November 1–2 · Published November 23, 2016
Statement·Presser·Minutes
JYJanet L. YellenNovember 1–2, 2016 FOMC Minutes
Our reading
The minutes are consistent with the statement because both documents reflect the FOMC's decision to maintain the federal funds rate at 1/4 to 1/2 percent, acknowledge that the case for an increase has strengthened, and emphasize the need to wait for further evidence of progress toward maximum employment and 2 percent inflation before adjusting policy.
Our reading compares the minutes of the November 1–2 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Lael Brainard
- James B. Bullard
- William C. Dudley
- Stanley Fischer
- Esther L. George ↑ dissented
- Mses. George and Mester dissented because they preferred to increase the target range for the federal funds rate by 25 basis points at this meeting. Ms. George judged that, with the labor market near full employment and inflation approaching the Committee's 2 percent objective, another step in the gradual adjustment of monetary policy was appropriate. While a low level of the target range for the federal funds rate had supported achieving the Committee's objectives, such low levels were no longer warranted and, if maintained, could pose a risk to the sustainability of the economic expansion with stable inflation. In particular, she viewed the supply-side benefits of allowing labor utilization to rise above its neutral level as temporary, and noted that monetary policy was unable to affect the longer-run growth potential of the economy.
- Loretta J. Mester ↑ dissented
- Mses. George and Mester dissented because they preferred to increase the target range for the federal funds rate by 25 basis points at this meeting. Ms. Mester judged that the economy was essentially at full employment in terms of what can be achieved through monetary policy. The unemployment rate was at her estimate of its longer-run normal level, and labor market conditions were projected to tighten further. In addition, she noted that inflation was moving up and was close to the Committee's 2 percent objective. In these circumstances, she believed it appropriate to gradually increase the target range for the federal funds rate from its current low level, which would allow monetary policy to continue to lend support to the economic expansion. A gradual path would allow the Committee to better calibrate policy over time as it learns more about the underlying structural aspects of the economy. Ms. Mester saw taking the next step in removing policy accommodation as consistent with the Committee's communications about the appropriate path for monetary policy.
- Jerome H. Powell
- Eric S. Rosengren
- Daniel K. Tarullo
- Janet L. Yellen
From the minutes
FOMC minutes
Ms. George judged that, with the labor market near full employment and inflation approaching the Committee's 2 percent objective, another step in the gradual adjustment of monetary policy was appropriate. While a low level of the target range for the federal funds rate had supported achieving the Committee's objectives, such low levels were no longer warranted and, if maintained, could pose a risk to the sustainability of the economic expansion with stable inflation. In particular, she viewed the supply-side benefits of allowing labor utilization to rise above its neutral level as temporary, and noted that monetary policy was unable to affect the longer-run growth potential of the economy.
Ms. Mester judged that the economy was essentially at full employment in terms of what can be achieved through monetary policy. The unemployment rate was at her estimate of its longer-run normal level, and labor market conditions were projected to tighten further. In addition, she noted that inflation was moving up and was close to the Committee's 2 percent objective. In these circumstances, she believed it appropriate to gradually increase the target range for the federal funds rate from its current low level, which would allow monetary policy to continue to lend support to the economic expansion. A gradual path would allow the Committee to better calibrate policy over time as it learns more about the underlying structural aspects of the economy. Ms. Mester saw taking the next step in removing policy accommodation as consistent with the Committee's communications about the appropriate path for monetary policy.
Consistent with the Committee's decision to leave the target range for the federal funds rate unchanged, the Board of Governors took no action to change the interest rates on reserves or discount rates.
It was agreed that the next meeting of the Committee would be held on Tuesday-Wednesday, December 13-14, 2016. The meeting adjourned at 10:00 a.m. on November 2, 2016.
What changed from the previous meeting’s minutes
- Dissenters dropped from three to two as Rosengren voted with the majority.
- Statement changed "case for an increase" to "case for an increase has continued to strengthen."
- Statement changed "wait for further evidence" to "wait for some further evidence."
- Inflation description changed from "continued to run below" to "increased somewhat since earlier this year but is still below."
- Market-based inflation compensation changed from "remained low" to "had moved up but remained low."
- Household spending changed from "growing strongly" to "rising moderately."
Summary generated automatically from the two documents.