Written by Steven Hansen
The Federal Open Market Committee (FOMC) – the board of directors of the Federal Reserve maintained the federal funds rate at 1‑1/2 to 1-3/4 as expected, and stated:
…. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak ….
Overall the Fed appears to believe the economy is little changed since the last meeting.
Analyst Opinion of the FOMC Meeting Minutes
There was nothing unexpected in the meeting minutes.
The Meeting Minutes
Econoday consensus forecast was for no change to the Federal Funds rate. Following the meeting statement, the economic projections of the FOMC members are incorporated into this post.
30 October Statement | 11 December Statement |
|---|---|
| Information received since the Federal Open Market Committee met in September indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12-month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed. | Information received since the Federal Open Market Committee met in October indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Although household spending has been rising at a strong pace, business fixed investment and exports remain weak. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2 percent. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed. |
| Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1-1/2 to 1-3/4 percent. This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective are the most likely outcomes, but uncertainties about this outlook remain. The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate. | Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee decided to maintain the target range for the federal funds rate at 1‑1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective. The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate. |
| 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. | 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 for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; and Randal K. Quarles. Voting against this action were: Esther L. George and Eric S. Rosengren, who preferred at this meeting to maintain the target range at 1-3/4 percent to 2 percent. | Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren. |
December 11, 2019: FOMC Projections materials, accessible version
For release at 2:00 p.m., EDT, December 11, 2019
Table 1. Economic projections of Federal Reserve Board members and Federal Reserve Bank presidents, under their individual assumptions of projected appropriate monetary policy, December 2019
Advance release of table 1 of the Summary of Economic Projections to be released with the FOMC minutes
Figure 1. Medians, central tendencies, and ranges of economic projections, 2019-22 and over the longer run
Change in real GDP
Percent
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Longer run | |
|---|---|---|---|---|---|---|---|---|---|---|
| Actual | 2.9 | 1.9 | 2.0 | 2.8 | 2.5 | – | – | – | – | – |
| Upper End of Range | – | – | – | – | – | 2.3 | 2.3 | 2.2 | 2.2 | 2.2 |
| Upper End of Central Tendency | – | – | – | – | – | 2.2 | 2.2 | 2.0 | 2.0 | 2.0 |
| Median | – | – | – | – | – | 2.2 | 2.0 | 1.9 | 1.8 | 1.9 |
| Lower End of Central Tendency | – | – | – | – | – | 2.1 | 2.0 | 1.8 | 1.8 | 1.8 |
| Lower End of Range | – | – | – | – | – | 2.1 | 1.8 | 1.7 | 1.5 | 1.7 |
Unemployment rate
Percent
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Longer run | |
|---|---|---|---|---|---|---|---|---|---|---|
| Actual | 5.7 | 5.0 | 4.8 | 4.1 | 3.8 | – | – | – | – | – |
| Upper End of Range | – | – | – | – | – | 3.6 | 3.8 | 4.0 | 4.1 | 4.5 |
| Upper End of Central Tendency | – | – | – | – | – | 3.6 | 3.7 | 3.9 | 4.0 | 4.3 |
| Median | – | – | – | – | – | 3.6 | 3.5 | 3.6 | 3.7 | 4.1 |
| Lower End of Central Tendency | – | – | – | – | – | 3.5 | 3.5 | 3.5 | 3.5 | 3.9 |
| Lower End of Range | – | – | – | – | – | 3.5 | 3.3 | 3.3 | 3.3 | 3.5 |
PCE inflation
Percent
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Longer run | |
|---|---|---|---|---|---|---|---|---|---|---|
| Actual | 1.1 | .3 | 1.5 | 1.8 | 1.9 | – | – | – | – | – |
| Upper End of Range | – | – | – | – | – | 1.7 | 2.1 | 2.3 | 2.2 | 2.0 |
| Upper End of Central Tendency | – | – | – | – | – | 1.5 | 1.9 | 2.1 | 2.2 | 2.0 |
| Median | – | – | – | – | – | 1.5 | 1.9 | 2.0 | 2.0 | 2.0 |
| Lower End of Central Tendency | – | – | – | – | – | 1.4 | 1.8 | 2.0 | 2.0 | 2.0 |
| Lower End of Range | – | – | – | – | – | 1.4 | 1.7 | 1.8 | 1.8 | 2.0 |
Note. Definitions of variables and other explanations are in the notes to table 1. The data for the actual values of the variables are annual.
