June 19, 2019
May 01, 2019
Statement·Presser·Minutes·Policy
Jerome H. Powell
June 19, 2019 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
Information received since the Federal Open Market Committee met in March May indicates that the labor market remains strong and that economic activity rose is rising at a solid moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth Although growth of household spending and appears to have picked up from earlier in the year, indicators of business fixed investment slowed in the first quarter. have been soft. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based Market-based measures of inflation compensation have remained low in recent months, and declined; survey-based measures of longer-term inflation expectations are little changed.
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. outcomes, but uncertainties about this outlook have increased. In light of global economic these uncertainties and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to closely monitor the target range implications of incoming information for the federal funds rate may be economic outlook and will act as appropriate to support these outcomes. sustain the expansion, with a strong labor market and inflation near its symmetric 2 percent objective.
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: were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren. Voting against the action was James Bullard, who preferred at this meeting to lower the target range for the federal funds rate by 25 basis points.
Implementation Note issued May 1, June 19, 2019
Our summary
What changed
- The FOMC upgraded its description of economic activity from 'solid rate' to 'moderate rate' and noted household spending picked up while business fixed investment has been soft.
- It replaced the phrase 'will be patient' with a commitment to 'closely monitor' incoming information and 'act as appropriate' to sustain the expansion, citing increased uncertainties.
- It changed the inflation compensation language from 'remained low' to 'declined'.
- The vote was no longer unanimous: James Bullard dissented, preferring a 25 basis point cut to the target range.
Implications
The shift from 'patient' to 'act as appropriate' signals a more conditional, data-dependent stance, leaving the door open for a potential rate cut if the economic outlook deteriorates.
The acknowledgment of increased uncertainties and softer business investment suggests the FOMC is more attuned to downside risks, which markets may interpret as a dovish tilt.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2019 | 2020 | 2021 | Longer run | |
|---|---|---|---|---|
| Real GDP growth | 2.1 | 2.0 was 1.9 | 1.8 | 1.9 |
| Unemployment rate | 3.6 was 3.7 | 3.7 was 3.8 | 3.8 was 3.9 | 4.2 was 4.3 |
| PCE inflation | 1.5 was 1.8 | 1.9 was 2.0 | 2.0 | 2.0 |
| Core PCE inflation | 1.8 was 2.0 | 1.9 was 2.0 | 2.0 | |
| Federal funds rate | 2.4 | 2.1 was 2.6 | 2.4 was 2.6 | 2.5 was 2.8 |
Median projections of FOMC participants; previous: March.
Each dot is one participant's projection of the federal funds rate (%) at the end of each year and in the longer run.
June March median March median
Scroll the chart sideways for the later years.
Implementation Note
The settings that put the decision into effect: the interest rate paid on reserves, the FOMC's instructions to the New York Fed's trading desk, and the discount rate. Changes are marked the same way as in the statement.
- The Board of Governors of the Federal Reserve System voted unanimously to
setmaintain the interest rate paid on required and excess reserve balances at 2.35 percent, effectiveMay 2,June 20, 2019.Setting the interest rate paid on required and excess reserve balances 15 basis points below the top of the target range for the federal funds rate is intended to foster trading in the federal funds market at rates well within the FOMC's target range. - 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
May 2,June 20, 2019, 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 2-1/4 to 2-1/2 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 2.25 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.Effective May 2, 2019, theThe Committee directs the Desk torollcontinue rolling over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month that exceeds $15billion. The Committee directs the Deskbillion, 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 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." - In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 3.00 percent.
Press conference
June 19, 2019, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said that eight FOMC participants wrote down rate cuts in their projections, and a number of others saw the case for a cut as strengthened.
- The chair stated that the FOMC did not consider a rate cut at this meeting, preferring to wait for more information on whether risks would persist.
- The chair said that the risk of waiting too long to cut rates was not prominent at the time, given the recent nature of some developments.
- The chair noted that the drop in market-based inflation expectations and the lower FOMC inflation forecast for 2019 were reasons the case for accommodation had strengthened.
- The chair said that the FOMC had not yet engaged with the question of whether a future rate cut would be 25 or 50 basis points, as it would depend on incoming data.
Summary generated automatically from the transcript and the statement.