Meeting Date: July 26-27, 2016

Economic Highlights
Labor market conditions have been mixed with weak job growth in May, but stronger growth in June. Inflation rate still below the Fed’s announced goal of 2.0%.
“Information received since the Federal Open Market Committee met in June indicates that the labor market strengthened and that economic activity has been expanding at a moderate rate. Job gains were strong in June following weak growth in May. Household spending has been growing strongly but business fixed investment has been soft. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.”

Policy Announcements
Fed keeps Fed Funds rate fixed for fifth consecutive meeting but claims new policy is still “Accommodative.”
“The Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation.”

Fed’s Security Holdings
No change from last FOMC meeting. Total dollars injected into the economy from the Large Scale Asset Purchase programs to remain constant.
“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, and it anticipates doing so until normalization of the level of the federal funds rate is well under way. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.”

Forward Guidance
FOMC will raise rates very slowly and only if the economy continues to improve, and the committee warns that rates are likely to remain below levels that are expected to prevail in the longer run for some time. All rate changes will be based on incoming data.
“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. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only 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.”

Voting Results
Esther George, Kansas City Fed president, dissented at this meeting after voting “yes” at the June meeting. Esther George preferred an immediate rate hike of 0.25%.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester; Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.

Next Meeting:  September 20-21, 2016

The preceding information contains excerpts from an official published statement on the Federal Open Market Committee’s July 26-27, 2016 meeting.  For full text, please visit the Federal Reserve website.