Figure 2. FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate
Number of participants with the projected midpoint of the target range or target level
| Midpoint of target range or target level (Percent) | 2019 | 2020 | 2021 | 2022 | Longer run |
|---|---|---|---|---|---|
| 3.375 | |||||
| 3.250 | 1 | ||||
| 3.125 | |||||
| 3.000 | 1 | ||||
| 2.875 | 2 | ||||
| 2.750 | 2 | ||||
| 2.625 | 2 | ||||
| 2.500 | 8 | ||||
| 2.375 | 3 | 4 | 1 | ||
| 2.250 | 2 | ||||
| 2.125 | 5 | 3 | |||
| 2.000 | 1 | ||||
| 1.875 | 4 | 4 | 5 | ||
| 1.750 | |||||
| 1.625 | 17 | 13 | 5 | 1 | |
| 1.500 |
Note: Each shaded circle indicates the value (rounded to the nearest 1/8 percentage point) of an individual participant’s judgment of the midpoint of the appropriate target range for the federal funds rate or the appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer run. One participant did not submit longer-run projections for the federal funds rate.
Explanation of Economic Projections Charts
The charts show actual values and projections for three economic variables, based on FOMC participants’ individual assessments of appropriate monetary policy:
- Change in Real Gross Domestic Product (GDP)-as measured from the fourth quarter of the previous year to the fourth quarter of the year indicated.
- Unemployment Rate-the average civilian unemployment rate in the fourth quarter of each year.
- PCE Inflation-as measured by the change in the personal consumption expenditures (PCE) price index from the fourth quarter of the previous year to the fourth quarter of the year indicated.
Information for these variables is shown for each year from 2014 to 2022, and for the longer run.
The solid blue line, labeled “Actual,” shows the historical values for each variable.
The solid red lines depict the median projection in each period for each variable. The median value in each period is the middle projection when the projections are arranged from lowest to highest. When the number of projections is even, the median is the average of the two middle projections.
The range and central tendency for each variable in each projection period are depicted in “box and whiskers” format. The blue connected horizontal and vertical lines (“whiskers”) represent the range of the projections of policymakers. The bottom of the range for each variable is the lowest of all of the projections for that year or period. Likewise, the top of the range is the highest of all of the projections for that year or period. The light blue shaded boxes represent the central tendency, which is a narrower version of the range that excludes the three highest and three lowest projections for each variable in each year or period.
The longer-run projections, which are shown on the far right side of the charts, are the rates of growth, unemployment, and inflation to which a policymaker expects the economy to converge over time-maybe in five or six years-in the absence of further shocks and under the appropriate monetary policy. Because appropriate monetary policy, by definition, is aimed at achieving the Federal Reserve’s dual mandate of maximum employment and price stability in the longer run, policymakers’ longer-run projections for economic growth and unemployment may be interpreted, respectively, as estimates of the economy’s normal or trend rate of growth and its normal unemployment rate over the longer run. The longer-run projection shown for inflation is the rate of inflation judged to be most consistent with the Federal Reserve’s dual mandate.
Explanation of Policy Path Chart
This chart is based on policymakers’ assessments of appropriate monetary policy, which, by definition, is the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her interpretation of the Federal Reserve’s dual objectives of maximum employment and stable prices.
Each shaded circle indicates the value (rounded to the nearest 1/8 percentage point) of an individual participant’s judgment of the midpoint of the appropriate target range for the federal funds rate or the appropriate target level for the federal funds rate at the end of the specified calendar year or over the longer run.
Source: All minutes and statement index/calendar for the Federal Reserve
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