January 31, 2019

Northwest FCS News

Meeting Date:  Jan. 29-30, 2019
Economic Highlights
FOMC declares economy is basically unchanged since their last meeting of Dec. 18, 2018, as labor markets remain healthy and economic activity is rising. The rate of inflation is near the 2.0 percent goal, and longer-term inflation expectations are relatively stable.
  • “Information received since the Federal Open Market Committee met in December indicates that the labor market has continued to strengthen, and that economic activity has been rising at a solid rate.
  • Job gains have been strong, on average, in recent months, and the unemployment rate has remained low.
  • Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier last year.
  • On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Although market-based measures of inflation compensation have moved lower in recent months, survey-based measures of longer-term inflation expectations are little changed.”
    Fed funds rate unchanged at the range of 2.25-2.50 percent. But the FOMC declares they will be patient in determining future rate hikes. Interest on Excess Reserves (IOER) paid to financial institutions remains at 2.40 percent.
  • “Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2.25 to 2.50 percent.
  • The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective as the most likely outcomes.
  • In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
  • The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on required and excess reserve balances at 2.40 percent, effective Jan. 31, 2019.
    Forward Guidance
    The Fed indicated that future rate hikes will depend on economic conditions such as labor market changes, indicators of inflation pressures and any changes in inflation expectations, as well as any new financial and international developments.
  • “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 maximum employment objective and its symmetric 2 percent inflation objective.
  • 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.”
    Voting Results
    No dissenting vote at this meeting.
    Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.
    Next Meeting:  March 19-20, 2019


    The preceding information contains excerpts from an official published statement on the Federal Open Market Committee’s Jan. 29-30, 2019 meeting.  For full text, please visit the Federal Reserve website.