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However, with tightening resource constraints indicating unsustainable growth, only tentative signs that growth might be slowing, and various factors that had been damping prices now turning around, all the members agreed on the need for a slight tightening at this meeting to raise the odds on containing inflation and ... | 2,015 | 1 |
But again, our basic forecast is one which is basically, as was pointed out earlier by Mr. Hilsenrath, a moderately optimistic forecast, where growth picks up as we pass through this period of fiscal restraint; where unemployment continues to fall at a gradual pace as it has been since last September—and we have made s... | 2,018 | 1 |
For 2000, the Committee agreed on a tentative basis in June to retain the same ranges for growth of the monetary aggregates and debt, measured from the fourth quarter of 1999 to the fourth quarter of 2000. | 2,007 | 2 |
A few participants judged that while the labor market was close to full employment, some margins of slack remained; these participants pointed to the employment-to-population ratio or the labor force participation rate for prime-age workers, which remained below pre-recession levels, as well as the absence to date of c... | 2,020 | 2 |
The Summary of Economic Projections by FOMC participants in December 2020 had the unemployment rate moving down to 4.2 percent at the end of 2022 and inflation moving up to 2 percent only in 2023. | 2,006 | 0 |
Although inflation remained remarkably subdued and any increase in inflationary pressures likely would tend to emerge only slowly, the strength in demand had developed against the backdrop of financial conditions that, broadly considered, were not substantially different from those now prevailing. | 2,005 | 0 |
They also generally expected that inflation would remain, for some time, below levels the Committee considers most consistent, over the longer run, with maximum employment and price stability. | 2,017 | 0 |
In recent years, aggressive cost-cutting in the United States has been linked to greater emphasis on maximization of shareholder value and less on growth and diversification, which was more prominent in the 1970s and 1980s. | 2,005 | 2 |
Household mortgage debt was expected to expand at a reduced rate in the fourth quarter, reflecting softer home prices and declining home sales, as well as a tightening in credit conditions for some borrowers. | 2,001 | 0 |
However, the fact that most other industrial countries did not experience the same increase in productivity growth as the United States during that period, even as they became more open to trade, suggests that the relationship between productivity and trade may be complex. | 2,006 | 2 |
Communications about monetary policy over the intermeeting period generally had little effect on Treasury yields or the expected path of the federal funds rate. | 2,007 | 2 |
Most participants continued to see the risks to inflation as balanced. | 2,007 | 2 |
In their discussion of the economic situation and the outlook, meeting participants agreed that information received over the intermeeting period indicated that the labor market had continued to strengthen and that economic activity had been rising moderately so far this year. | 2,020 | 1 |
The staff raised slightly its projection for inflation during the second half of this year, as the upward pressure on consumer prices from earlier increases in import and commodity prices was expected to persist a little longer than previously anticipated. | 1,997 | 1 |
Two members preferred to leave the target range at 1 to 1-1/4 percent, suggesting that the Committee should wait to raise the target range until inflation moves up closer to 2 percent on a sustained basis or inflation expectations increase. | 2,015 | 2 |
Following the deepest plunge since the Great Depression, employment and activity rebounded faster and more sharply than anticipated. | 2,000 | 1 |
Strong fundamentals, including low interest rates, wide profit margins, and a high level of liquid assets, were seen as supporting expenditures on software and equipment going forward. | 2,002 | 0 |
Some participants mentioned upside risks around the inflation outlook that could arise if temporary factors influencing inflation turned out to be more persistent than expected. | 2,009 | 1 |
Total nonfarm payroll employment expanded at a solid pace in July and August. | 2,013 | 1 |
As a policymaker, I can assure you that any model of inflation that did not take account of these effects, and how they might or might not affect ongoing rates of inflation, would have been of little practical use to the FOMC over the past few years. | 2,017 | 2 |
Financing conditions in capital markets remained broadly accommodative, supported by low interest rates and high equity valuations. | 2,014 | 0 |
Members who preferred to retain an asymmetrical directive agreed that, although there was little likelihood of a further policy change during the intermeeting period, such a directive was the best way to convey their concerns about the risks of rising inflation and the potential need for policy tightening over time. | 1,997 | 1 |
Moreover, survey data on labor market attitudes of both consumers and businesses had not signaled a significant deterioration in employment prospects. | 2,011 | 2 |
