TextCEsInFinance/fomc-communication

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1,040	I don’t think we look at—I understand what you’re asking, but we’re looking at—our mandate is price inflation and maximum employment, and that’s what we’re looking at with setting interest rates.	2,019	0	dovish
1,041	If you look at the number of job openings compared to the number of unemployed, it’s—we’re, we’re clearly on a path to a very strong labor market with high participation, low unemployment, high employment, wages moving up across the spectrum.	2,021	1	hawkish
1,042	Wage growth is not—there are many factors that affect it—it’s not definitive in any sense in determining our policy,	2,021	2	neutral
1,043	The growth of subprime mortgage lending is one indication of the extent to which access to credit has increased for all households, including those with lower incomes.	1,997	2	neutral
1,044	However, some participants noted that the recent rise in the prices of oil and other commodities, as well as increases in import prices stemming from the decline in the foreign exchange value of the dollar, could boost inflation pressures.	2,008	1	hawkish
1,045	As the economy approached full employment, the Federal Open Market Committee (FOMC), the monetary policymaking arm of the Federal Reserve System, was faced with the classic problem of managing the mid-cycle slowdown--that is, of setting policy to help guide the economy toward sustainable growth without inflation.	2,022	1	hawkish
1,046	The staff interpreted the increases in prices of energy and nonmarket services that recently boosted consumer price inflation as largely transitory.	2,019	2	neutral
1,047	PCE core is at about 2, and I think we see that, you know, the temporary increase in headline inflation as being a function of oil prices probably, and we expect inflation to go back down to 2 percent.	2,012	1	hawkish
1,048	* * * What then are the implications of this largely irreducible uncertainty for the conduct of monetary policy?	1,999	2	neutral
1,049	it was noted that this drop could be explained by a reduction in the number of respondents who had previously expected relatively high inflation outcomes.	2,010	2	neutral
1,050	The Phillips curve has become, according to most estimates, quite flat in the sense that movements in unemployment have only a modest impact on inflation, so we shouldn’t overblow how large that is.	2,020	2	neutral
1,051	In these circumstances, inflation pressures could be expected to remain subdued and some further disinflation might well occur.	2,022	0	dovish
1,052	Venezuela provides one counterexample, with a long-term inflation forecast now of 15 percent.	2,006	2	neutral
1,053	Job gains had been robust in recent months, and the unemployment rate had declined substantially.	2,021	1	hawkish
1,054	If the demand growth that caused the oil price increases is domestic, it could mean that the price shock might be less permanent.	2,006	1	hawkish
1,055	The economy continued to perform well into 2007, with solid growth through the third quarter and unemployment remaining near recent lows.	2,005	1	hawkish
1,056	Our role, though, is also to, you know, to make sure that—that maximum employment happens in a context of price stability and financial stability, which is why we’re gradually raising rates.	2,021	1	hawkish
1,057	Ensuring that every American has the chance to improve his or her economic circumstances through hard work, saving, entrepreneurship, and other productive activities is essential for building healthy communities and achieving sustainable economic growth.	1,997	2	neutral
1,058	The effect can be accentuated by the temporary parking in liquid accounts of the proceeds from the more-frequent turnover and refinancings that often accompany a house price boom.	2,005	1	hawkish
1,059	Long-term government bond yields declined and headline equity indexes increased, on net, in most of these countries, with bank stock prices in the euro area rising more than broader indexes.	2,022	0	dovish
1,060	will soon fall well below its underlying trend as the price of energy falls back to its initial level.	2,020	2	neutral
1,061	Core price inflation was projected to rise a little over the forecast horizon, in part as a result of higher import prices	2,000	1	hawkish
1,062	The hurricanes were also expected to depress payroll employment in September, with a reversal over the next few months.	2,000	2	neutral
1,063	Rapid responses by businesses to changes in free-market prices have muted much of the tendency for unsold goods to back up, or unmet needs to produce shortages.	2,005	2	neutral
1,064	Several members noted the benefits of accumulating further information that could help clarify the contours of the outlook for economic activity and inflation as well as the need for further policy action.	2,018	2	neutral
1,065	Several mentioned that the revisions to the NIPA pointed to a modest downward adjustment in projected growth of actual and potential GDP,	2,010	0	dovish
1,066	The staff continued to project that the accommodative stance of monetary policy, together with a further attenuation of financial stress, the waning of adverse effects of earlier declines in wealth, and improving household and business confidence, would support a moderate recovery in economic activity and a gradual decline in the unemployment rate over the next two years.	1,998	0	dovish
