Actions Taken By the FOMC

Actions Taken By the FOMC

September 2019

According to the information received as of July by the Federal Open Market Committee, indicators show that the labor market is consistently strong while at the same time the rate of economic activities has been on the rise.

It is clear that the gains made in offering jobs to the population are substantial , implying that the unemployment rate is low. Despite the general household spending rising at a steady pace, there has been a severe weakening in exports as well as the business fixed investment.

Using a baseline of the past 12 months, the general inflation and that of other items apart from energy and food has been running below a rate of 2%. If we consider other measures of inflation that are market-based, we can conclude that inflation in this aspect still remains low. On a good note, measures used for long term inflation that are survey-based are a little changed. The committee now is seeking to promote a state of stability in price as well as employment, which is consistent with its statutory mandate.

In view of the impacts of global developments and the pressures of inflation, the committee decisions are focused on trying to lower the federal funds rate targets to between 1-3/4  and 2 %. With this type of action, the idea of the committee is to have a; labor market that is stable, an economic activity that is strong and sustainable as well as inflation that is near a 2% symmetry is supported.

The committee intends to keep on monitoring the impacts of information that is coming from the general outlook, while at the same time keep on contemplating federal funds future growth. As a result of making an assessment to the realized as well as expected conditions of the economy, relative to the 2% inflation symmetry and maximum employment, the committee is able to determine the sizes as well as the time targets ranges and future adjustments to federal fund rate.

Looking at decisions that are made in regards to monetary policy implementation, decisions made by the federal reserve in order to implement the stance of the monetary policy stated as at September 18, 2019, includes; the board voted to have interest rates paid lowered to a required a reserve of 1.8%. A vote was also done in order to authorize the open market desk to have an undertaking of the open market operations in order to maintain fund rate at the federal in the range of 1-0.75 to 2 %. That includes an overnight reverse repurchase operation that is offered at a rate of 1.70%.

The committee has given a direction to the Desk to have payments received from the auction to keep rolling over Treasury securities of Federal Reserve’s holdings and keep on reinvesting the total of the principal payments from the agency debt of the Federal Reserve’s holdings as well as agency mortgage-backed securities that is received each and every month.

The agency debt has a principal payment that has been backed monthly by securities in the range of $20 and will keep on being reinvested by the treasury securities so as to be able to match maturity of Treasury securities that is outstanding; A monthly excess of $20 billion principal payments will keep on being reinvested by mortgage-backed securities of the agency.

October 2019

According to the information received as at July by the Federal Open Market Committee, indicators are showing that the labor market is consistently remaining strong while at the same time the rate of economic activities has been on the rise.

Taking a look at the rate of employment, it is clear that the gains made in offering jobs to the population are solid meaning that unemployment rate is low. Despite the general household spending rising at a strong pace, there has been a severe weakening in exports as well as the business fixed investment.

Using a baseline of the past 12 months, the general inflation and that of other items apart from energy and food has been running below a rate of 2%. If we consider other measures of inflation that are market based, we can conclude that inflation in this aspect still remain low. On a good note though, measures used for long term inflation that are survey based are a little changed. The committee now is seeking to promote a state of stability in price as well as employment which is consistent with its statutory mandate.

In view of the impacts of global developments  and the pressures of inflation , the committee decisions is focused on trying to lower the federal funds rate targets to between 1-3/4  and 2 %. With this type of action, the idea of the committee to have a; labor market that is strong, an economic activity that is strong and sustainable as well as inflation that is near a 2% symmetry is supported.

The committee intends to keep on monitoring the impacts of information that is coming from the general outlook, while at the same time keep on contemplating federal funds future growth. As a result of making an assessment to the realized as well as expected conditions of the economy, relative to the 2% inflation symmetry and maximum employment, the committee is able to determine the sizes as well as the time targets ranges and future adjustments to federal fund rate.

Looking at decisions that are made in regards to monetary policy implementation, decisions made by federal reserve in order to implement the stance of monetary policy stated as at October 30, 2019 includes; the board voted to  have interest rates paid lowered to a required a reserve of 1.55%. A vote was also done in order to authorize the open market desk to have an undertaking of the open market operations in order to maintain fund rate at the federal in the range of 1-0.75 to 2 %, that includes overnight reverse repurchase operations that is offered at  a rate of 1.45%.

The committee has given a direction to the Desk to have payments received from the auction to keep rolling over Treasury securities of Federal Reserve’s holdings and keep on reinvesting the total of the principal payments from the agency debt of the Federal Reserve’s holdings as well as agency mortgage-backed securities that is received each and every month.

The agency debt has a principal payment that has been backed monthly by securities in the range of $20 and will keep on being reinvested by the treasury securities so as to be able to match maturity of Treasury securities that is outstanding; A monthly excess of $20 billion principal payments will keep on being reinvested by mortgage-backed securities of the agency.