary for achieving the Committee’s maximum-employ- 1.75 percent and with an aggregate operament and price-stability goals, the Committee decided to tion limit of $500 billion; the aggregate opraise the target range for the federal funds rate to 1½ to eration limit can be temporarily increased at\n1¾ percent and anticipated that ongoing increases in the the discretion of the Chair.\ntarget range would be appropriate. In addition, mem-\n Conduct overnight reverse repurchase\nbers agreed that the Committee would continue reducagreement operations at an offering rate of\ning its holdings of Treasury securities and agency debt\n1.55 percent and with a per-counterparty\nand agency MBS, as described in the Plans for Reducing\nlimit of $160 billion per day; the\nthe Size of the Federal Reserve’s Balance Sheet that were\nper-counterparty limit can be temporarily\nissued in May. One member preferred to raise the target\nincreased at the discretion of the Chair.\nrange for the federal funds rate 50 basis points to 1¼ to\n1½ percent at this meeting.  Roll over at auction the amount of principal\npayments from the Federal Reserve’s holdMembers judged that, with high and widespread inflaings of Treasury securities maturing in the\ntion pressures and some measures of longer-term inflacalendar months of June and July that extion expectations moving up somewhat, it would be apceeds a cap of $30 billion per month. Repropriate for the postmeeting statement to note that the\ndeem Treasury coupon securities up to this\nCommittee was strongly committed to returning inflamonthly cap and Treasury bills to the extent\ntion to its 2 percent objective. As the further firming in\nthat coupon principal payments are less\nthe policy stance would likely result in some slowing in\nthan the monthly cap.\neconomic growth and tempering in labor market condi-\n\n_ _____________________________M__in_u_t_es_ _o_f _th_e_ _M_e_e_t_in_g_ _o_f _Ju_n_e_ _1_4_–_1_5,_ 2_0_2_2________________________P__ag_e_ _1_1\n Reinvest into agency mortgage-backed se- agency mortgage-backed securities, as described\ncurities (MBS) the amount of principal pay- in the Plans for Reducing the Size of the Federal\nments from the Federal Reserve’s holdings Reserve’s Balance Sheet that were issued in\nof agency debt and agency MBS received in May. The Committee is strongly committed to\nthe calendar months of June and July that returning inflation to its 2 percent objective.\nexceeds a cap of $17.5 billion per month. In assessing the appropriate stance of monetary\n Allow modest deviations from stated policy, the Committee will continue to monitor\namounts for reinvestments, if needed for the implications of incoming information for\noperational reasons. the economic outlook. The Committee would\nbe prepared to adjust the stance of monetary\n Engage in dollar roll and coupon swap\npolicy as appropriate if risks emerge that could\ntransactions as necessary to facilitate settleimpede the attainment of the Committee’s\nment of the Federal Reserve’s agency MBS\ngoals. The Committee’s assessments will take\ntransactions.”\ninto account a wide range of information, inThe vote also encompassed approval of the statement cluding readings on public health, labor market\nbelow for release at 2:00 p.m.: conditions, inflation pressures and inflation expectations, and financial and international de-\n“Overall economic activity appears to have\nvelopments.”\npicked up after edging down in the first quarter. Job gains have been robust in recent months, Voting for this action: Jerome H. Powell, John C.\nand the unemployment rate has remained low. Williams, Michelle W. Bowman, Lael Brainard, James\nInflation remains elevated, reflecting supply and Bullard, Lisa D. Cook, Patrick Harker, Philip N.\ndemand imbalances related to the pandemic, Jefferson, Loretta J. Mester, and Christopher J. Waller.\nhigher energy prices, and broader price presVoting against this action: Esther L. George.\nsures. Patrick Harker voted as an alternate member at this\nThe invasion of Ukraine by Russia is causing\nmeeting.