A couple of participants referred to information from business contacts suggesting that inflation was unlikely to decline further, and a few expressed concerns that maintaining a highly accommodative stance of monetary policy for an extended period could erode the stability of inflation expectations over time and hence... | 2,019 | 1 |
Looking beyond this spring, my views on the appropriate pace of interest rate increases and balance sheet reduction for this year and beyond will depend on how the economy evolves. | 2,021 | 2 |
Participants agreed that the path of the economy would depend significantly on the course of the virus and that the ongoing public health crisis would continue to weigh on economic activity, employment, and inflation in the near term. | 2,004 | 0 |
It is again useful to compare estimates of expected inflation derived from breakeven inflation data with estimates of expected inflation obtained from surveys—for example, the expected inflation over the next 5 to 10 years from the University of Michigan Surveys of Consumers. | 2,020 | 1 |
Inflation-targeting regimes may allow some consideration of real-side costs either by specifying relatively long adjustment periods, to allow a high probability that the central bank can bring inflation down to the target within the allotted time, or by including "escape clauses" that grant temporary exemptions for lar... | 1,998 | 1 |
There is much about the inflation process that we do not understand, and I have been surprised at the extent of the pickup in core inflation this year. | 2,005 | 1 |
In addition, any other imbalances are more likely to grow to worrisome proportions during an unsustainable boom and are more likely to unwind in a disruptive manner if confronted by rising inflation, sharply higher interest rates in response to higher inflation, and a subsequent recession. | 2,000 | 2 |
To be sure, the prices of assets and the level of debt seem to reflect expectations of a benign economic environment--one in which policy will tighten only gradually, the economy will continue to strengthen and inflation will remain low, and the demand for houses and equities will remain solid. | 2,021 | 0 |
While more moderate growth in consumer spending for durable goods seemed likely after an extended period of robust expansion, these favorable factors suggested that the risks of a different outcome were tilted in the direction of faster-than-projected expansion. | 2,002 | 1 |
The unemployment rate ticked down to 5. | 2,003 | 1 |
If the recent slower rate of price declines on high-tech products implied a softer underlying pace of technological change, both the outlook for investment demand and the prospects for persisting high trend growth in productivity could be damped relative to previous expectations. | 2,015 | 2 |
One participant suggested that the economic projections would be more understandable if they were based on a common interest rate path. | 2,019 | 2 |
When governments resort to printing money to finance their spending, inflation rises and nominal assets lose their value. | 2,007 | 2 |
The information reviewed at this meeting indicated that economic activity had turned up in the final quarter of last year and strengthened further since then. | 2,008 | 1 |
Major reasons for optimism about the outlook were the substantial easing in monetary policy, whose lagged effects would be felt increasingly in the year ahead, and the fiscal stimulus measures that already had been enacted and might well be supplemented over coming months. | 2,017 | 0 |
We are not seeing any evidence to date that a strong labor market is putting excessive cost-push pressure on price inflation. | 2,003 | 2 |
Lower potential growth implies lower returns and therefore lower rates. | 2,021 | 0 |
Job gains had been solid, on average, in recent months, and the unemployment rate had remained low. | 2,005 | 1 |
The strongest case for a link between monetary policy and changes in inflation dynamics is in the greater stability of inflation. | 2,021 | 2 |
Productivity Growth and Cost Reductions So, what happened? | 2,005 | 2 |
We have a much more resilient, stronger banking system, and we’re not seeing some worrisome buildup in leverage or credit growth at successive levels.1 So, you know, this is something that the FOMC pays attention to, but if you ask me, is this a significant factor shaping monetary policy now, well, it’s on the list of ... | 2,015 | 1 |
While deflation appears to have eased in Japan recently, it is difficult to know how much of the improvement is due to monetary policy, and, of the part due to monetary policy, how much is due to the zero-interest-rate policy and how much to quantitative easing. | 2,019 | 0 |
Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely. | 2,006 | 2 |
Many members were concerned about the still-sensitive state of financial markets and thought that an easing of policy would help to support improvements in market functioning, thereby mitigating some of the downside risks to economic growth. | 2,013 | 0 |
Risks to the inflation projection also were seen as balanced. | 2,010 | 2 |
Of the 1,700 Washington employees, roughly 250 are Ph.D. economists, the majority of whom support the Board's monetary policy responsibilities. | 2,002 | 2 |
