Federal Reserve — FOMC Statement (USA, 2024)

Minutes of the Federal Open Market Committee March 19 20, 2024 A joint meeting of the Federal Open Market Committee and the Board of Governors of the Federal Reserve Sys- tem was held in the offices of the Board of Governors on Tuesday, March 19, 2024, at 9:00 a.m. and continued on Wednesday, March 20, 2024, at 9:00 a.m.1 Attendance Jerome H. Powell, Chair John C. Williams, Vice Chair Thomas I. Barkin Michael S. Barr Raphael W. Bostic Michelle W. Bowman Lisa D. Cook Mary C. Daly Philip N. Jefferson Adriana D. Kugler Loretta J. Mester Christopher J. Waller Susan M. Collins, Austan D. Goolsbee, Kathleen O Neill, and Jeffrey R. Schmid, Alternate Members of the Committee Patrick Harker, Neel Kashkari, and Lorie K. Logan, Presidents of the Federal Reserve Banks of Philadelphia, Minneapolis, and Dallas, respectively Joshua Gallin, Secretary Matthew M. Luecke, Deputy Secretary Brian J. Bonis, Assistant Secretary Michelle A. Smith, Assistant Secretary Mark E. Van Der Weide, General Counsel Richard Ostrander, Deputy General Counsel Trevor A. Reeve, Economist Stacey Tevlin, Economist Shaghil Ahmed, Kartik B. Athreya, James A. Clouse, Edward S. Knotek II, Sylvain Leduc, and William Wascher, Associate Economists Jose Acosta, Senior System Administrator II, Division of Information Technology, Board Oladoyin Ajifowoke, Program Management Analyst, Division of Monetary Affairs, Board David Altig, Executive Vice President, Federal Reserve Bank of Atlanta Andre Anderson, First Vice President, Federal Reserve Bank of Atlanta Roc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia Alyssa Arute,2 Manager, Division of Reserve Bank Operations and Payment Systems, Board Penelope A. Beattie,2 Section Chief, Office of the Secretary, Board Carol C. Bertaut, Senior Adviser, Division of International Finance, Board David Bowman,2 Senior Associate Director, Division of Monetary Affairs, Board Ellen J. Bromagen, First Vice President, Federal Reserve Bank of Chicago Isabel Cair , Principal Economist, Division of Monetary Affairs, Board Mark A. Carlson, Adviser, Division of Monetary Affairs, Board Juan C. Climent, Special Adviser to the Board, Division of Board Members, Board Stephanie E. Curcuru, Deputy Director, Division of International Finance, Board Ryan Decker, Special Adviser to the Board, Division of Board Members, Board Rochelle M. Edge, Deputy Director, Division of Roberto Perli, Manager, System Open Market Account Monetary Affairs, Board Julie Ann Remache, Deputy Manager, System Open Market Account Eric M. Engen, Senior Associate Director, Division of Research and Statistics, Board 1 The Federal Open Market Committee is referenced as the  FOMC  and the  Committee  in these minutes; the Board of Governors of the Federal Reserve System is referenced as the  Board  in these minutes. 2 Attended through the discussion of considerations for slow- ing the pace of balance sheet reduction. Page 1_____________________________________________________________________________________________ Giovanni Favara, Assistant Director, Division of Monetary Affairs, Board Deborah L. Leonard, Capital Markets Trading Director, Federal Reserve Bank of New York Ron Feldman, First Vice President, Federal Reserve Kurt F. Lewis, Special Adviser to the Chair, Division of Bank of Minneapolis Board Members, Board Erin E. Ferris,2 Principal Economist, Division of Laura Lipscomb, Special Adviser to the Board, Monetary Affairs, Board Division of Board Members, Board Andrew Figura, Associate Director, Division of Research and Statistics, Board David L pez-Salido, Senior Associate Director, Division of Monetary Affairs, Board Charles A. Fleischman, Senior Adviser, Division of Joshua S. Louria, Group Manager, Division of Research and Statistics, Board Monetary Affairs, Board Glenn Follette, Associate Director, Division of Byron Lutz, Deputy Associate Director, Division of Research and Statistics, Board Research and Statistics, Board Jenn Gallagher, Assistant to the Board, Division of Karel Mertens, Interim Director of Research, Federal Board Members, Board Reserve Bank of Dallas Michael S. Gibson, Director, Division of Supervision Ann E. Misback, Secretary, Office of the Secretary, and Regulation, Board Board Joseph W. Gruber, Executive Vice President, Federal Michelle M. Neal, Head of Markets, Federal Reserve Reserve Bank of Kansas City Bank of New York Luca Guerrieri, Associate Director, Division of Edward Nelson,2 Senior Adviser, Division of Monetary International Finance, Board Affairs, Board Christopher J. Gust,2 Associate Director, Division of Monetary Affairs, Board Michael G. Palumbo, Senior Associate Director, Division of Research and Statistics, Board Valerie S. Hinojosa, Section Chief, Division