May 01, 2024
March 20, 2024
Jerome H. Powell
May 1, 2024 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 continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective.
The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee judges that the risks to achieving its employment and inflation goals are moving into have moved toward better balance. balance over the past year. The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.
In support of its goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. In considering any adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described mortgage‑backed securities. Beginning in June, the Committee will slow the pace of decline of its previously announced plans. securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities. 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; Thomas I. Barkin; Michael S. Barr; Raphael W. Bostic; Michelle W. Bowman; Lisa D. Cook; Mary C. Daly; Philip N. Jefferson; Adriana D. Kugler; Loretta J. Mester; and Christopher J. Waller.
For media inquiries, please email [email protected] or call 202-452-2955.
Implementation Note issued March 20, May 1, 2024
Our summary
What changed
- The FOMC noted a lack of further progress toward its 2 percent inflation objective in recent months.
- The FOMC revised its risk assessment language, stating risks have moved toward better balance over the past year.
- The FOMC announced it will slow the pace of balance sheet runoff starting in June, reducing the monthly Treasury redemption cap from $60 billion to $25 billion.
- The FOMC will maintain the agency debt and mortgage-backed securities redemption cap at $35 billion and reinvest excess principal payments into Treasury securities.
- The federal funds rate target range remains unchanged at 5-1/4 to 5-1/2 percent, with the same unanimous vote.
Implications
The acknowledgment of stalled inflation progress suggests the FOMC is less confident about imminent rate cuts, reinforcing its data-dependent stance.
The decision to taper balance sheet runoff indicates a shift toward a less restrictive policy stance, potentially easing financial conditions gradually.
Markets may interpret the combination of steady rates and slower runoff as a cautious approach, balancing inflation concerns with financial stability.
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
March 21,May 2, 2024. - 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
March 21,May 2, 2024, 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 May that exceeds a cap of $60 billion per month. Beginning on June 1, 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$25 billion per month. Redeem Treasury coupon securities up tothisthese monthlycapcaps and Treasury bills to the extent that coupon principal payments are less than the monthlycap.caps. - 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 May that exceeds a cap of $35 billion per month. Beginning on June 1, reinvest 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.month into Treasury securities to roughly match the maturity composition of Treasury securities outstanding. - 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
May 1, 2024, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said that private domestic final purchases grew at 3.1 percent in the first quarter, matching the strength of the second half of 2023, despite overall GDP growth moderating to 1.6 percent.
- The chair stated that it is unlikely the next policy rate move will be a hike, and that a hike would require persuasive evidence that the policy stance is not sufficiently restrictive to bring inflation sustainably down to 2 percent.
- The chair said that gaining greater confidence that inflation is moving sustainably toward 2 percent will likely take longer than previously expected, based on the first quarter's inflation readings.
- The chair noted that with principal payments on agency securities currently running at about $15 billion per month, total portfolio runoff will amount to roughly $40 billion per month after the slowdown begins in June.
- The chair said that slowing the pace of balance sheet runoff does not mean the balance sheet will ultimately shrink by less, but rather allows a more gradual approach to its ultimate level to reduce the possibility of money market stress.
Summary generated automatically from the transcript and the statement.