In contrast, Robert Lucas and others reached more dramatic conclusions, arguing that only unpredictable movements in monetary policy can affect the real economy and concluding that policy has no capacity to smooth the business cycle (Lucas, 1972; Sargent and Wallace, 1975). | 2,007 | 2 |
The members also agreed on the desirability of retaining the assessment that the risks with regard to the outlook for economic growth were balanced. | 2,006 | 2 |
Staff Economic Outlook In the economic forecast prepared by the staff for the March FOMC meeting, real GDP growth was revised down somewhat in the near term, largely reflecting the federal spending sequestration that went into effect on March 1 and the resulting drag from reduced government purchases. | 2,012 | 0 |
Some measures of inflation expectations were down notably over the intermeeting period. | 2,018 | 0 |
At longer maturities, yields drifted lower over most of the intermeeting period in response to incoming data that suggested economic growth would remain moderate and inflation subdued, but they rebounded late in the period in response to the release of firmer economic data and growing concerns regarding the sustainabil... | 2,016 | 1 |
Nearly all measures of total and core prices had decelerated over the past year, and in the context of forecasts implying a continued sizable gap between actual and potential output, the risk that inflationary pressures would intensify significantly over coming quarters appeared to be quite limited; indeed, inflation m... | 2,006 | 0 |
When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. " | 2,009 | 1 |
Last year, we had 1.9 percent productivity, which is much higher. | 2,012 | 0 |
Rather, central banks have learned over the years that their policies should be devoted to fostering macroeconomic balance and price stability. | 2,005 | 1 |
Several participants noted ongoing challenges in the agricultural sector, including those associated with increased trade uncertainty, weak export demand, and the effects of wet weather and severe flooding. | 2,017 | 2 |
Although single-family housing starts had come down substantially from their peak, the drop had lagged the decline in demand, and as a result, inventories of new homes had risen considerably. | 2,015 | 0 |
But low rates are not solely or even primarily a result of the Federal Reserve's accommodative monetary policies; they are rooted in the market's expectations of low inflation and the weakness of the economic recovery, factors weighing on rates not just in the United States but throughout the advanced economies.7 Given... | 1,998 | 0 |
This observation raises the question of why, in some cases, the putative productivity benefits of investments in new technologies do not occur until years after those investments are made. | 2,006 | 2 |
The median expectation for inflation over the next 5 to 10 years from the Michigan survey edged down in October to a new historical low, although it was noted that this drop could be explained by a reduction in the number of respondents who had previously expected relatively high inflation outcomes. | 2,010 | 2 |
Moreover, measures of labor compensation showed only moderate gains while relatively wide profit margins could allow firms to absorb somewhat larger increases in labor and other costs without boosting prices. | 2,019 | 2 |
Equity prices in most foreign countries were up moderately since the January FOMC meeting. | 2,005 | 2 |
As stock prices soared in the 1990s, the share of equity holdings in household portfolios surpassed the share of owner-occupied housing. | 2,022 | 2 |
Members still saw the economic expansion continuing, and most believed that inflation was likely to stabilize near recent low readings in coming quarters and then gradually rise toward levels they consider more consistent with the Committee's dual mandate for maximum employment and price stability. | 1,997 | 2 |
Although some of the recent data on economic activity had been better than anticipated, most participants saw the incoming information as broadly in line with their earlier projections for moderate growth; accordingly, their views on the economic outlook had not changed appreciably. | 2,015 | 2 |
The deceleration seemed to reflect primarily an unwinding of heightened demand for the relative safety and liquidity of money market mutual funds that had boosted M2 in prior months. | 2,018 | 0 |
On this path, unemployment would decline modestly below current estimates of the natural rate and remain there for some time. | 2,017 | 1 |
I will focus my remarks today on the use of explicit forward guidance as a tool for monetary policy.1 Before I start, let me briefly discuss near-term monetary policy. | 2,001 | 2 |
Policymakers, economists, and market participants see much of this decline as reflecting a permanent fall in the equilibrium rate of interest—that is, the level of the federal funds rate that keeps the economy at full employment with stable inflation in the longer run. | 2,002 | 0 |
For inflation, we can use the 12-month change in core PCE prices, a measure of the current underlying rate of inflation. | 2,004 | 2 |
President George dissented because she believed that an unchanged setting of policy was appropriate based on the incoming data and the outlook for economic activity over the medium term. | 2,001 | 2 |