1,068	But change is hard and not everyone is willing or able to pay the price.	2,021	2	neutral
1,069	The producer price index for core intermediate materials dropped for a fifth month in February, reflecting, in part, weaker global demand and steep declines in the prices of a wide variety of energy-intensive goods, such as chemicals and plastics.	2,012	0	dovish
1,070	The information reviewed at this meeting indicated that economic activity had turned up in the final quarter of last year and strengthened further since then.	2,008	1	hawkish
1,071	So, I think you raise a very important point because, although there is a great deal of market focus on the timing of liftoff, what to matter in thinking about the stance of policy is what the entire path of interest rates will look like.	2,019	2	neutral
1,072	Williamson cited Hayek's 1945 paper, along with Adam Smith's The Wealth of Nations from the eighteenth century, as forming the core of a "venerated tradition in economics" of studying the notion of "spontaneous order" arising from a freely operating market system.9 How does Hayek's case for the price system fit in alongside the other work that Williamson mentioned?	2,017	2	neutral
1,073	The U. S. trade deficit in goods and services widened substantially in January and February from its fourth-quarter average, with exports falling sharply and imports rising strongly.	2,010	1	hawkish
1,074	Inflation is also being held down, reflecting weaker demand as well as significantly lower energy prices.	2,012	0	dovish
1,075	however, apart from the energy and health care sectors, price inflation had remained relatively subdued, evidently reflecting the combination of diminished growth in overall demand and strong competitive pressures in most markets.	2,017	0	dovish
1,076	The members viewed the outlook for core price inflation as still quite benign, largely reflecting the ample availability of labor and other producer resources to accommodate rising economic activity and the favorable prospects for further robust growth in productivity.	2,012	2	neutral
1,077	First, we must be mindful that an unexpected slowdown might occur in the growth of productivity.	1,999	1	hawkish
1,078	Housing demand remained strong, but business fixed investment was still in the doldrums and consumer spending had flagged in late summer before apparently picking up somewhat in the autumn.	1,996	2	neutral
1,079	Following the deepest plunge since the Great Depression, employment and activity rebounded faster and more sharply than anticipated.	2,000	1	hawkish
1,080	May 21, 2020 U.S. Economic Outlook and Monetary Policy Vice Chair Richard H. Clarida At the New York Association for Business Economics, New York, New York (via webcast) Share Accessible Keys for Video [Space Bar] toggles play/pause; [Right/Left Arrows] seeks the video forwards and back (5 sec ); [Up/Down Arrows] increase/decrease volume; [M] toggles mute on/off; [F] toggles fullscreen on/off (Except IE 11); The [Tab] key may be used in combination with the [Enter/Return] key to navigate and activate control buttons, such as caption on/off.	2,017	2	neutral
1,083	There is, in fact, an unusual discrepancy between the unemployment and capacity utilization rates, compared to previous expansions	2,005	2	neutral
1,084	We have long said that the size of the balance sheet will be considered normalized when the balance sheet is once again at the smallest level consistent with conducting monetary policy efficiently and effectively.	2,020	2	neutral
1,085	Labor demand remained strong, and the labor market continued to be very tight.	2,005	0	dovish
1,086	So the FOMC will always, in some sense, trump the projections of forward interest rates, but clearly, because the participants and the people around the table are the same, the projections should give significant information about where the FOMC is likely to go.	2,013	2	neutral
1,087	However, it was noted that the Committee had in place tools that would enable it to remove policy accommodation quickly if necessary to avoid an undesirable increase in inflation.	2,006	1	hawkish
1,088	U. S. real GDP was forecast to plummet and the unemployment rate to soar in the second quarter of this year.	2,015	0	dovish
1,089	Real GDP growth was expected to step down in 2022 and 2023	2,008	0	dovish
1,090	Back then, the unemployment rate was 8.1percent and nonfarm payrolls were reported to have increased at a monthly rate of 97,000 over the prior six months; today, those figures are 7.6 percent and 194,000, respectively.	2,007	2	neutral
1,091	"The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output.	2,011	2	neutral
1,092	Homebuilding was forecast to decline somewhat but to stabilize at a relatively high level in the context of continued income growth and the generally favorable cash-flow affordability of home ownership.	2,001	2	neutral
1,093	And if we do that, inflation expectations will be right at 2 percent, and that’ll help us achieve 2 percent inflation over time and avoid the situation where the central bank loses its ability to support the economy.	2,013	2	neutral
1,094	Share prices of financial firms fell especially sharply, reportedly a reflection, in part, of concerns about exposures to subprime mortgages and about the effect of a potential slowdown in merger activity on operating profits.	2,003	2	neutral
