September 27, 2018

Northwest FCS News

Meeting Date:  Sept. 25-26, 2018
 
Economic Highlights
This section of the FOMC release is virtually identical to the last statement with labor markets remaining strong and the unemployment rate low; economic activity rising, at a strong rate; household spending and business fixed investment growing strongly; the rate of inflation is near the 2.0 percent goal; and longer-term inflation expectations are relatively constant.
  • “Information received since the Federal Open Market Committee met in August indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate.
  • Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low. Household spending and business fixed investment have grown strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent.
  • Indicators of longer-term inflation expectations are little changed, on balance.” 
 
Policy Announcements
Fed funds rate increased to 2.00-2.25 percent range. Fed claims monetary policy is in line with the effort to labor market strong and keep inflation near the 2.0 percent goal. Fed also raised the rate paid on required and excess reserves held by financial institution at the Federal reserve. Fed also released its economic and interest projections.
  • “Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.
  • In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 2 to 2-1/4 percent. 
  • The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 2.20 percent, effective September 27, 2018.”
  • The Fed issued its new economic forecast. The table below shows the latest projections.
 
Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents under their individual assessments of projected appropriate monetary policy, September 2018
Economic Projections
The fed also released its new Dot Plot - a forecast of future changes in the Federal Funds Rate.
Figure2
 
Forward Guidance
The Fed indicated that future rate hikes will depend on economic conditions and new economic 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; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Richard H. Clarida; Esther L. George; Loretta J. Mester; and Randal K. Quarles.
 
Next Meeting:  November 7-8, 2018

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The preceding information contains excerpts from an official published statement on the Federal Open Market Committee’s Sept. 25-26, 2018 meeting.  For full text, please visit the Federal Reserve website.