of Eugenio P. Pinto, Special Adviser to the Board, Monetary Affairs, Board Division of Board Members, Board Jasper J. Hoek, Deputy Associate Director, Division of Odelle Quisumbing,2 Assistant to the Secretary, Office International Finance, Board of the Secretary, Board Andreas L. Hornstein, Senior Advisor, Federal Reserve Andrea Raffo, Senior Vice President, Federal Reserve Bank of Richmond Bank of Minneapolis Jane E. Ihrig, Special Adviser to the Board, Division of Nellisha D. Ramdass, Deputy Director, Division of Board Members, Board Monetary Affairs, Board Sebastian Infante, Section Chief, Division of Monetary Jeanne Rentezelas, First Vice President, Federal Affairs, Board Reserve Bank of Philadelphia Michael T. Kiley, Deputy Director, Division of Achilles Sangster II, Senior Information Manager, Financial Stability, Board Division of Monetary Affairs, Board Kevin L. Kliesen, Research Officer, Federal Reserve Bernd Schlusche, Principal Economist, Division of Bank of St. Louis Monetary Affairs, Board Spencer Krane, Senior Vice President, Federal Reserve Andres Schneider, Principal Economist, Division of Bank of Chicago Monetary Affairs, Board Andreas Lehnert, Director, Division of Financial Zeynep Senyuz,2 Deputy Associate Director, Division Stability, Board of Monetary Affairs, Board Paul Lengermann, Deputy Associate Director, Division Robert J. Tetlow, Senior Adviser, Division of Monetary of Research and Statistics, Board Affairs, Board Page 2Federal Open Market Committee_____________________________________________________________________________________________ Clara Vega, Special Adviser to the Board, Division of Board Members, Board Jeffrey D. Walker,2 Associate Director, Division of Reserve Bank Operations and Payment Systems, Board Min Wei, Senior Associate Director, Division of Monetary Affairs, Board Paul R. Wood, Special Adviser to the Board, Division of Board Members, Board Egon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston Rebecca Zarutskie, Special Adviser to the Board, Division of Board Members, Board Developments in Financial Markets and Open Market Operations The manager turned first to a review of developments in financial markets over the intermeeting period. U.S. fi- nancial conditions had eased modestly since the January FOMC meeting, with higher equity prices more than off- setting increases in interest rates. Nominal Treasury yields had risen over the intermeeting period. At shorter maturities, most of the increase was attributable to a rise in inflation compensation, prompted by indications that the decline in inflation was proceeding somewhat more slowly than markets in recent months had been expect- ing. In contrast, at longer maturities, much of the in- crease in Treasury yields was due to a rise in real rates, reflecting solid labor market readings and stronger-than- expected data on economic activity. The manager turned next to policy rate expectations. An estimate of the expected federal funds rate path derived from futures prices shifted up significantly over the in- termeeting period. The modal federal funds rate path implied by options prices had also risen, but by substan- tially less than the futures-implied path. The move up in the futures-implied path reflected in part some shift in expectations toward policy rate cuts beginning later in the year, and cumulating to a smaller rate reduction in 2024, than previously assessed. Investors also appeared to have considerably lowered the perceived probability of more substantial rate cuts than in their baseline ex- pectations. This lowering was evident in significantly more concentrated probability distributions for the fed- eral funds rate over coming quarters. The changes in policy rate expectations over the intermeeting period oc- curred in the wake of stronger economic data, percep- tions that disinflation might be proceeding more slowly than previously thought, and Federal Reserve communi- cations. The median of modal paths of the federal funds rate obtained from the Open Market Desk s Survey of Primary Dealers and Survey of Market Participants was also slightly higher. Responses still indicated substantial differences among survey participants in their assess- ments of the total amount of rate cuts likely to occur this year. The manager then discussed expectations regarding bal- ance sheet policy. Survey responses reflected judgments that the Committee s slowing of balance sheet runoff would begin slightly later than previously expected, with the majority of survey participants now expecting the slowing to start around midyear. Balance sheet runoff was expected to continue for some time thereafter, and survey responses suggested a slightly smaller balance sheet size at the end of runoff than res