1,095	After falling steeply before the August FOMC meeting, emerging market equity prices were little changed, on net, over the period.	2,015	2	neutral
1,096	When the government runs deficits, it siphons off private savings (reducing national saving), leaving less available for capital investment.	1,999	0	dovish
1,097	Analysis suggests it could take many years with a formal AIT rule to return the price level to target following a lower-bound episode, and a mechanical AIT rule is likely to become increasingly difficult to explain and implement as conditions change over time.15 In contrast, FAIT is better suited for the highly uncertain and dynamic context in which policymaking takes place.	2,004	0	dovish
1,098	Labor cost increases had not turned up and core inflation continued to edge lower.	2,005	0	dovish
1,099	At the moment, trend growth near full employment appears to be a reasonable prospect in the year ahead.	2,022	1	hawkish
1,100	They also noted that even with this additional firming the risks were still weighted mainly in the direction of rising inflationary pressures.	2,017	1	hawkish
1,101	In the simplest version of his model, Bill assumed that the central bank could choose to specify its monetary policy actions in terms of a particular level of a monetary aggregate or a particular value of a short-term nominal interest rate.	2,021	2	neutral
1,102	Measures of inflation compensation were little changed on net.	2,006	2	neutral
1,103	A second set of circumstances in which deflation or very low inflation may pose significant problems is potentially more relevant to the current U.S. economy.	2,005	0	dovish
1,104	Such a jump could raise core inflation temporarily if it is passed through to other prices or if it contributes to increasing inflation expectations.	2,004	1	hawkish
1,105	The shifting balance of domestic demand and potential supply in each country means that policies affecting domestic demand will need to be re-calibrated to preserve price stability and keep economies operating at high levels of reserve utilization.	2,017	1	hawkish
1,106	But even this relation--between the unemployment rate and the concept of economic slack--is not necessarily constant, and thus a given unemployment rate may not indicate the same level of slack at two separate times.	2,000	2	neutral
1,107	Indeed, such hearings used to be a regular feature in the weeks leading up to semiannual monetary policy hearings.	2,005	2	neutral
1,108	the recent increase in crude oil and gasoline prices would push up inflation temporarily.	2,004	1	hawkish
1,109	Participants marked up their inflation projections, as they assessed that supply constraints in product and labor markets were larger and likely to be longer lasting than previously anticipated.	2,011	1	hawkish
1,110	Residential MBS yields and residential mortgage interest rates declined, on net, over the intermeeting period to historically low levels, but their spreads to yields on long-term Treasury securities increased.	2,012	2	neutral
1,112	The Committee reiterated, however, that purchases were not on a preset course, and that its decisions about the pace of purchases would remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.	2,009	2	neutral
1,113	In their discussion of monetary policy for the period ahead, Committee members generally agreed that their overall assessments of the economic outlook were little changed since their previous meeting.	2,021	2	neutral
1,115	You can get to 20, if you wanted to, easily, but labor force participation, the unemployment rate, different age groups of—you know, prime-age labor force participation, in particular, gets a lot of focus, the JOLTS data get a lot of focus.	2,019	2	neutral
1,116	We have continued to provide guidance, the same guidance that we have for some time, that says the Committee “anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.” I know that’s a mouthful, but it says, in effect, that the Committee believes that the economic conditions that have made recovery difficult, we’re getting beyond them.	2,020	0	dovish
1,117	A number of business contacts indicated that they were passing on at least a portion of these higher costs to their customers or that they planned to try to do so later this year; however, contacts were uncertain about the extent to which they could raise prices, given current market conditions and the cautious attitudes toward spending still held by households and businesses.	2,014	1	hawkish
1,118	For the present, however, inflation remained subdued, and it was likely to remain relatively low for some time in light of the weakness in commodity and other import prices and the tendency for low current inflation to hold down expected price increases.	2,007	0	dovish
1,119	In May, there was a notable rebound in employment and decline in unemployment, and these developments are certainly welcome.	2,020	1	hawkish
1,120	With regard to the consensus in favor of moving from an assessment of risks weighted toward rising inflation to one that was weighted toward economic weakness, with no intermediate issuance of a balanced risks assessment, some members observed that such a change was likely to be viewed as a relatively rapid shift by some observers.	2,015	0	dovish
1,121	If the public expects that inflation will remain low and stable over time, then, absent major shocks, it likely will.	2,006	2	neutral
