March 15, 23, 2020

Federal Reserve issues FOMC statement

For release at 5:00 p.m. 8:00 a.m. EDT

The Federal Reserve is committed to use its full range of tools to support the U.S. economy in this challenging time and thereby promote its maximum employment and price stability goals.

The Federal Reserve Open Market Committee is prepared taking further actions to use its full range of tools to support the flow of credit to households and businesses and thereby promote its maximum employment and price stability goals. To support by addressing strains in the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee securities. The Federal Reserve will increase its holdings of continue to purchase Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion. in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions. The Committee will also reinvest all principal payments from the Federal Reserve's holdings include purchases of agency debt and agency commercial mortgage-backed securities in its agency mortgage-backed securities. security purchases. In addition, the Open Market Desk has recently expanded its will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will continue to closely monitor market conditions conditions, and is prepared to adjust will assess the appropriate pace of its plans as appropriate. securities purchases at future meetings.

Voting (by notation) for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles. Voting against this action was Loretta J. Mester, who 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 preferred to reduce the target range for the federal funds rate to 1/2 to 3/4 percent at this meeting.

In a related set of actions to support actions, the credit needs of households and businesses, the Federal Reserve announced additional measures related to support the discount window, intraday credit, bank capital flow of credit to households and liquidity buffers, reserve requirements, and—in coordination with other central banks—the U.S. dollar liquidity swap line arrangements. businesses. More information can be found on the Federal Reserve Board's website.

In connection with these plans, the Committee voted unanimously to authorize and direct 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:

More information regarding open market operations and reinvestments may be found on the Federal Reserve Bank of New York's website.

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Statement Regarding Treasury Securities and Agency Mortgage-Backed Securities Operations

The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States. Global financial conditions have also been significantly affected. Available economic data show that the U.S. economy came into this challenging period on a strong footing. Information received since the Federal Open Market Committee met in January indicates that the labor market remained strong through February and economic activity rose at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending rose at a moderate pace, business fixed investment and exports remained weak. More recently, the energy sector has come under stress. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation have 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. The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee's symmetric 2 percent objective.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, 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.