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These members expected that the target range would be maintained at this level until they were confident that the economy had weathered recent events and was on track to achieve the Committee's maximum employment and price stability goals. | 2,002 | 2 |
By contrast, economic activity in China and other developing countries showed greater buoyancy. | 2,022 | 2 |
In the real world, there are two reasons why central bankers still prize credibility, even if it cannot be shown to reduce the costs of disinflation. | 2,021 | 0 |
In the absence of such a forward-looking response of long-term rates, short-term interest rates may have to move by more to achieve the same near-term impact on long-term interest rates and economic activity. | 2,000 | 2 |
Some members expressed a concern that in this context any further adverse shocks could have disproportionate effects, resulting in a significant slowing in growth going forward. | 2,013 | 0 |
It was observed that, after the early 1980s, the pass-through of energy prices into core inflation had been quite limited, suggesting that, in current circumstances, core inflation could stay relatively low and overall inflation would probably drop back if inflation expectations remained contained. | 2,021 | 2 |
In any event, it was clear that forecasts in recent years typically had overstated the rise in inflation, and a great deal of uncertainty surrounded the extent to which productivity gains and other factors, some unspecified, might continue to hold down inflation in a period of robust economic growth and relatively tight labor markets. | 2,011 | 2 |
A considerable literature suggests that successful monetary policies should stabilize, or "anchor," inflation expectations so as to prevent them from becoming a source of instability in their own right (Goodfriend, 1993; Evans and Honkapohja, 2003). | 1,997 | 1 |
If we don’t see the improvement that’s projected in the baseline outlook, that the June 18, 2014 opposite would be true and the pace of the timing and pace of interest rate increases would be Chair Yellen’s Press Conference FINAL later and more gradual. | 2,016 | 2 |
This role is largely a reflection of the New York Fed's responsibility for implementing monetary policy decisions through its open market desk operations. | 1,999 | 2 |
The net effect could be steady, rising, or falling inflation--depending on whether productivity continues to accelerate and on how low the unemployment rate is driven in the process. | 2,005 | 2 |
More recently, with inflation under control, overheating has shown up in the form of financial excess. | 2,002 | 1 |
One participant suggested that the Committee could announce an additional, lower set of thresholds for inflation and unemployment; another indicated that the Committee could provide guidance stating that it would not raise its target for the federal funds rate if the inflation rate was expected to run below a given level at a specific horizon. | 1,999 | 2 |
At these low rates, the central bank is poorly positioned to respond to further negative demand shocks. | 2,022 | 1 |
We have continued to provide guidance, the same guidance that we have for some time, that says the Committee “anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.” I know that’s a mouthful, but it says, in effect, that the Committee believes that the economic conditions that have made recovery difficult, we’re getting beyond them. | 2,020 | 0 |
This outcome would be entirely consistent with the new framework we adopted in August 2020 and began to implement at our September 2020 FOMC meeting.3 In our new framework, we aim for inflation outcomes that keep inflation expectations well anchored at 2 percent. | 2,006 | 1 |
Overall inflation was projected to remain subdued, with the staff's forecasts for headline and core inflation little changed from the previous projection. | 2,012 | 0 |
The gains in employment over July and August were generally seen as larger than anticipated. | 2,000 | 1 |
Comparing the Theoretical Prediction to Recent Experience The swing from budget deficit to surplus has been much more dramatic than was expected when the fiscal year 1994 budget was adopted. | 2,007 | 2 |
The staff's forecast for inflation was little changed from the projection prepared for the previous FOMC meeting. | 2,021 | 2 |
By definition, this excess of U.S. payments to foreigners over payments received in a given period equals the U.S. current account deficit, which, as I have already noted, was $666 billion in 2004--close to the $617 billion by which the value of U.S. imports exceeded that of exports. | 2,013 | 1 |
Nonetheless, with rising productivity and moderate wage gains likely continuing to help hold down unit labor costs, the outlook for subdued inflation remained promising, especially for the nearer term. | 1,996 | 0 |
Although the Fed hasn't started raising rates or reducing the balance sheet, interest rates have moved up notably. | 2,004 | 1 |
All members agreed that the statement to be released after the meeting should convey that inflation risks remained dominant and that consequently keeping policy unchanged at this meeting did not necessarily mark the end of the tightening cycle. | 1,997 | 1 |
Regarding the economic outlook, most participants agreed that economic growth was likely to remain moderate over coming quarters and then pick up gradually. | 2,007 | 2 |
The hurricanes were also expected to depress payroll employment in September, with a reversal over the next few months. | 2,000 | 2 |