1,122	Since June, however, inflation fears have receded, and some financial-market participants have become less optimistic about the economy's near-term growth prospects.	2,020	0	dovish
1,123	While the absence of increasing price inflation was a welcome development, members were concerned that the break with historical patterns might not persist.	2,006	1	hawkish
1,124	Consumer spending was projected to increase at a rate generally in line with the anticipated rise in disposable income; the favorable effects on household wealth of the advance that had occurred in stock prices and the ample availability of credit for most borrowers were expected to balance the damping effects of continuing consumer concerns about the adequacy of their savings, the security of their jobs, and the extent of their debt burdens.	2,014	2	neutral
1,125	Equity prices have recently increased considerably, pushing the forward price-earnings ratio further above its historical median (slide).	1,997	0	dovish
1,126	participants generally expected no more than moderate growth in consumer spending over the near term.	2,007	2	neutral
1,127	Total nonfarm payroll employment rose solidly in July and August, with strong gains in private-sector jobs and declines in government employment.	2,013	2	neutral
1,128	A second economic rationale that is often advanced for the development of cities and that seems applicable to the Sioux Falls experience is that of labor market pooling--the ability of an industry to take advantage of a labor force possessing a specific set of skills, thereby raising productivity compared with competing areas with a more dispersed set of skills.	2,004	0	dovish
1,129	In addition, some policymakers observed that the timing and magnitude of future policy adjustments would ultimately be determined by the Committee's interpretation of the incoming data on the economy and prices rather than by its current expectation of those developments.	2,015	2	neutral
1,130	As of this month, the maximum monthly reduction in the balance sheet will be nearly double the level of the previous cycle.10 Together, the increase in the policy rate and the reduction in the balance sheet should help bring demand into alignment with supply.	2,022	1	hawkish
1,131	The shift in the stance of monetary policy that we undertook in 2019 was, I believe, well timed and has been providing support to the economy and helping to keep the U.S. outlook on track.	2,017	2	neutral
1,132	Conversely, perhaps the transitory factors boosting productivity will recede more sharply than most observers anticipate, and the output gap will close more rapidly.	2,020	2	neutral
1,133	The September FOMC meeting was the first since the Committee approved in August our new Statement on Longer-Run Goals and Monetary Policy Strategy and adopted a new policy framework.3 The changes we made in our September FOMC statement bring our policy guidance in line with this new framework.	2,006	2	neutral
1,134	More specifically, we observed financial-market developments over the period beginning fifteen minutes before and ending forty-five minutes after each policy decision became known to the public.4 The advantage of restricting the analysis to a short period spanning the Committee's decision is that the changes in yields or asset prices occurring within that narrow window are more likely to reflect the impact of the decision, as opposed to the arrival of other information about the economy.	2,002	2	neutral
1,135	Treasury yields rose sharply on its release as market participants traced out the report's presumed implications for monetary policy.	1,997	1	hawkish
1,136	Members expected to maintain an accommodative stance of monetary policy until those outcomes were achieved.	2,009	0	dovish
1,137	Experienced loan officers who are well acquainted with their markets can channel funds into the loans that are most likely to create wealth and growth in the local economy.	1,996	2	neutral
1,138	year-over-year consumer inflation remained at a very low level.	2,012	0	dovish
1,139	The pickup in demand had yet to materially narrow currently wide margins of idle labor and other resources, and these margins along with the uncertainties that still surrounded current forecasts of robust economic growth suggested that an accommodative monetary policy might remain desirable for a considerable period of time.	2,012	0	dovish
1,140	Implications for Monetary Policy The period from 1950 through the early 1980s provides two important lessons for managing the risks and uncertainties we face today.	2,022	2	neutral
1,141	Of course, many other factors also influence inflation, and some of these provide other possible explanations for the recent changes in inflation dynamics.	2,002	2	neutral
1,142	This automatically pushes up domestic interest rates to support the currency.	2,021	1	hawkish
1,143	Labor markets appeared to be stabilizing as private nonfarm payrolls grew in September for the first time since January, and employment losses in July and August turned out to be smaller than data initially had indicated.	2,022	2	neutral
1,144	Martin Baily and Robert Lawrence (2004) present a much more thorough analysis of this issue and come to a similar conclusion.4 To investigate further the relationship between restructuring and labor productivity, we compared the performance of industry employment to the performance of industry productivity for the period from 2000 to 2002 (chart 5).	1,999	2	neutral

