Central Banks

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The Federal Reserve as expected kept rates at 2.25 -.50% as expected after a two day meeting on Wednesday with Jerome Powell as Chairman. Markets had priced in a 93% chance of No Change. Says Labor market remains strong and that economic activity is rising at a moderate rate.

 Fed Boardroom

Federal Reserve December FOMC Meeting 

Federal Reserve Announcement Wed 19 June 2019 14:00:00 ET

FOMC Benchmark Interest Rate Unchanged; Target Range Stands At 2.25-2.50%

Interest Rate On Excess Reserves Unchanged At 2.35% 

Highlights

  • Drops language saying it would be 'patient' on rates
  • Median dot is for no change in 2019, but nearly half see lower rates
  • Median at end of 2020 is 2.1% vs 2.6% prior
  • Household spending appears to have picked up but business fixed investment has been soft
  • Activity has been rising at a moderate pace
  • Fed will act as appropriate to sustain economic expansion with a strong labor market and inflation near target
  • Uncertainties have increased regarding outlook for sustained economic expansion
  • Household spending appears to have picked up from earlier in the year
  • Indicators of business fixed investment have been soft 
  • Survey-based measures of longer-term inflation expectations are little changed
  • Bullard dissents for cut

FOMC Statement and Press Conference June 19, 2019 14:30 ET

June 19, 2019 Federal Reserve issues FOMC statement For release at 2:00 p.m.EDT

Decisions Regarding Monetary Policy Implementation The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement on June 19, 2019:

The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on required and excess reserve balances at 2.35 percent, effective June 20, 2019. As part of its policy decision, the Federal Open Market Committee voted to authorize and direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive:

"Effective June 20, 2019, the Federal Open Market Committee directs the Desk to undertake open market operations as necessary to maintain the federal funds rate in a target range of 2-1/4 to 2-1/2 percent, including overnight reverse repurchase operations (and reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering rate of 2.25 percent, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.

The Committee directs the Desk to continue rolling over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month that exceeds $15 billion, and to continue reinvesting in agency mortgage-backed securities the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $20 billion. Small deviations from these amounts for operational reasons are acceptable. The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency mortgage-backed securities transactions." In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 3.00 percent.

Information received since the Federal Open Market Committee met in May indicates that the labor market remains strong and that economic activity is rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although growth of household spending appears to have picked up from earlier in the year, indicators of business fixed investment have been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation have declined; survey-based measures of longer-term inflation expectations are little changed.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1/4 to 2-1/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes, but uncertainties about this outlook have increased. In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective. In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective.

This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren. Voting against the action was James Bullard, who preferred at this meeting to lower the target range for the federal funds rate by 25 basis points.

Federal Reserve March FOMC Statement Changes via RANsquawk @RANsquawk

 

 

Source: Federal Reserve

From the TradersCommunity Research Desk

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