One participant suggested that excess liquidity might be leading to speculation in commodity markets, possibly putting upward pressure on prices. | 1,999 | 1 |
Mortgage credit conditions generally remained tight over the intermeeting period, though signs of easing continued to emerge amid further gains in house prices. | 2,002 | 2 |
Yields on longer-term inflation-indexed Treasury securities, which are relatively illiquid, rose more sharply than did those on nominal securities. | 2,013 | 1 |
Turning now to monetary policy, at both its July and September meetings, the FOMC voted to lower the target range for the federal funds rate by 25 basis points.3 With these decisions, the current target range for the federal funds rate is 1.75 to 2 percent, which compares with the range of 2.25 to 2.5 percent that prevailed between December 2018 and July 2019. | 1,997 | 0 |
Fortunately, as we make monetary policy we have the advantage of several forecasts. | 2,008 | 2 |
One objective--price stability--can be well defined and is fully under the control of monetary policymakers, at least over a period of time. | 2,020 | 2 |
Despite a large increase in the overall consumer price index for September, measures of inflation compensation calculated using yields on nominal and inflation-protected Treasury securities were about unchanged over the intermeeting period, although they remained a bit above the levels seen before Hurricane Katrina. | 1,999 | 1 |
The downside risks from the possibility that longer-term inflation expectations may have edged down or that the dollar could appreciate substantially were seen as roughly counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to continue operating above its longer-run potential. | 2,011 | 2 |
Recent declines in payroll employment and industrial production, while still sizable, were smaller than those registered earlier in 2009. | 2,007 | 0 |
Most Committee members, while acknowledging the deficiencies of structural models, viewed them as useful in their efforts to understand how the inflation process was changing and also as input to inflation forecasts. | 2,021 | 2 |
A major concern that I have about the bubble-popping strategy, however, is that attempts to bring down stock prices by a significant amount using monetary policy are likely to have highly deleterious and unwanted side effects on the broader economy. | 1,998 | 0 |
More recent data are not available, but I suspect that trend has continued since 1992 as the strong performance of the economy, coupled with generally ample availability of credit, has created an environment conducive to the birth and growth of innovative enterprises of all ownership types. | 1,997 | 2 |
It was noted, however, that increases in compensation that exceeded productivity gains might be absorbed to some extent by a narrowing of firms’ high profit margins. | 2,021 | 1 |
At the moment, trend growth near full employment appears to be a reasonable prospect in the year ahead. | 2,022 | 1 |
In these circumstances, domestic demand would need to decelerate considerably for growth to proceed at a sustainable pace. | 2,022 | 1 |
On balance, however, the members generally believed that prospective trends in overall economic activity and the persistence of strong competitive pressures in most markets, including the effects of foreign competition, were likely in the context of now firmly embedded expectations of low inflation to moderate any tendency for price inflation to accelerate over the year ahead. | 2,005 | 2 |
That sentiment was apparently reinforced over the remainder of the period by the comments of several Federal Reserve officials and the release of the August employment report, which seemed to convey the view that the economy was emerging from its "soft patch. " | 2,016 | 2 |
The near-term forecast again entailed a marked downshift in headline inflation as energy prices fall back consistent with readings from futures markets. | 2,016 | 0 |
To this end, the new statement conveys the Committee's judgment that, in order to anchor expectations at the 2 percent level consistent with price stability, it "seeks to achieve inflation that averages 2 percent over time," and—in the same sentence—that therefore "following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time." | 2,019 | 1 |
First, I will discuss the available empirical evidence from the United States on the effect of changes in asset prices on household consumption and business investment. | 2,005 | 2 |
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. | 2,009 | 1 |
Overall, though shifts in business attitudes are difficult to measure, I believe that markets reward businesses that outperform their competitors and that, as demand picks up, companies will respond to opportunities to incorporate technological advances in production, communication, and organization. | 2,007 | 2 |
Looking ahead, reports from retailer contacts were somewhat mixed; many anticipated relatively depressed holiday sales and where possible were making efforts to limit buildups of holiday merchandise, while other retailers were confident that sales would be reasonably well maintained, albeit generally somewhat below levels or growth rates experienced in previous holiday seasons. | 2,019 | 2 |
Notably, if people feel sure that inflation will remain well controlled, they will be more restrained in their wage-setting and pricing behavior, which (in something of a virtuous circle) makes it easier for the Federal Reserve to confirm their expectations by keeping inflation low. | 2,003 | 1 |
