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Today is Halloween, and the Federal Open Market Committee gave market participants a couple of treats when it made its decision on short-term interest rates yesterday.

First, it lowered short-term interest rates, which keeps borrowing rates low for U.S. consumers for a range of things including mortgages.

The second treat was that Federal Reserve Chairman Jerome Powell gave the market an insight into the thinking of the Committee at his press conference. Powell said current monetary policy would remain steady as long as the data the Committee was seeing continued to signal economic strength and inflation near the Federal Reserve’s goal of 2%. Market participants have taken this as a signal that there won’t be future rate cuts without a significant change in the data.

Although they aren’t directly correlated, longer-term interest rates for things like mortgages do tend to follow the path of the benchmark interest rate set by the Fed. If you’re in the market for mortgage, this is a great time to take advantage of low rates and lock your rate today.

The release is below. My comments are in bold.

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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.

The Committee always starts their announcements by giving us their views on the state of the economy. Labor gets an A on the report card. There continues to be new hiring and the unemployment rate is very low right now. Consumer spending has also been strong. We’ve been doing our part when we buy those new earphones. At the same time, the Committee really feels that businesses aren’t spending as much as they could be. Our level of exports to other countries also leaves something to be desired. Finally, the Federal Reserve continues to keep an eye on inflation, which is below its 2% target. The Fed would love to see prices rise a little bit because the threat of inflation makes people buy now, which stimulates the economy.

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.

Each time the Fed makes a rate decision, everyone skips ahead to this paragraph, specifically the italicized portion. It’s the equivalent to checking the score on a game you didn’t watch. Anyway, this is where the Committee decided to lower short-term interest rates. This keeps borrowing costs low for consumers. The Fed is also hoping it’ll give inflation a push without bumping it up too high.

The Committee does see threats to sustained economic expansion, including low inflation – people won’t rush to buy things if they don’t think prices will go up soon. In addition, developments that could slow global economic growth are keeping the Committee on its toes. Think of the ongoing trade tariffs with China as well as what’s going on over in Europe with Brexit and negative interest rates in Germany. Anyway, the Committee tells us it’s keeping an eye on those things. That’s a good thing.

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.

Ideally, the Federal Reserve would have a crystal ball that could tell the Committee exactly what was going to happen in the economy. Unfortunately, no such thing exists, so they do the next best thing and look at a bunch of economic data points to try to determine where things might be going in the future by studying the recent past. In this paragraph, they also reaffirm their long-term goals of keeping employment as high as possible and reaching 2% annual inflation.

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.

There was some dissent on the Committee as there’s now an open debate on the best course of action to take in the future. Esther George and Eric Rosengren preferred to keep rates where they were rather than lowering them.

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