January 29, 2020

Based on the latest information received by the Federal Open Market Committee (FOMC) since the last meeting in December 2019, the FOMC has noted that economic activity continues to rise at a moderate rate and labour market remains strong. In the recent months, the unemployment rate has remained low, while job gains have been solid. Despite the moderate increase in household spending, business fixed investment and exports continues to be weak. Furthermore, the released statement noted “overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.”

In line with its mandate, the Committee seeks to foster full employment and price stability. The decision was made by the Committee to maintain the target range for the federal funds at 1.50% – 1.75%, considering the expansion of economic activity, strong labour market conditions and inflation. Furthermore, the FOMC stated that, “The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.”

The FOMC as part of its policy decision, 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 January 30, 2020, 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 1-1/2 to 1-3/4 percent. In light of recent and expected increases in the Federal Reserve’s non-reserve liabilities, the Committee directs the Desk to continue purchasing Treasury bills at least into the second quarter of 2020 to maintain over time ample reserve balances at or above the level that prevailed in early September 2019. The Committee also directs the Desk to continue conducting term and overnight repurchase agreement operations at least through April 2020 to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation.”

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