December 18, 2020

Northwest FCS News

Meeting Date:  December 15-16, 2020

Federal Open Market Committee (FOMC) Meeting Results

This meeting was a virtual  meeting

Fed pledges to use full range of tools to assist the economy. Fed does not change rates - keeps interest rate range  at  0.0% - 0.25%

Fed claims that the COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world and warns of additional economic and financial harm that the virus might cause.

Fed enhances its quarterly economic projections by included new measures of risk associated with their forecasts.

Fed promises to use all tools at their disposal, thereby promoting its maximum employment and price stability goals.

Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least  $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals.

 

 Economic Highlights:
The Federal Reserve pledges to do everything in its power to assist the economy.
  • “The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
  • The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. 
  • Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation.
  • Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
  • The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”

Announcements
Fed funds rate unchanged. Fed funds range remains at 0.0% -0.25%. Fed pledges more bond buying if necessary. 
  • “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.
  • The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
  • In addition, Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals.
 
Quarterly Economic Projections
New Economic Forecasts and New Risk Assessments pertaining to the forecasts. 
  • Summary of the December, 2020 projections as compared to the September, 2020 are shown in the following chart:
  • Fed Forecast Changes from September to December 2020
  • The new charts show FOMC participants' judgments of uncertainty and risks related to their projections of the change in real gross domestic product, the unemployment rate, personal consumption expenditures (PCE) inflation, and core PCE inflation. The first new illustrative chart shows the proportion of participants who indicated that the uncertainty surrounding their projections for each variable was higher or lower relative to the average level of uncertainty over the past 20 years. The chart below shows the uncertainty of the participant’s December 2020 GDP projections
  • Fed Uncertainty Graph December, 2020
  • The second new illustrative chart shows the proportion of participants who saw the risks to their projections as weighted toward the upside or downside. The following chart shows the risks toward the upside or downside to the December, 2020 GDP projections.
  • Fed Risk Weightings Graph December 2020
 
 Voting Results
No dissenting votes

 Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.  

 
Next Meeting:  January 26-27, 2021

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The preceding information contains excerpts from an official published statement on the Federal Open Market Committee’s March 15, 2020 meeting.  For full text, please visit the Federal Reserve website.