Federal Open Market Committee

For release at 2 p.m. EDT September 26, 2018

Information received since the Federal Open Market Committee met in August indicates

that the labor market has continued to strengthen and that economic activity has been rising at a

strong rate. Job gains have been strong, on average, in recent months, and the unemployment

rate has stayed low. Household spending and business fixed investment have grown strongly.

On a 12-month basis, both overall inflation and inflation for items other than food and energy

remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on

balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum

employment and price stability. The Committee expects that further gradual increases in the

target range for the federal funds rate will be consistent with sustained expansion of economic

activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent

objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee

decided to raise the target range for the federal funds rate to 2 to 2-1/4 percent.

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 FOMC monetary policy action were: Jerome H. Powell, Chairman;

John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard;

Richard H. Clarida; Esther L. George; Loretta J. Mester; and Randal K. Quarles.

– 0 –

 

 

 

 

For release at 2 p.m. EDT September 26, 2018

 

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 (FOMC) in its statement on September 26, 2018:

• The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 2.20 percent, effective September 27, 2018.

• 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 September 27, 2018, 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 to 2-1/4 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 2.00 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 September that exceeds $24 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 September that exceeds $16 billion. Effective in October, the Committee directs the Desk to roll over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing during each calendar month that exceeds $30 billion, and to reinvest 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.”

(more)

 

 

 

For release at 2 p.m. EDT September 26, 2018

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• In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point increase in the primary credit rate to 2.75 percent, effective September 27, 2018. In taking this action, the Board approved requests to establish that rate submitted by the Boards of Directors of the Federal Reserve Banks of Boston, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco.

This information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve’s operational tools and approach used to implement monetary policy.

More information regarding open market operations and reinvestments may be found on the Federal Reserve Bank of New York’s website.

 

org/markets/domestic-market-operations” rel=”nofollow”>https://www.newyorkfed.org/markets/domestic-market-operations

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