June 12, 2024
May 01, 2024
Statement·Presser·Minutes·Policy
Jerome H. Powell
June 12, 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 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 modest 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 have moved toward better 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. Beginning in June, the Committee will slow the pace of decline of its 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 May 1, June 12, 2024
Our summary
What changed
- The FOMC upgraded its inflation assessment, noting 'modest further progress' toward the 2 percent objective, replacing the prior language of 'a lack of further progress.'
- The statement removed the forward guidance about slowing the pace of balance sheet runoff, which had specified reducing the monthly Treasury redemption cap from $60 billion to $25 billion starting in June.
- The target range for the federal funds rate remains unchanged at 5-1/4 to 5-1/2 percent.
- The vote was unanimous, with all 12 members voting for the action.
Implications
The upgraded inflation language suggests the FOMC sees some improvement, but the removal of the balance sheet guidance may indicate that the slowdown is now in effect or that the FOMC is shifting focus to the rate path.
Markets might interpret the change as a slight dovish tilt, as the FOMC acknowledges progress on inflation, but the lack of new guidance leaves the timing of any rate cut uncertain.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2024 | 2025 | 2026 | Longer run | |
|---|---|---|---|---|
| Real GDP growth | 2.1 | 2.0 | 2.0 | 1.8 |
| Unemployment rate | 4.0 | 4.2 was 4.1 | 4.1 was 4.0 | 4.2 was 4.1 |
| PCE inflation | 2.6 was 2.4 | 2.3 was 2.2 | 2.0 | 2.0 |
| Core PCE inflation | 2.8 was 2.6 | 2.3 was 2.2 | 2.0 | |
| Federal funds rate | 5.1 was 4.6 | 4.1 was 3.9 | 3.1 | 2.8 was 2.6 |
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 maintain the interest rate paid on reserve balances at 5.4 percent, effective
May 2,June 13, 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
May 2,June 13, 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 ineach calendar month that exceeds a cap of $25 billion per month. Redeem Treasury coupon securities up tothesethis monthlycapscap and Treasury bills to the extent that coupon principal payments are less than the monthlycaps.cap. - Reinvest
into agency mortgage-backed securities (MBS)the amount of principal payments from the Federal Reserve's holdings of agency debt and agencyMBSmortgage-backed securities (MBS) received inMay 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 ineach calendar month that exceeds a cap of $35 billion per 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
June 12, 2024, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair said inflation has eased from a peak of 7 percent to 2.7 percent, a figure not in the statement.
- The chair noted that private domestic final purchases grew at 2.8 percent in the first quarter, nearly as strong as the second half of 2023.
- The chair said the median SEP projection for the federal funds rate is 5.1 percent at the end of this year, 4.1 percent at the end of 2025, and 3.1 percent at the end of 2026.
- The chair said that the median SEP projection for total PCE inflation is 2.6 percent this year, 2.3 percent next year, and 2.0 percent in 2026.
- The chair said that the labor market has returned to about where it stood on the eve of the pandemic—relatively tight but not overheated.
Summary generated automatically from the transcript and the statement.