Experiential Wealth

FOMC September 2017 Press Release Language Changes

Sep 20, 2017 | FOMC, Individuals, Institutions


·         Economic activity expanded moderately (no change)

·         Labor market continues to strengthen with solid job gains (no change)

·         Unemployment remains low (no change)

·         Household spending continues to expand (no change)

·         Business fixed investment picked up (change)

·         Inflation and core inflation are little changed (change)

·         Near term risks to the economic outlook appear balanced (no change)

·         Hurricanes impact would likely be temporary (new)

·         Inflation may rise due to hurricanes in the short term (new)

·         Maintain federal fund rate target range (no change)

·         Begin balance sheet normalization in October (change)

·         Bottom Line:  Economic activities continue to rise with some short-term negative impact from hurricanes which may cause a short-term increase in inflation.  The FOMC is holding the federal funds rate unchanged while announcing October to begin the first step in balance sheet normalization.

For release at 2 p.m. EDT July 26 September 20, 2017

Information received since the Federal Open Market Committee met in June July indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year.  Job gains have been remained solid, on average, since the beginning of the year, in recent months, and the unemployment rate has declined stayed low.  Household spending has been expanding at a moderate rate, and growth in business fixed investment have continued to expand has picked up in recent quarters.  On a 12-month basis, overall inflation and the measure excluding food and energy prices have declined this year and are running below 2 percent.  Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The Hurricanes Harvey, Irma, and Maria have devastated many communities, inflicting severe hardship. Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term. Consequently, the Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace, and labor market conditions will strengthen somewhat further.  Inflation Higher prices for gasoline and some other items in the aftermath of the hurricanes will likely boost inflation temporarily; apart from that effect, inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee’s 2 percent objective over the medium term.  Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 1 to 1-1/4 percent.  The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a sustained return to 2 percent inflation.

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 objectives of maximum employment and 2 percent inflation.  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 Committee will carefully monitor actual and expected inflation developments relative to its symmetric inflation goal.  The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.  However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

For the time being, In October, the Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.  The Committee expects to begin implementing its will initiate the balance sheet normalization program relatively soon, provided that the economy evolves broadly as anticipated; this program is described in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H. Powell.

Source: The Federal Reserve