1,040

I don’t think we look at—I understand what you’re asking, but we’re looking at—our mandate is price inflation and maximum employment, and that’s what we’re looking at with setting interest rates.

2,019

0

dovish

1,041

If you look at the number of job openings compared to the number of unemployed, it’s—we’re, we’re clearly on a path to a very strong labor market with high participation, low unemployment, high employment, wages moving up across the spectrum.

2,021

1

hawkish

1,042

Wage growth is not—there are many factors that affect it—it’s not definitive in any sense in determining our policy,

2,021

2

neutral

1,043

The growth of subprime mortgage lending is one indication of the extent to which access to credit has increased for all households, including those with lower incomes.

1,997

2

neutral

1,044

However, some participants noted that the recent rise in the prices of oil and other commodities, as well as increases in import prices stemming from the decline in the foreign exchange value of the dollar, could boost inflation pressures.

2,008

1

hawkish

1,045

As the economy approached full employment, the Federal Open Market Committee (FOMC), the monetary policymaking arm of the Federal Reserve System, was faced with the classic problem of managing the mid-cycle slowdown--that is, of setting policy to help guide the economy toward sustainable growth without inflation.

2,022

1

hawkish

1,046

The staff interpreted the increases in prices of energy and nonmarket services that recently boosted consumer price inflation as largely transitory.

2,019

2

neutral

1,047

PCE core is at about 2, and I think we see that, you know, the temporary increase in headline inflation as being a function of oil prices probably, and we expect inflation to go back down to 2 percent.

2,012

1

hawkish

1,048

* * * What then are the implications of this largely irreducible uncertainty for the conduct of monetary policy?

1,999

2

neutral

1,049

it was noted that this drop could be explained by a reduction in the number of respondents who had previously expected relatively high inflation outcomes.

2,010

2

neutral

1,050

The Phillips curve has become, according to most estimates, quite flat in the sense that movements in unemployment have only a modest impact on inflation, so we shouldn’t overblow how large that is.

2,020

2

neutral

1,051

In these circumstances, inflation pressures could be expected to remain subdued and some further disinflation might well occur.

2,022

0

dovish

1,052

Venezuela provides one counterexample, with a long-term inflation forecast now of 15 percent.

2,006

2

neutral

1,053

Job gains had been robust in recent months, and the unemployment rate had declined substantially.

2,021

1

hawkish

1,054

If the demand growth that caused the oil price increases is domestic, it could mean that the price shock might be less permanent.

2,006

1

hawkish

1,055

The economy continued to perform well into 2007, with solid growth through the third quarter and unemployment remaining near recent lows.

2,005

1

hawkish

1,056

Our role, though, is also to, you know, to make sure that—that maximum employment happens in a context of price stability and financial stability, which is why we’re gradually raising rates.

2,021

1

hawkish

1,057

Ensuring that every American has the chance to improve his or her economic circumstances through hard work, saving, entrepreneurship, and other productive activities is essential for building healthy communities and achieving sustainable economic growth.

1,997

2

neutral

1,058

The effect can be accentuated by the temporary parking in liquid accounts of the proceeds from the more-frequent turnover and refinancings that often accompany a house price boom.

2,005

1

hawkish

1,059

Long-term government bond yields declined and headline equity indexes increased, on net, in most of these countries, with bank stock prices in the euro area rising more than broader indexes.

2,022

0

dovish

1,060

will soon fall well below its underlying trend as the price of energy falls back to its initial level.

2,020

2

neutral

1,061

Core price inflation was projected to rise a little over the forecast horizon, in part as a result of higher import prices

2,000

1

hawkish

1,062

The hurricanes were also expected to depress payroll employment in September, with a reversal over the next few months.

2,000

2

neutral

1,063

Rapid responses by businesses to changes in free-market prices have muted much of the tendency for unsold goods to back up, or unmet needs to produce shortages.

2,005

2

neutral

1,064

Several members noted the benefits of accumulating further information that could help clarify the contours of the outlook for economic activity and inflation as well as the need for further policy action.

2,018

2

neutral

1,065

Several mentioned that the revisions to the NIPA pointed to a modest downward adjustment in projected growth of actual and potential GDP,

2,010

0

dovish

1,066

The staff continued to project that the accommodative stance of monetary policy, together with a further attenuation of financial stress, the waning of adverse effects of earlier declines in wealth, and improving household and business confidence, would support a moderate recovery in economic activity and a gradual decline in the unemployment rate over the next two years.

