Federal Reserve — FOMC Statement (USA, 2024)

Minutes of the Federal Open Market Committee June 11 12, 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, June 11, 2024, at 10:30 a.m. and continued on Wednesday, June 12, 2024, at 9:15 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, Alberto G. Musalem, 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,2 Economist Beth Anne Wilson, Economist Shaghil Ahmed, Kartik B. Athreya, James A. Clouse, Brian M. Doyle, Edward S. Knotek II, David E. Lebow, Paula Tkac, and William Wascher, Associate Economists Roberto Perli, Manager, System Open Market Account Julie Ann Remache, Deputy Manager, System Open Market Account Stephanie R. Aaronson, Senior Associate Director, Division of Research and Statistics, Board Jose Acosta, Senior System Administrator II, Division of Information Technology, Board Roc Armenter, Executive Vice President, Federal Reserve Bank of Philadelphia Ayelen Banegas, Principal Economist, Division of Monetary Affairs, Board Michele Cavallo, Principal Economist, Division of Monetary Affairs, Board Stephanie E. Curcuru, Deputy Director, Division of International Finance, Board Stefania D Amico,3 Senior Economist and Research Advisor, Federal Reserve Bank of Chicago Ryan Decker, Special Adviser to the Board, Division of Board Members, Board Rochelle M. Edge, Deputy Director, Division of Monetary Affairs, Board Eric M. Engen, Senior Associate Director, Division of Research and Statistics, Board Michele Taylor Fennell,4 Deputy Associate Secretary, Office of the Secretary, Board Glenn Follette, Associate Director, Division of Research and Statistics, Board Jenn Gallagher, Assistant to the Board, Division of Board Members, Board Carlos Garriga, Senior Vice President, Federal Reserve Bank of St. Louis Michael S. Gibson, Director, Division of Supervision and Regulation, Board David Glancy, Principal Economist, Division of Monetary Affairs, 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 Tuesday s session only. 3 Attended through the discussion of developments in finan- cial markets and open market operations. 4 Attended the discussion of the economic and financial situ- ation only. _____________________________________________________________________________________________Page 1 Francois J. Gourio, Senior Economist and Economic Advisor, Federal Reserve Bank of Chicago Edward Nelson, Senior Adviser, Division of Monetary Affairs, Board Olesya Grishchenko, Principal Economist, Division of Alyssa O Connor, Special Adviser to the Board, Monetary Affairs, Board Division of Board Members, Board Christopher J. Gust, Associate Director, Division of Matthias Paustian, Assistant Director, Division of Monetary Affairs, Board Research and Statistics, Board Valerie S. Hinojosa, Section Chief, Division of Karen M. Pence, Deputy Associate Director, Division Monetary Affairs, Board of Research and Statistics, Board Jasper J. Hoek, Deputy Associate Director, Division of Karen A. Pennell, First Vice President, Federal Reserve International Finance, Board Bank of Boston Sara J. Hogan,3 Senior Financial Institution Policy Damjan Pfajfar, Group Manager, Division of Monetary Analyst I, Division of Reserve Bank Operations and Payment Systems, Board Affairs, Board Eugenio P. Pinto, Special Adviser to the Board, Jane E. Ihrig, Special Adviser to the Board, Division of Division of Board Members, Board Board Members, Board Odelle Quisumbing,5 Assistant to the Secretary, Office Michael T. Kiley, Deputy Director, Division of of the Secretary, Board Financial Stability, Board Gisela Rua, Principal Economist, Division of Research Don H. Kim,3 Senior Adviser, Division of Monetary and Statistics, Board Affairs, Board Achilles Sangster II, Senior Information Manager, Andreas Lehnert, Director, Division of Financial Division of Monetary Affairs, Board Stability, Board A. Lee Smith, Senior Vice President, Federal Reserve Paul Lengermann, Deputy Associate Director, Division Bank of Kansas City of Research and Statistics, Board Robert G. Valletta, Senior Vice President, Federal Kurt F. Lewis, Special Adviser to the Chair, Division of Reserve Bank of San Francisco Board Members, Board Francisco Vazquez-Grande, Group Manager, Division Dan Li, Assistant Director, Division of Monetary of Monetary Affairs, Board