July 31, 2019
Based on information collected since the Federal Open Market Committee (FOMC) met in June 2019, the findings alluded to a strong labour market with a moderate rise in economic activity. Solid job gains were reported in recent months while the unemployment rate remained subdued. However the growth of business fixed investment has been soft despite an uptick in household spending, which picked up from earlier in the year. The inflation rate for the last twelve month for items other than food and energy according to the FOMC, “runs below 2%. 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 bolster maximum employment and price stability. The FOMC stated, “in light of the implication of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2% – 2.25%.” The FOMC expressed that this supports the Committee’s view that sustained expansion of economic activity, strong labour market and conditions, and inflation near the Committee’s symmetric 2% objective are the most likely outcomes, but uncertainties about this outlook remain.
The FOMC reiterated its commitment to monitor the implications of incoming information for the economic outlook as it contemplates the future path of the target range for the federal funds rate. The FOMC will also act as appropriate to sustain the expansion, with a strong labour market and inflation near its symmetric 2% objective.
cated its intention to conclude the reduction of its aggregate securities holdings in the System Open Market Account in August, two months earlier than previously indicated.
As part of its policy decision, the FOMC 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 August 1, 2019, 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 2 to 2-1/4 percent, including overnight reverse repurchase operations (and reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading conventions) at an offering rate of 2.00 percent, in amounts limited only by the value of Treasury securities held outright in the System Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.”
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