September 22, 2021
July 28, 2021
Jerome H. Powell
September 22, 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.
With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have shown improvement improved in recent months, but have not fully recovered. Inflation the rise in COVID-19 cases has risen, slowed their recovery. Inflation is elevated, 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 continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, 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 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. Last December, the Committee indicated that it would 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 its maximum employment and price stability goals. Since then, the economy has made progress toward these goals, and goals. If progress continues broadly as expected, the Committee will continue to assess progress judges that a moderation in coming meetings. the pace of asset purchases may soon be warranted. 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 July 28, September 22, 2021
Our summary
What changed
- The statement now notes that the pandemic-affected sectors have improved recently but that the rise in COVID-19 cases has slowed their recovery, replacing the previous language that they had shown improvement but not fully recovered.
- The FOMC added that if progress continues broadly as expected, a moderation in the pace of asset purchases may soon be warranted, signaling a potential tapering of its bond-buying program.
- The target range for the federal funds rate remains unchanged at 0 to 1/4 percent, and the FOMC continues to expect to maintain this range until labor market and inflation conditions are met.
- The asset purchase guidance was updated: previously the FOMC said it would continue purchases until substantial further progress was made; now it indicates that such progress has been made and that a slowdown in purchases may be appropriate soon.
- The vote was unanimous, with all 11 members voting for the action, same as in the previous statement.
Implications
The new language on asset purchases suggests the FOMC is preparing to begin tapering its bond purchases, likely at the next meeting if economic progress continues. Markets may interpret this as a step toward policy normalization, though the statement emphasizes that any moderation will depend on incoming data.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2021 | 2022 | 2023 | 2024 | Longer run | |
|---|---|---|---|---|---|
| Real GDP growth | 5.9 was 7.0 | 3.8 was 3.3 | 2.5 was 2.4 | 2.0 | 1.8 |
| Unemployment rate | 4.8 was 4.5 | 3.8 | 3.5 | 3.5 | 4.0 |
| PCE inflation | 4.2 was 3.4 | 2.2 was 2.1 | 2.2 | 2.1 | 2.0 |
| Core PCE inflation | 3.7 was 3.0 | 2.3 was 2.1 | 2.2 was 2.1 | 2.1 | |
| Federal funds rate | 0.1 | 0.3 was 0.1 | 1.0 was 0.6 | 1.8 | 2.5 |
Median projections of FOMC participants; previous: June.
Each dot is one participant's projection of the federal funds rate (%) at the end of each year and in the longer run.
September June median June 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
establishmaintain the interest rate paid on reserve balances at 0.15 percent, effectiveJuly 29, 2021.1September 23, 2021. - 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
July 29,September 23, 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 overnight repurchase agreement operations with a minimum bid rate of 0.25 percent and with an aggregate operation limit of $500 billion; the aggregate operation limit can be temporarily increased at the discretion of the Chair.
- Conduct overnight reverse repurchase agreement operations at an offering rate of 0.05 percent and with a per-counterparty limit of
$80$160 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
September 22, 2021, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said the "substantial further progress" test for inflation has been met, while the employment test is "all but met" in his view, with the FOMC possibly deciding on tapering as soon as the next meeting.
- He stated that a gradual tapering process concluding around the middle of next year is likely appropriate, with broad support on the FOMC, despite some members preferring an earlier start.
- He noted that half of FOMC participants forecast the economic conditions for liftoff will be fulfilled by the end of next year, with the median projection for the federal funds rate slightly above the effective lower bound in 2022.
- He acknowledged that the recent trading activities of Federal Reserve officials were "clearly not adequate" to sustain public trust, and he directed a comprehensive review of ethics rules, including restrictions on holdings and trading windows.
- He said that the inflation projections for 2023 and 2024 were marked up by only a couple of tenths, and he downplayed the significance of a few tenths of an overshoot, emphasizing the goal of inflation averaging 2 percent over time.
Summary generated automatically from the transcript and the statement.