1,998

0

dovish

1,068

But change is hard and not everyone is willing or able to pay the price.

2,021

2

neutral

1,069

The producer price index for core intermediate materials dropped for a fifth month in February, reflecting, in part, weaker global demand and steep declines in the prices of a wide variety of energy-intensive goods, such as chemicals and plastics.

2,012

0

dovish

1,070

The information reviewed at this meeting indicated that economic activity had turned up in the final quarter of last year and strengthened further since then.

2,008

1

hawkish

1,071

So, I think you raise a very important point because, although there is a great deal of market focus on the timing of liftoff, what to matter in thinking about the stance of policy is what the entire path of interest rates will look like.

2,019

2

neutral

1,072

Williamson cited Hayek's 1945 paper, along with Adam Smith's The Wealth of Nations from the eighteenth century, as forming the core of a "venerated tradition in economics" of studying the notion of "spontaneous order" arising from a freely operating market system.9 How does Hayek's case for the price system fit in alongside the other work that Williamson mentioned?

2,017

2

neutral

1,073

The U. S. trade deficit in goods and services widened substantially in January and February from its fourth-quarter average, with exports falling sharply and imports rising strongly.

2,010

1

hawkish

1,074

Inflation is also being held down, reflecting weaker demand as well as significantly lower energy prices.

2,012

0

dovish

1,075

however, apart from the energy and health care sectors, price inflation had remained relatively subdued, evidently reflecting the combination of diminished growth in overall demand and strong competitive pressures in most markets.

2,017

0

dovish

1,076

The members viewed the outlook for core price inflation as still quite benign, largely reflecting the ample availability of labor and other producer resources to accommodate rising economic activity and the favorable prospects for further robust growth in productivity.

2,012

2

neutral

1,077

First, we must be mindful that an unexpected slowdown might occur in the growth of productivity.

1,999

1

hawkish

1,078

Housing demand remained strong, but business fixed investment was still in the doldrums and consumer spending had flagged in late summer before apparently picking up somewhat in the autumn.

1,996

2

neutral

1,079

Following the deepest plunge since the Great Depression, employment and activity rebounded faster and more sharply than anticipated.

2,000

1

hawkish

1,080

May 21, 2020 U.S. Economic Outlook and Monetary Policy Vice Chair Richard H. Clarida At the New York Association for Business Economics, New York, New York (via webcast) Share Accessible Keys for Video [Space Bar] toggles play/pause; [Right/Left Arrows] seeks the video forwards and back (5 sec ); [Up/Down Arrows] increase/decrease volume; [M] toggles mute on/off; [F] toggles fullscreen on/off (Except IE 11); The [Tab] key may be used in combination with the [Enter/Return] key to navigate and activate control buttons, such as caption on/off.

2,017

2

neutral

1,083

There is, in fact, an unusual discrepancy between the unemployment and capacity utilization rates, compared to previous expansions

2,005

2

neutral

1,084

We have long said that the size of the balance sheet will be considered normalized when the balance sheet is once again at the smallest level consistent with conducting monetary policy efficiently and effectively.

2,020

2

neutral

1,085

Labor demand remained strong, and the labor market continued to be very tight.

2,005

0

dovish

1,086

So the FOMC will always, in some sense, trump the projections of forward interest rates, but clearly, because the participants and the people around the table are the same, the projections should give significant information about where the FOMC is likely to go.

2,013

2

neutral

1,087

However, it was noted that the Committee had in place tools that would enable it to remove policy accommodation quickly if necessary to avoid an undesirable increase in inflation.

2,006

1

hawkish

1,088

U. S. real GDP was forecast to plummet and the unemployment rate to soar in the second quarter of this year.

2,015

0

dovish

1,089

Real GDP growth was expected to step down in 2022 and 2023

2,008

0

dovish

1,090

Back then, the unemployment rate was 8.1percent and nonfarm payrolls were reported to have increased at a monthly rate of 97,000 over the prior six months; today, those figures are 7.6 percent and 194,000, respectively.

2,007

2

neutral

1,091

"The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output.

2,011

2

neutral

1,092

Homebuilding was forecast to decline somewhat but to stabilize at a relatively high level in the context of continued income growth and the generally favorable cash-flow affordability of home ownership.

2,001

2

neutral

1,093

And if we do that, inflation expectations will be right at 2 percent, and that’ll help us achieve 2 percent inflation over time and avoid the situation where the central bank loses its ability to support the economy.