\ntremendous human and economic hardship. The invasion and related events are creating ad- President George dissented because she judged that a\nditional upward pressure on inflation and are large increase in the target range for the federal funds\nweighing on global economic activity. In addi- rate would add to uncertainty about policy concurrent\ntion, COVID-related lockdowns in China are with the beginning of balance sheet runoff in ways that\nlikely to exacerbate supply chain disruptions. could unsettle households and businesses and could also\nThe Committee is highly attentive to inflation adversely affect the ability of small banks to meet the\nrisks. credit needs of their communities. The Committee seeks to achieve maximum em- To support the Committee’s decision to raise the target\nployment and inflation at the rate of 2 percent range for the federal funds rate, the Board of Governors\nover the longer run. In support of these goals, of the Federal Reserve System voted unanimously to\nthe Committee decided to raise the target range raise the interest rate paid on reserve balances to\nfor the federal funds rate to 1½ to 1¾ percent 1.65 percent, effective June 16, 2022. The Board of\nand anticipates that ongoing increases in the tar- Governors of the Federal Reserve System voted\nget range will be appropriate. In addition, the unanimously to approve a ¾ percentage point increase\nCommittee will continue reducing its holdings in the primary credit rate to 1.75 percent, effective\nof Treasury securities and agency debt and June 16, 2022.5\n5 In taking this action, the Board approved a request to estab- Board of such a request. (Secretary’s note: Subsequently,\nlish that rate submitted by the Board of Directors of the Fed- other Federal Reserve Banks were informed of the Secretary\neral Reserve Bank of Minneapolis. This vote also encom- of the Board’s approval of their establishment of a primary\npassed approval by the Board of Governors of the establish- credit rate of 1.75 percent, effective June 16, 2022, for the\nment of a 1.75 percent primary credit rate by the remaining Federal Reserve Banks of Boston, New York, Philadelphia,\nFederal Reserve Banks, effective on the later of June 16, 2022, Cleveland, Richmond, Chicago, St. Louis, Kansas City, and\nor the date such Reserve Banks inform the Secretary of the\n\n_P _ag_e_ _1_2____________________________F_e_d_e_r_al_ O__p_e_n_ M__a_rk_e_t_ C__o_m_m__it_te_e__________________________________\nIt was agreed that the next meeting of the Committee\nwould be held on Tuesday–Wednesday, July 26–27,\n2022. The meeting adjourned at 10:45 a.m. on June 15,\n2022. Notation Vote\nBy notation vote completed on May 24, 2022, the Committee unanimously approved the minutes of the Committee meeting held on May 3–4, 2022.\n_______________________\nJames A. Clouse\nSecretary\nDallas, and effective June 17, 2022, for the Federal Reserve\nBanks of Atlanta and San Francisco.)",
+    "url": "https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20220615.pdf",
+    "action": "Raised",
+    "rate": "1.50%-1.75%",
+    "magnitude": "0.75 percentage points",
+    "forward_guidance": "The Fed signaled that ongoing increases in the federal funds rate will be appropriate to combat high inflation, and it remains highly attentive to inflation risks. The pace of future rate hikes will depend on incoming economic data, with a willingness to adjust policy if risks emerge that could impede its goals.",
+    "key_economic_factors": [
+      "Elevated inflation well above the 2% target, with PCE inflation at 6.3% and CPI at 8.6%",
+      "Tight labor market with strong job gains and low unemployment (3.6%)",
+      "Supply chain disruptions exacerbated by China's lockdowns and the war in Ukraine",
+      "Rising energy and food prices adding to inflationary pressures"
+    ],
+    "economic_outlook": "The Fed expects inflation to remain high in 2022 but gradually decline toward 2% by 2024 as supply-demand imbalances ease and tighter monetary policy restrains demand. Economic growth is projected to slow in the second half of 2022 and into 2023 due to tighter financial conditions, though real GDP remains above potential. The labor market is expected to stay tight but gradually rebalance, with the unemployment rate rising modestly to 4.1% by 2024.",
+    "market_impact": "Higher borrowing costs will weigh on consumer spending, housing activity, and business investment, particularly for rate-sensitive sectors. Financial markets will likely remain volatile as investors adjust to a faster pace of tightening and the Fed's shift to a restrictive policy stance."
+  }
+]
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