Faster productivity growth was among the factors that boosted equity valuations; in turn, larger expected productivity advances and a lower cost of equity capital provided a further stimulus to investment. | 2,006 | 0 |
The external sector was projected to continue to support domestic economic activity throughout the forecast period. | 2,021 | 2 |
The stock market soared, and--remarkably enough--core inflation moderated. | 2,001 | 2 |
Those developments included a recent uptick in core measures of consumer prices, a drop in the dollar on foreign exchange markets, and still elevated energy prices--all against the backdrop of longer-term inflation expectations that were firmly anchored. | 2,004 | 1 |
For example, monetary policy makers might attempt to influence market expectations of future short rates as an alternative to changing the current setting of the overnight rate. | 1,997 | 2 |
The unwinding in the early months of 1997 of special factors that had boosted net exports in the fourth quarter of 1996 was offsetting some of the effects on production of the persisting strength in domestic demand. | 2,012 | 2 |
Monetary Policy in a World without Treasuries Today, monetary policy decisions are implemented through a mix of outright purchases and sales of assets held in the Fed's portfolio, temporary operations through repurchase agreements, and discount window loans.2 It seems to me that the same three operations, though perhaps in different proportions, could be used in the absence of Treasury securities. | 2,021 | 2 |
Most major indexes of equity prices moved up sharply on the bullish economic reports. | 2,021 | 1 |
Longer-term inflation expectations have moved much less than actual inflation or near-term expectations, suggesting that households, businesses, and market participants also believe that current high inflation readings are likely to prove transitory and that, in any case, the Fed will keep inflation close to our 2 percent objective over time.12 5. | 2,005 | 1 |
This automatically pushes up domestic interest rates to support the currency. | 2,021 | 1 |
Over the intermeeting period, yields on short- and intermediate-term nominal Treasury securities fell, while yields on inflation-indexed Treasury securities of comparable maturity increased somewhat, pushing inflation compensation considerably lower at those horizons. | 2,019 | 0 |
LBOs, and other forms of private equity investment, may force management to implement strategic changes rapidly to restore the firm’s return on equity and boost share prices, in part by increasing financial leverage. | 1,998 | 2 |
But speculators rarely succeed in dislodging an exchange rate that is firmly rooted in compatible policies and cost structures. | 1,997 | 2 |
The Federal Reserve Bank of New York was authorized and directed, until instructed otherwise by the Committee, to execute transactions in the System Account in accordance with the following domestic policy directive: The information reviewed at this meeting suggests that the expansion in economic activity has slowed considerably after a very rapid advance in the first quarter. | 2,002 | 0 |
The simplest answer is that interest rates should vary to imitate qualitatively the way they would behave if the Fed were implementing a money supply target. | 2,017 | 2 |
Several participants commented that the factors that had contributed to low inflation during the previous expansion could again exert more downward pressure on inflation than expected. | 2,010 | 0 |
Participants also observed that crude oil prices fell over the intermeeting period and other commodity prices also moderated, developments that were likely to damp headline inflation at the consumer level going forward. | 2,003 | 0 |
Financial factors also seemed likely on balance to accommodate continuing growth in consumer spending, in particular the marked increases that had occurred in the value of stock holdings and a still-ample availability of credit to most households. | 2,014 | 2 |
Still, most members projected that over the next couple of years, the unemployment rate would remain quite elevated and the level of inflation would remain below rates consistent over the longer run with the Federal Reserve's objectives. | 2,002 | 0 |
In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. | 2,018 | 0 |
The rapid pace of investment also helped to hold down inflationary pressures by increasing the growth of productive capacity. | 2,007 | 1 |
This week, the Federal Open Market Committee (FOMC) took another significant step toward achieving our inflation objective by raising the Federal Funds rate target by 75 basis points. | 2,004 | 1 |
As the economy approached full employment, the Federal Open Market Committee (FOMC), the monetary policymaking arm of the Federal Reserve System, was faced with the classic problem of managing the mid-cycle slowdown--that is, of setting policy to help guide the economy toward sustainable growth without inflation. | 2,022 | 1 |
The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. | 2,001 | 0 |
In my comments today, I will focus on the Fed's efforts to promote our maximum employment and price stability goals amid this upheaval, and suggest how lessons from history and a careful focus on incoming data and the evolving risks offer useful guidance for today's unique monetary policy challenges. | 1,999 | 2 |
