November 01, 2023
September 20, 2023
Jerome H. Powell
November 1, 2023 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EDT
Recent indicators suggest that economic activity has been expanding expanded at a solid pace. strong pace in the third quarter. Job gains have slowed moderated since earlier in recent months the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated.
The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains 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 maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. 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 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; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller.
For media inquiries, please email [email protected] or call 202-452-2955.
Implementation Note issued September 20, November 1, 2023
Our summary
What changed
- Upgraded the description of economic activity from 'expanding at a solid pace' to 'expanded at a strong pace in the third quarter'.
- Changed the labor market language from 'job gains have slowed in recent months' to 'job gains have moderated since earlier in the year'.
- Expanded the reference to 'tighter credit conditions' to 'tighter financial and credit conditions'.
- Maintained the federal funds rate target range at 5-1/4 to 5-1/2 percent and continued the balance sheet reduction plan.
- The vote was unanimous, with all 12 members voting for the action.
Implications
The upgraded assessment of economic growth and the slight softening in labor market language suggest the FOMC sees the economy as resilient but with some cooling in hiring.
The broadening of 'credit conditions' to 'financial and credit conditions' may signal increased attention to broader financial tightening, potentially influencing future policy decisions.
The unchanged policy stance and forward guidance indicate the FOMC is holding steady while monitoring incoming data, with no immediate shift in policy signaled.
Summary generated automatically from the statements. Not investment advice.
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 maintain the interest rate paid on reserve balances at 5.4 percent, effective
September 21,November 2, 2023. - As part of its policy decision, the Federal Open Market Committee voted to 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
September 21,November 2, 2023, 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 5-1/4 to 5-1/2 percent.
- Conduct standing overnight repurchase agreement operations with a minimum bid rate of 5.5 percent and with an aggregate operation limit of $500 billion.
- Conduct standing overnight reverse repurchase agreement operations at an offering rate of 5.3 percent and with a per-counterparty limit of $160 billion per day.
- 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.
- 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 each calendar month that exceeds a cap of $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 the establishment of the primary credit rate at the existing level of 5.5 percent.
Press conference
November 1, 2023, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said the FOMC has raised the policy interest rate by 5¼ percentage points since early last year.
- The chair said the Fed has decreased its securities holdings by more than $1 trillion.
- The chair said the staff did not put a recession back into the baseline forecast for the meeting.
- The chair said the FOMC is not thinking about rate cuts at all right now.
- The chair said the increase in longer-term yields does not appear to be caused by expectations of higher near-term policy rates.
Summary generated automatically from the transcript and the statement.