March 15 · Published April 8, 2020
Jerome H. Powell
March 15, 2020 FOMC Minutes
Our reading
The minutes read somewhat more dovish relative to the statement because they reveal a wider internal debate and a more cautious stance on future policy, including concerns about the effectiveness of monetary policy at the effective lower boundchers, the potential for negative interest rate expectations, and the risk that the aggressive action could be interpreted as overly negative about the economic outlook, whereas the statement focuses more on the immediate decision and its supportive intent.
Our reading compares the minutes of the March 15 FOMC meeting with the FOMC statement issued at the end of that meeting, three weeks before the minutes were published.
Vote
- Michelle W. Bowman
- Lael Brainard
- Richard H. Clarida
- Patrick Harker
- Robert S. Kaplan
- Neel Kashkari
- Loretta J. Mester ↓ dissented
- President Mester was fully supportive of all of the actions taken to promote the smooth functioning of markets and the flow of credit to households and businesses but voted against the FOMC action because she preferred to reduce the target range for the federal funds rate to 1/2 to 3/4 percent at this meeting.
- Jerome H. Powell
- Randal K. Quarles
- John C. Williams
From the minutes
FOMC minutes
President Mester was fully supportive of all of the actions taken to promote the smooth functioning of markets and the flow of credit to households and businesses but voted against the FOMC action because she preferred to reduce the target range for the federal funds rate to 1/2 to 3/4 percent at this meeting.
Consistent with the Committee's decision to lower the target range for the federal funds rate to 0 to 1/4 percent, the Board of Governors voted unanimously to lower the interest rate paid on required and excess reserve balances to 0.10 percent and voted unanimously to approve a 1-1/2 percentage point decrease in the primary credit rate to 0.25 percent, effective March 16, 2020.
The Board also approved changes to allow Reserve Banks to extend primary credit loans for as long as 90 days and that could be prepaid or renewed on request. In addition, the Board approved a reduction in reserve requirement ratios applicable to net transaction deposits above the exemption threshold to 0 percent effective with the reserve maintenance period beginning on March 26, 2020.
It was agreed that the next meeting of the Committee would be held on Tuesday–Wednesday, April 28–29, 2020. The meeting adjourned at 2:40 p.m. on March 15, 2020.
What changed from the previous meeting’s minutes
- The target range for the federal funds rate was lowered from 1-1/2 to 1-3/4 percent to 0 to 1/4 percent.
- The FOMC agreed to increase Treasury securities holdings by at least $500 billion and agency MBS by at least $200 billion.
- All principal payments from agency debt and MBS will be reinvested in agency MBS, replacing the previous Treasury reinvestment up to $20 billion.
- The primary credit rate was lowered by 150 basis points to 0.25 percent, and reserve requirements were reduced to 0 percent.
- Loretta J. Mester voted against the action, preferring a 50 basis point cut to 1/2 to 3/4 percent.
- The offering rate for overnight reverse repurchase operations was lowered from 1.50 percent to 0.00 percent.
Summary generated automatically from the two documents.