These downside risks were seen as essentially counterbalanced by the upside risk that inflation could increase more than expected in an economy that was projected to move further above its longer-run potential. | 2,020 | 1 |
In light of asset market developments over the intermeeting period, which in large part appeared to reflect heightened expectations among investors that the Federal Reserve would undertake additional purchases of longer-term securities, the November forecast was conditioned on lower long-term interest rates, higher stock prices, and a lower foreign exchange value of the dollar than was the staff's previous forecast. | 2,004 | 0 |
Core price inflation was projected to rise a little over the forecast horizon, in part as a result of higher import prices but largely as a consequence of further increases in nominal labor compensation gains that would not be fully offset by growth in productivity. | 2,000 | 1 |
But—so I would just say that our—that there are many things that go in, as you know, to, to setting asset prices. | 2,022 | 2 |
The benefits achieved through more-stable prices are substantial. | 2,021 | 1 |
Although I expect these upward price pressures to ease after the temporary supply bottlenecks are resolved, the exact timing of that dynamic is uncertain. | 2,006 | 1 |
Without the accompanying boost to productivity, our progress toward price stability might well have been marked by the social pressures that arose in many previous episodes of disinflation both here and abroad. | 2,022 | 0 |
But a longer-term trend--slow productivity growth--helps explain why we don't think dramatic interest rate increases are required to move our federal funds rate target back to neutral. | 2,022 | 1 |
I look forward, as always, to my conversation with Ellen Zentner, but first, please allow me to offer a few remarks on the economic outlook, Federal Reserve monetary policy, and our new monetary policy framework. | 2,022 | 2 |
But you do see growth in services, so you—this pattern around the world of Chair Powell’s Press Conference FINAL weak manufacturing but growth in the far larger part of the services economy, which has led to low unemployment, good job creation, rising wages, that’s kind of the two big pieces of it that you see. | 2,014 | 1 |
In this regard the risks of rising inflation could not be dismissed, and while those risks appeared to be quite limited for the nearer term, excessive monetary stimulus had to be avoided to avert rising inflation expectations and added inflation pressures over time. | 2,010 | 1 |
My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation. | 2,013 | 1 |
Members recognized that from the standpoint of the level of real short-term interest rates, monetary policy could already be deemed to be fairly restrictive. | 1,997 | 1 |
The vote encompassed approval of the paragraph below for inclusion in the statement to be released shortly after the meeting: "The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information. | 2,001 | 1 |
In the modal outlook, monetary policy tightening to temper demand, in combination with improvements in supply, is expected to reduce demand–supply imbalances and reduce inflation over time.10 The real yield curve is now in solidly positive territory at all but the very shortest maturities, and with the additional tightening and deceleration in inflation that is expected over coming quarters, the entire real curve will soon move into positive territory. | 2,000 | 0 |
On the upside, recent fiscal policy changes could lead to a greater expansion in economic activity over the next few years than the staff projected. | 1,998 | 1 |
Others indicated that because part of the recent decline in the jobless rate was associated with a reduction in labor force participation, the drop in the unemployment rate likely overstated the overall improvement in the labor market. | 2,019 | 0 |
The boom was fueled by a sustained acceleration of productivity and an accompanying rise in corporate profits--fundamental changes that justified a major rise in equity prices. | 2,021 | 0 |
But that forecast for growth and uncertainty about the resolution of supply constraints mean that there are upside risks to inflation next year. | 1,997 | 1 |
The U. S. international trade deficit declined somewhat in May after reaching a record high in April. | 2,010 | 2 |
However, equity prices subsequently retraced some of the earlier declines as concerns about trade policy seemed to ease and corporate earnings reports for the first quarter of 2018 generally came in stronger than expected. | 2,007 | 2 |
Mr. Broaddus dissented because he continued to believe that a modest tightening of policy would be prudent in light of the apparent persisting strength in aggregate demand for goods and services. | 2,005 | 1 |
Housing demand remained strong, but business fixed investment was still in the doldrums and consumer spending had flagged in late summer before apparently picking up somewhat in the autumn. | 1,996 | 2 |
Broad stock price indexes rose, on net, over the intermeeting period, as investors responded to strong second-quarter earnings reports and indications that the economy may be stabilizing. | 1,999 | 2 |
We also expect it will be appropriate to maintain the current target range for the federal funds rate at 0 to 1/4 percent until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment, until inflation has risen to 2 percent, and until inflation is on track to moderately exceed 2 percent for some time. | 2,019 | 0 |
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