INSUBCONTINENT EXCLUSIVE:
This is the statement the US Fed released last night at the end of its two-day rage-setting meeting
Analysts this morning made various interpretation of the tone and tenor of this statement
Here we reproduce the full text.Information received since the Federal Open Market Committee met in November 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 remained low
Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in
On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 per cent
Indicators 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 Committee judges that some further gradual increases in the target range for the federal funds rate will be consistent with sustained
The Committee judges that risks to the economic outlook are roughly balanced, but will continue to monitor global economic and financial
developments and assess their implications for the economic outlook.
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 2-1/4 to 2-1/2 per cent.
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 per cent 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
Voting for the FOMC monetary policy action were: Jerome H
Williams, Vice Chairman; Thomas I
Bowman; Lael Brainard; Richard H
Quarles.
Decisions Regarding Monetary Policy ImplementationThe Federal Reserve has made the following decisions to implement the monetary
Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 2.40 per cent, effective
Setting the interest rate paid on required and excess reserve balances 10 basis points below the top of the target range for the federal
decision, the Federal Open Market Committee voted to authorize and direct the Open Market Desk at the Federal Reserve Bank of New York,
until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy
to maintain the federal funds rate in a target range of 2-1/4 to 2-1/2 per cent, including overnight reverse repurchase operations (and
reverse repurchase operations with maturities of more than one day when necessary to accommodate weekend, holiday, or similar trading
conventions) at an offering rate of 2.25 per cent, in amounts limited only by the value of Treasury securities held outright in the System
Open Market Account that are available for such operations and by a per-counterparty limit of $30 billion per day.
The Committee directs the
maturing during each calendar month that exceeds $30 billion, and to continue reinvesting in agency mortgage-backed securities the amount of
month that exceeds $20 billion
Small deviations from these amounts for operational reasons are acceptable
The Committee also directs the Desk to engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the
System voted unanimously to approve a 1/4 per centage point increase in the primary credit rate to
In taking this action, the Board approved
requests to establish that rate submitted by the Boards of Directors of the Federal Reserve Banks of Boston, Cleveland, Richmond, Atlanta,
Chicago, and San Francisco
This information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors
