FOMC votes to maintain target range

November 08, 2018


Based on the latest information received by the Federal Open Market Committee (FOMC) since September, the FOMC has noticed strengthening in the labour market coinciding with rising economic activity. Based on the FOMC, Job gains have been strong, on average, in recent months, and the unemployment rate have declined. Household spending has continued to grow strongly, coinciding with the growth of business fixed investment has moderated from its rapid pace earlier in the year. The FOMC statement notes, “On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.”

In line with its directive, a key deliverable for the committee is to foster maximum employment and price stability. Gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term.

The FOMC decided to maintain the target range for the federal funds rate at 2% – 2.25% in view of realized and expected labour market conditions and inflation. The FOMC indicated that, “In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.”

The FOMC also stated that  as part of its policy decision, the Committee elected to, authorize and direct the Open Market Desk at the Federal Reserve Bank of New York, until told otherwise, to execute transactions in the System Open Market Account in agreement with the following domestic policy directive:

  • “The Committee directs the Desk to continue rolling over at auction the amount of principal payments from the Federal Reserve’s holdings of Treasury securities maturing during each calendar month that exceeds $30 billion, and to continue reinvesting in agency mortgage-backed securities the amount of principal payments from the Federal Reserve’s holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $20 billion. Small deviations from these amounts for operational reasons are acceptable.”


  • “The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve’s agency mortgage-backed securities transactions.”



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