2,013

2

neutral

1,094

Share prices of financial firms fell especially sharply, reportedly a reflection, in part, of concerns about exposures to subprime mortgages and about the effect of a potential slowdown in merger activity on operating profits.

2,003

2

neutral

1,095

After falling steeply before the August FOMC meeting, emerging market equity prices were little changed, on net, over the period.

2,015

2

neutral

1,096

When the government runs deficits, it siphons off private savings (reducing national saving), leaving less available for capital investment.

1,999

0

dovish

1,097

Analysis suggests it could take many years with a formal AIT rule to return the price level to target following a lower-bound episode, and a mechanical AIT rule is likely to become increasingly difficult to explain and implement as conditions change over time.15 In contrast, FAIT is better suited for the highly uncertain and dynamic context in which policymaking takes place.

2,004

0

dovish

1,098

Labor cost increases had not turned up and core inflation continued to edge lower.

2,005

0

dovish

1,099

At the moment, trend growth near full employment appears to be a reasonable prospect in the year ahead.

2,022

1

hawkish

1,100

They also noted that even with this additional firming the risks were still weighted mainly in the direction of rising inflationary pressures.

2,017

1

hawkish

1,101

In the simplest version of his model, Bill assumed that the central bank could choose to specify its monetary policy actions in terms of a particular level of a monetary aggregate or a particular value of a short-term nominal interest rate.

2,021

2

neutral

1,102

Measures of inflation compensation were little changed on net.

2,006

2

neutral

1,103

A second set of circumstances in which deflation or very low inflation may pose significant problems is potentially more relevant to the current U.S. economy.

2,005

0

dovish

1,104

Such a jump could raise core inflation temporarily if it is passed through to other prices or if it contributes to increasing inflation expectations.

2,004

1

hawkish

1,105

The shifting balance of domestic demand and potential supply in each country means that policies affecting domestic demand will need to be re-calibrated to preserve price stability and keep economies operating at high levels of reserve utilization.

2,017

1

hawkish

1,106

But even this relation--between the unemployment rate and the concept of economic slack--is not necessarily constant, and thus a given unemployment rate may not indicate the same level of slack at two separate times.

2,000

2

neutral

1,107

Indeed, such hearings used to be a regular feature in the weeks leading up to semiannual monetary policy hearings.

2,005

2

neutral

1,108

the recent increase in crude oil and gasoline prices would push up inflation temporarily.

2,004

1

hawkish

1,109

Participants marked up their inflation projections, as they assessed that supply constraints in product and labor markets were larger and likely to be longer lasting than previously anticipated.

2,011

1

hawkish

1,110

Residential MBS yields and residential mortgage interest rates declined, on net, over the intermeeting period to historically low levels, but their spreads to yields on long-term Treasury securities increased.

2,012

2

neutral

1,112

The Committee reiterated, however, that purchases were not on a preset course, and that its decisions about the pace of purchases would remain contingent on its outlook for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.

2,009

2

neutral

1,113

In their discussion of monetary policy for the period ahead, Committee members generally agreed that their overall assessments of the economic outlook were little changed since their previous meeting.

2,021

2

neutral

1,115

You can get to 20, if you wanted to, easily, but labor force participation, the unemployment rate, different age groups of—you know, prime-age labor force participation, in particular, gets a lot of focus, the JOLTS data get a lot of focus.

2,019

2

neutral

1,116

We have continued to provide guidance, the same guidance that we have for some time, that says the Committee “anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.” I know that’s a mouthful, but it says, in effect, that the Committee believes that the economic conditions that have made recovery difficult, we’re getting beyond them.

2,020

0

dovish

1,117

A number of business contacts indicated that they were passing on at least a portion of these higher costs to their customers or that they planned to try to do so later this year; however, contacts were uncertain about the extent to which they could raise prices, given current market conditions and the cautious attitudes toward spending still held by households and businesses.

2,014

1

hawkish

1,118

For the present, however, inflation remained subdued, and it was likely to remain relatively low for some time in light of the weakness in commodity and other import prices and the tendency for low current inflation to hold down expected price increases.

2,007

0

dovish

1,119

In May, there was a notable rebound in employment and decline in unemployment, and these developments are certainly welcome.

2,020

1

hawkish

1,120

With regard to the consensus in favor of moving from an assessment of risks weighted toward rising inflation to one that was weighted toward economic weakness, with no intermediate issuance of a balanced risks assessment, some members observed that such a change was likely to be viewed as a relatively rapid shift by some observers.

2,015

0

dovish

1,121

If the public expects that inflation will remain low and stable over time, then, absent major shocks, it likely will.