Affairs, Board Laura Lipscomb, Special Adviser to the Board, Division of Board Members, Board David L pez-Salido, Senior Associate Director, Division of Monetary Affairs, Board Thomas Lubik, Senior Advisor, Federal Reserve Bank of Richmond Clara Vega, Special Adviser to the Board, Division of Board Members, Board Annette Vissing-J rgensen, Senior Adviser, Division of Monetary Affairs, Board Jeffrey D. Walker,3 Associate Director, Division of Reserve Bank Operations and Payment Systems, Board Benjamin Malin, Vice President, Federal Reserve Bank Paul R. Wood, Special Adviser to the Board, Division of Minneapolis of Board Members, Board Benjamin W. McDonough, Deputy Secretary and Ombudsman, Office of the Secretary, Board Egon Zakrajsek, Executive Vice President, Federal Reserve Bank of Boston Karel Mertens, Senior Vice President, Federal Reserve Rebecca Zarutskie, Special Adviser to the Board, Bank of Dallas Division of Board Members, Board Michelle M. Neal, Head of Markets, Federal Reserve Bank of New York 5 Attended through the discussion of the economic and finan- cial situation. Page 2Federal Open Market Committee_____________________________________________________________________________________________ Developments in Financial Markets and Open Market Operations The manager turned first to a review of developments in financial markets. Financial conditions eased modestly over the intermeeting period mainly because of higher equity prices. Taking a somewhat longer perspective, the manager noted that financial conditions had changed little since March but eased notably since the fall. The main drivers of that easing were again higher equity prices, which appeared to respond to the reductions in the perceived odds of a recession, and a consensus among market participants that the federal funds rate has reached its peak. Nominal Treasury yields declined moderately across the curve, on net, but continued to be very sensitive to incoming data surprises, especially those pertaining to inflation and the labor market. The net decline in nominal yields over the period was primar- ily due to lower real yields. Inflation compensation also fell somewhat, especially at shorter horizons. Longer- term inflation expectations remained well anchored. The manager turned next to policy rate expectations. The path of the federal funds rate implied by futures prices shifted a bit lower over the intermeeting period and indicated one and one-half 25 basis point cuts by year-end. This shift appeared to reflect mostly changes in perceived risks rather than base-case expectations be- cause the modal path implied by options was virtually unchanged and remained consistent with, at most, one cut this year. The median of modal paths of the federal funds rate obtained from the Open Market Desk s Sur- vey of Primary Dealers and Survey of Market Partici- pants taken before the May employment report was also little changed. The manager then discussed expectations regarding bal- ance sheet policy. Responses to the Desk surveys showed a median expected timing for the end of balance sheet runoff of April 2025, one month later than in the previous surveys, though individual respondents  views of the exact timing remained dispersed. Respondents  expectations about the size of the portfolio at the end of runoff had changed little in recent surveys. In international developments, the European Central Bank (ECB) and the Bank of Canada (BOC) initiated rate-cutting cycles this period, as generally expected. Market participants reportedly had not expected easing cycles to begin at the same time across economies but appeared to expect that most advanced-economy central banks will have started easing policy within the next sev- eral months. The manager then turned to money markets and Desk operations. Unsecured overnight rates were stable over the intermeeting period. In secured funding markets, re- purchase agreement (repo) rates remained steady for most of the period but firmed close to the end of May because of month-end pressures and the effect of large settlements of Treasury coupon securities. Rate firm- ness around reporting and settlement dates was con- sistent with historical patterns. Use of the overnight re- verse repurchase agreement (ON RRP) facility remained sensitive to marke