Because inflation expectations are now more firmly tied down, surges and declines in energy prices do not significantly affect core inflation and thus do not force a policy response to inflation to the extent they did three decades ago. | 2,003 | 0 |
In the Committee's discussion of current and prospective economic developments, members referred to the widespread statistical and anecdotal evidence that the surprising strength in economic activity over the closing months of 1996 was persisting in 1997. | 1,997 | 1 |
More subtly, my conclusion that the effects on inflation of transitory changes in commodity prices or in the value of the dollar tend to dissipate in the longer run depends on the assumption that the public's inflation expectations are well anchored. | 2,002 | 2 |
The literature on this topic extends at least as far back as William Brainard’s original paper on uncertainty and policy almost forty years ago.7 Brainard’s analysis showed that if policymakers are uncertain about how real activity and inflation will be affected over time by monetary actions, they should be less ag... | 2,005 | 2 |
In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for t... | 1,997 | 0 |
Some survey measures of inflation expectations declined during the period. | 2,017 | 0 |
As a monetary policy maker, I am interested in these links because the prices of financial assets affect the spending decisions of firms and households and because these prices may reveal forward-looking information relevant for setting policy. | 2,017 | 2 |
However, with longer-term interest rates already very low, there did not appear to be a need for enhanced forward guidance at this juncture or much scope for forward guidance to put additional downward pressure on yields. | 2,008 | 2 |
We have a 2 percent symmetric inflation objective, and, for a number of years now, inflation has been running under 2 percent. | 2,015 | 0 |
In Japan, private consumption rebounded strongly, and private investment and net exports continued to boost growth. | 2,006 | 2 |
In particular, investors noted that the Committee attributed some of the recent increase in inflation to transitory factors, retained its earlier balance of risks assessment, and reiterated its belief that policy accommodation could be removed at a pace that would likely be measured. | 2,003 | 1 |
But in the shorter run, we must also develop strategies to overcome the education deficiencies of all too many of our young people, and to renew the skills of workers who have not kept up with the changing demands of the workplace. | 1,998 | 2 |
In the end, they concurred that the statement should note that economic growth had rebounded in the current quarter but that it appeared likely to moderate to a more sustainable pace in coming quarters. | 2,010 | 2 |
With respect to the new framework itself, the statement now notes that the neutral level of the federal funds rate has declined relative to its historical average and therefore that the policy rate is more likely than in the past to be constrained by its ELB, and, moreover, that this binding ELB constraint is likely to... | 2,005 | 1 |
In considering the effectiveness of the operating regime, the staff observed that over recent years, the Federal Reserve had been able to implement monetary policy in an environment with ample reserves by adjusting administered rates--including the rates on required and excess reserve balances and the offered rate at t... | 2,011 | 2 |
After a short coffee break, we have a staff presentation on the alternatives we face in setting monetary policy. | 2,001 | 2 |
Although the unemployment rate is around a 50-year low, wages are rising broadly in line with productivity growth and underlying inflation. | 2,004 | 1 |
In this regard, members referred to earlier unsustainable rates of investment by many high-tech firms that were now obliged to retrench despite still high rates of growth in the demand for their products and services. | 2,010 | 1 |
One measure of the decline in recent years of the marginal cost of additions to oil availability is the downdrift in the prices of the most distant contracts for future delivery of Light Sweet crude oil. | 2,020 | 2 |
Business contacts in a number of Districts noted an improvement in housing activity and a continued rise in house prices, although their reports showed that the pace of sales and construction varied across regions. | 2,000 | 1 |
Broad equity price indexes were higher over the intermeeting period, amid heightened volatility. | 1,999 | 2 |
Looking ahead, the projected slowing in the growth of final sales, including the effects of weak export markets, likely would reinforce business efforts to bring the growth of their inventories into better alignment with that of their sales, and such a development should contribute to the projected slowing in overall e... | 2,004 | 0 |
Yields on nominal Treasury coupon securities declined over the intermeeting period while yields on inflation-indexed Treasury securities were roughly unchanged, which left inflation compensation noticeably lower. | 2,013 | 0 |
Economic Outlook and Monetary Policy Now I would like to turn to the current economic scene and this week's FOMC decision. | 1,997 | 2 |
European equity prices were also lower over the period. | 2,005 | 2 |
The Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. | 2,001 | 0 |
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