September 21, 2022
July 27, 2022
Jerome H. Powell
September 21, 2022 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
Recent indicators of point to modest growth in spending and production have softened. Nonetheless, job production. Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.
Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity. The Committee is highly attentive to inflation risks.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 2-1/4 3 to 2-1/2 3-1/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the Size of the Federal Reserve's Balance Sheet that were issued in May. The Committee is strongly committed to returning inflation to its 2 percent objective.
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; Michael S. Barr; Michelle W. Bowman; Lael Brainard; James Bullard; Susan M. Collins; Lisa D. Cook; Esther L. George; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller.
Implementation Note issued July 27, September 21, 2022
Our summary
What changed
- The FOMC raised the target range for the federal funds rate to 3 to 3-1/4 percent, up from 2-1/4 to 2-1/2 percent.
- The description of economic activity changed from 'softened' to 'modest growth in spending and production.'
- The statement continues to anticipate ongoing increases in the target range and maintains the balance sheet reduction plan.
- The vote was unanimous, with the same 12 members voting for the action as in the previous statement.
Implications
The upgraded language on spending and production suggests the FOMC sees the economy as holding up despite tightening, which supports further rate hikes.
The unchanged forward guidance on ongoing increases and balance sheet reduction indicates a continued tightening bias, with markets likely to expect additional rate moves in coming meetings.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2022 | 2023 | 2024 | 2025 | Longer run | |
|---|---|---|---|---|---|
| Real GDP growth | 0.2 was 1.7 | 1.2 was 1.7 | 1.7 was 1.9 | 1.8 | 1.8 |
| Unemployment rate | 3.8 was 3.7 | 4.4 was 3.9 | 4.4 was 4.1 | 4.3 | 4.0 |
| PCE inflation | 5.4 was 5.2 | 2.8 was 2.6 | 2.3 was 2.2 | 2.0 | 2.0 |
| Core PCE inflation | 4.5 was 4.3 | 3.1 was 2.7 | 2.3 | 2.1 | |
| Federal funds rate | 4.4 was 3.4 | 4.6 was 3.8 | 3.9 was 3.4 | 2.9 | 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 raise the interest rate paid on reserve balances to
2.43.15 percent, effectiveJuly 28,September 22, 2022. - 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 28,September 22, 2022, 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
2-1/43 to2-1/23-1/4 percent. - Conduct overnight repurchase agreement operations with a minimum bid rate of
2.53.25 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
2.33.05 percent and with a per-counterparty limit of $160 billion per day; the per-counterparty limit can be temporarily increased at the discretion of the Chair. - Roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in
theeach calendarmonths of July and Augustmonth that exceeds a cap of$30$60 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap. - Reinvest into agency mortgage-backed securities (MBS) the amount of principal payments from the Federal Reserve's holdings of agency debt and agency MBS received in
theeach calendarmonths of July and Augustmonth that exceeds a cap of$17.5$35 billion per month. - Allow modest deviations from stated amounts for 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 a 3/4 percentage point increase in the primary credit rate to
2.53.25 percent, effectiveJuly 28,September 22, 2022. In taking this action, the Board approved requests to establish that rate submitted by the Boards of Directors of the Federal Reserve Banks of Boston,New York,Philadelphia, Cleveland, Richmond, Atlanta, Chicago,Dallas,St. Louis, Kansas City, andSan Francisco.Dallas. Starting in the calendar month of September, roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing in each calendar month that exceeds a cap of $60 billion per month. Redeem Treasury coupon securities up to this monthly cap and Treasury bills to the extent that coupon principal payments are less than the monthly cap.Starting in the calendar month of September, reinvest into agency MBS the amount of principal payments from the Federal Reserve's holdings of agency debt and agency MBS received in each calendar month that exceeds a cap of $35 billion per month.
Press conference
September 21, 2022, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The median projection for real GDP growth was 0.2 percent this year and 1.2 percent next year, well below the longer-run normal rate.
- The median projection for the unemployment rate rises to 4.4 percent at the end of next year, a half percentage point higher than the June projection.
- The median projection for total PCE inflation is 5.4 percent this year, falling to 2.8 percent next year, 2.3 percent in 2024, and 2 percent in 2025.
- The median projection for the federal funds rate is 4.4 percent at the end of this yearhol—one percentage point higher than projected in June—rising to 4.6 percent at the end of next year, and declining to 2.9 percent by the end of 2025.
- The chair stated that real rates need to be positive across the entire yield curve, and that the current stance is likely at the very lowest level of what might be restrictive.
Summary generated automatically from the transcript and the statement.