2,006

2

neutral

1,122

Since June, however, inflation fears have receded, and some financial-market participants have become less optimistic about the economy's near-term growth prospects.

2,020

0

dovish

1,123

While the absence of increasing price inflation was a welcome development, members were concerned that the break with historical patterns might not persist.

2,006

1

hawkish

1,124

Consumer spending was projected to increase at a rate generally in line with the anticipated rise in disposable income; the favorable effects on household wealth of the advance that had occurred in stock prices and the ample availability of credit for most borrowers were expected to balance the damping effects of continuing consumer concerns about the adequacy of their savings, the security of their jobs, and the extent of their debt burdens.

2,014

2

neutral

1,125

Equity prices have recently increased considerably, pushing the forward price-earnings ratio further above its historical median (slide).

1,997

0

dovish

1,126

participants generally expected no more than moderate growth in consumer spending over the near term.

2,007

2

neutral

1,127

Total nonfarm payroll employment rose solidly in July and August, with strong gains in private-sector jobs and declines in government employment.

2,013

2

neutral

1,128

A second economic rationale that is often advanced for the development of cities and that seems applicable to the Sioux Falls experience is that of labor market pooling--the ability of an industry to take advantage of a labor force possessing a specific set of skills, thereby raising productivity compared with competing areas with a more dispersed set of skills.

2,004

0

dovish

1,129

In addition, some policymakers observed that the timing and magnitude of future policy adjustments would ultimately be determined by the Committee's interpretation of the incoming data on the economy and prices rather than by its current expectation of those developments.

2,015

2

neutral

1,130

As of this month, the maximum monthly reduction in the balance sheet will be nearly double the level of the previous cycle.10 Together, the increase in the policy rate and the reduction in the balance sheet should help bring demand into alignment with supply.

2,022

1

hawkish

1,131

The shift in the stance of monetary policy that we undertook in 2019 was, I believe, well timed and has been providing support to the economy and helping to keep the U.S. outlook on track.

2,017

2

neutral

1,132

Conversely, perhaps the transitory factors boosting productivity will recede more sharply than most observers anticipate, and the output gap will close more rapidly.

2,020

2

neutral

1,133

The September FOMC meeting was the first since the Committee approved in August our new Statement on Longer-Run Goals and Monetary Policy Strategy and adopted a new policy framework.3 The changes we made in our September FOMC statement bring our policy guidance in line with this new framework.

2,006

2

neutral

1,134

More specifically, we observed financial-market developments over the period beginning fifteen minutes before and ending forty-five minutes after each policy decision became known to the public.4 The advantage of restricting the analysis to a short period spanning the Committee's decision is that the changes in yields or asset prices occurring within that narrow window are more likely to reflect the impact of the decision, as opposed to the arrival of other information about the economy.

2,002

2

neutral

1,135

Treasury yields rose sharply on its release as market participants traced out the report's presumed implications for monetary policy.

1,997

1

hawkish

1,136

Members expected to maintain an accommodative stance of monetary policy until those outcomes were achieved.

2,009

0

dovish

1,137

Experienced loan officers who are well acquainted with their markets can channel funds into the loans that are most likely to create wealth and growth in the local economy.

1,996

2

neutral

1,138

year-over-year consumer inflation remained at a very low level.

2,012

0

dovish

1,139

The pickup in demand had yet to materially narrow currently wide margins of idle labor and other resources, and these margins along with the uncertainties that still surrounded current forecasts of robust economic growth suggested that an accommodative monetary policy might remain desirable for a considerable period of time.

2,012

0

dovish

1,140

Implications for Monetary Policy The period from 1950 through the early 1980s provides two important lessons for managing the risks and uncertainties we face today.

2,022

2

neutral

1,141

Of course, many other factors also influence inflation, and some of these provide other possible explanations for the recent changes in inflation dynamics.

2,002

2

neutral

1,142

This automatically pushes up domestic interest rates to support the currency.

2,021

1

hawkish

1,143

Labor markets appeared to be stabilizing as private nonfarm payrolls grew in September for the first time since January, and employment losses in July and August turned out to be smaller than data initially had indicated.

2,022

2

neutral

1,144

Martin Baily and Robert Lawrence (2004) present a much more thorough analysis of this issue and come to a similar conclusion.4 To investigate further the relationship between restructuring and labor productivity, we compared the performance of industry employment to the performance of industry productivity for the period from 2000 to 2002 (chart 5).

1,999

2

neutral