June 16, 2021
April 28, 2021
Statement·Presser·Minutes·Policy
Jerome H. Powell
June 16, 2021 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
The Progress on vaccinations has reduced the spread of COVID-19 pandemic is causing tremendous human and economic hardship across in the United States and around the world. States. Amid this progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
The path of the economy will depend significantly on the course of the virus, including progress virus. Progress on vaccinations. The ongoing vaccinations will likely continue to reduce the effects of the public health crisis continues to weigh on the economy, and but risks to the economic outlook remain.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.
Implementation Note issued April 28, June 16, 2021
Our summary
What changed
- The FOMC noted that progress on vaccinations has reduced the spread of COVID-19 in the United States, replacing the previous reference to the ongoing public health crisis weighing on the economy.
- The statement now says that progress on vaccinations will likely continue to reduce the effects of the public health crisis, while risks to the outlook remain.
- The language on inflation was slightly revised to say 'with inflation having run persistently below' the longer-run goal, instead of 'with inflation running persistently below'.
- The FOMC kept the federal funds rate target range at 0 to 1/4 percent and maintained the pace of asset purchases at at least $80 billion per month in Treasuries and $40 billion per month in agency MBS.
- The vote was unanimous, with all 11 members voting for the action, unchanged from the previous meeting.
Implications
The upgraded language on vaccinations and the economy suggests the FOMC sees the recovery as on firmer footing, though it still emphasizes risks remain.
The unchanged policy stance and forward guidance indicate no near-term shift in rates or asset purchases, but the subtle wording change on inflation may hint at a growing acknowledgment of price pressures.
Markets may interpret the statement as slightly more optimistic about the economic outlook, but with no change in policy, the focus remains on the FOMC's data-dependent approach.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2021 | 2022 | 2023 | Longer run | |
|---|---|---|---|---|
| Real GDP growth | 7.0 was 6.5 | 3.3 | 2.4 was 2.2 | 1.8 |
| Unemployment rate | 4.5 | 3.8 was 3.9 | 3.5 | 4.0 |
| PCE inflation | 3.4 was 2.4 | 2.1 was 2.0 | 2.2 was 2.1 | 2.0 |
| Core PCE inflation | 3.0 was 2.2 | 2.1 was 2.0 | 2.1 | |
| Federal funds rate | 0.1 | 0.1 | 0.6 was 0.1 | 2.5 |
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
maintainset the interest rate paid on required and excess reserve balances at0.100.15 percent, effectiveApril 29,June 17, 2021. Setting the interest rate paid on required and excess reserve balances 15 basis points above the bottom of the target range for the federal funds rate is intended to foster trading in the federal funds market at rates well within the Federal Open Market Committee's target range and to support the smooth functioning of short-term funding markets. - 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
April 29,June 17, 2021, 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 0 to 1/4 percent.
- Increase the System Open Market Account holdings of Treasury securities by $80 billion per month and of agency mortgage-backed securities (MBS) by $40 billion per month.
- Increase holdings of Treasury securities and agency MBS by additional amounts and purchase agency commercial mortgage-backed securities (CMBS) as needed to sustain smooth functioning of markets for these securities.
- Conduct repurchase agreement operations to support effective policy implementation and the smooth functioning of short-term U.S. dollar funding markets.
- Conduct overnight reverse repurchase agreement operations at an offering rate of
0.000.05 percent and with a per-counterparty limit of $80 billion per day; the per-counterparty limit can be temporarily increased at the discretion of the Chair. - Roll over at auction all principal payments from the Federal Reserve's holdings of Treasury securities and reinvest all principal payments from the Federal Reserve's holdings of agency debt and agency MBS in agency MBS.
- Allow modest deviations from stated amounts for purchases and reinvestments, if needed for operational reasons.
- Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS 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 0.25 percent.
Press conference
June 16, 2021, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair described the labor market as on a path to a very strong labor market with low unemployment, high participation, and rising wages, projecting the unemployment rate to decline to 3.5 percent by the end of 2023.
- The chair cited specific factors weighing on employment growth, including caregiving needs, ongoing fears of the virus, and unemployment insurance payments, expecting these to wane in coming months.
- The chair noted that the technical adjustment to the IOER and overnight RRP rates by 5 basis points was made to keep the federal funds rate well within the target range and support smooth money market functioning, with no bearing on the policy path.
- The chair said the FOMC’s discussion on asset purchases was a "talking about talking about" meeting, and that it would be appropriate to consider announcing a plan for reducing purchases at a future meeting, depending on the pace of progress, not a calendar.
- The chair stated that longer-term inflation expectations have moved into a range broadly consistent with the 2 percent goal, while shorter-term measures can move around based on factors like gasoline prices, and the Fed tends to focus on longer-term expectations.
Summary generated automatically from the transcript and the statement.