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FOMC Meeting Results

Federal Open Market Committee (FOMC) Meeting Results

Dr. Edmond J. Seifried

Dr. Seifried provides excerpts from an official published statement on the Federal Open Market Committee’s meetings.

FOMC Meeting Results, March 2019


Meeting Date:  March 19-20, 2019
 
Economic Highlights
FOMC declares the economy has changed somewhat since their last meeting of January 29-30, 2019. While labor markets remain healthy, economic activity as slowed from its strong pace of the 4th quarter of 2018. The rate of inflation has declined lately due to falling energy prices, but core inflation is near the 2.0% goal. Longer-term inflation expectations are relatively stable.
  • “Information received since the Federal Open Market Committee met in January indicates that the labor market remains strong, but that growth of economic activity has slowed from its solid rate in the fourth quarter.
  • Payroll employment was little changed in February, but job gains have been solid, on average, in recent months, and the unemployment rate has remained low.
  • Recent indicators point to slower growth of household spending and business fixed investment in the first quarter.
  • On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2 percent.
  • On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.”
 
Announcements
Fed funds rate unchanged at the range of 2.25-2.50%. And repeating the language from the previous meeting, the FOMC declares they will be patient in determining future rate hikes. Interest on Excess Reserves (IOER) paid to financial institutions remains at 2.40%. Most importantly, Fed intends to slow its balance sheet reduction program and end treasury runoff completely later this year.
  • “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.
  • In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
  • The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on required and excess reserve balances at 2.40 percent, effective March 21, 2019.
  • The FOMC declared that beginning in May 2019 it would slow the pace of runoff of its $4 trillion asset portfolio and end the runoff of its Treasury holdings at the end of September 2019, exactly two years after it began unwinding its Quantitative Easing programs.
  • The committee also released its famous dot plot for March 20, 2019. The new dot plot indicates that the Fed is continuing with its new interest rate program. Eleven of 17 officials indicated that the Fed would not raise rates at all this year, up from only two of 17 in December 2018. Six of 17 officials projected between one and two increases would be needed in 2019.
  • Surprisingly, a majority of the 17 officials now forecast just one more rate hike in the next three years. The December 2018 estimate was for 3 more hike over the next 3 years
 
Forward Guidance
The Fed indicated that future rate hikes will depend on economic conditions such as labor market changes, indicators of inflation pressures and any changes in inflation expectations, as well as any new financial and international developments.
  • “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.”
  • 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 Results
No dissenting vote at this meeting.
Voting for the FOMC monetary policy action were Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.
 
Next Meeting:  April 30-May 1, 2019

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The preceding information contains excerpts from an official published statement on the Federal Open Market Committee’s Jan. 1-2, 2018 meeting.  For full text, please visit the Federal Reserve website.

Dr. Ed Seifried is Chief Economist and Strategic Advisor at BNK Advisory Group. He is also professor of economics and business at Lafayette College in Easton, PA, and a faculty member of numerous graduate banking schools, including Stonier Graduate School of Banking and the Graduate School of Retail Bank Management. He also serves as dean of The West Virginia and Virginia Banking Management Schools. Dr. Seifried is a nationally recognized speaker and is the author of both academic and popular articles and books. He is the co-author of BNK's Art of Strategic Planning in Community Banks and The Art of Risk in Community Banks, a series for the committed bank director. He holds his doctorate in economics and business from West Virginia University.
 
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