Federal Open Market Committee, 20/9/2023 Federal Open Market Committee meeting, US Fed. 19-20/09/2023 Fed Funds Rate left unchanged for now.       The Federal Open Market Committee voted keep the Fed Funds Rate at 5.25% – 5.5% during its meeting on 19th and 20th September. Already borrowing costs are at their highest level in more than 20 years. The run-off of assets purchased between 2020 and 2022 in response to the coronavirus pandemic will continue at an overall rate of $95b. per month. However, there remains flexibility for potential reinvestment “if needed for operational reasons”. In the ensuing press conference, Fed…

Federal Open Market Committee, 27/7/2023 Federal Open Market Committee meeting, US Fed. 26-27/07/2023 Further increase in the Fed Funds Rate.       After voting to pause its tightening cycle at its June meeting, the Federal Open Market Committee voted unanimously to increase the Fed Funds Rate by 25bps to 5.25% – 5.5% during its meeting on 26th and 27th July. This is the eleventh increase in the cost of borrowing since March 2022 and it raises the Fed Funds Rate to a level not seen for more than 22 years. The run-off of assets purchased between 2020 and 2022 in response…

Federal Open Market Committee, 14/06/2023 Federal Open Market Committee meeting, US Fed. 13-14/06/2023 Fed pauses rate hikes but asset run-off continues.       As widely predicted, the Federal Open Market Committee voted unanimously to keep the Fed Funds Rate unchanged at 5% – 5.25% during its meeting on 13th and 14th June. This is the first time since March 2022 that the FOMC has not voted to increase the cost of borrowing. This decision does not imply that the end of the tightening cycle has yet been reached. “It may make sense for rates to move higher but at a more…

Federal Open Market Committee, 3/5/2023 Federal Open Market Committee meeting, US Fed. 02-03/05/2023 Fed Funds rate increased by 0.25% but may pause for now.       The Federal Open Market Committee voted unanimously to increase the Fed Funds Rate by 0.25% during its meeting at the start of May. The cost of borrowing has now been raised from zero to 5% – 5.25% since the start of 2022 and now stands at its highest level since 2007. The problems which have surfaced in several US banks since the start of the year have led to widespread speculation that the FOMC may…

Federal Open Market Committee, 22/03/2023 Federal Open Market Committee meeting, US Fed. 21-22/03/2023  Fed Funds rate increased by 0.25%.       The Federal Open Market Committee voted unanimously to increase the Fed Funds Rate by 0.25% during its meeting in March, despite concerns over the banking sector. The cost of borrowing has now been raised from zero to 4.75% – 5% since the start of 2022 and now stands at its highest level since 2007. Projections for monetary policy (the dot plot) show officals now expect the policy rate to peak at 5% to 4.25% this year. The press release following…

Federal Open Market Committee, 14/12/2022 Federal Open Market Committee meeting, US Fed. 13-14/12/2022 Fed Funds rate increased by 0.5%.       The Federal Open Market Committee voted unanimously to increase the Fed Funds Rate by 0.5% during its meeting at the start of November. The cost of borrowing has now been raised from zero to 4.25% – 4.5% since the start of the year and now stands at its highest level since 2007. Significantly, this increase is smaller than the previous four rate hikes, all of which were 0.75%. The statement from the FOMC following the meeting stressed that further increases…

Federal Open Market Committee, 2/11/2022 Federal Open Market Committee meeting, US Fed. 1-2/11/2022 Fourth consecutive 0.75% increase in the Fed Funds Rate may not be the last.       As widely expected, the Federal Open Market Committee voted unanimously to increase the Fed Funds Rate by 0.75% during its meeting at the start of November. The cost of borrowing has now been raised from zero to 3.75% – 4% since the start of the year. A further hike in borrowing costs could be implemented at the final FOMC meeting of the year. “We still have some ways to go,” said Fed…

Federal Open Market Committee, 21/09/2022 Federal Open Market Committee meeting, US Fed. 20-21/09/2022 FOMC goes for third consecutive 0.75% increase in the Fed Funds Rate. The Fed Funds Rate has now been raised from zero to 3% – 3.25% since the start of the year and it may not be the last increase of 2022. “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t” said Fed Chairman Jerome Powell after last week’s meeting of the Federal Open Market Committee, which included an unanimous vote to hike the cost of…

    Federal Open Market Committee, 27/072022 Federal Open Market Committee meeting, US Fed. 26-27/07/2022 FOMC raises the Fed Funds Rate by a further 0.75%.       With US inflation continuing to track upwards, it was inevitable that the Federal Open Market Committee was going to vote for a further increase in the Fed Funds Rate at its meeting on 26th – 27th June. The decision to implement a hike of 0.75% will raise the cost of borrowing to 2.25% – 2.5%. The FOMC statement issued after the meeting stressed the Fed’s commitment to bringing inflation back down to its 2%…

Federal Open Market Committee, 15/06/2022 Federal Open Market Committee meeting, US Fed. 14-15/06/2022 FOMC raises the Fed Funds Rate again – this time by 0.75%.       Any hopes that inflation may have already peaked when the annual increase in consumer prices fell from 8.5% in March to 8.3% in April were dashed when May’s data were published. The 8.6% inflation rate was the highest since December 1981. It is unsurprising that the Federal Open Market Committee voted for a further increase in the Fed Funds Rate at its meeting on 14th – 15th June. The size of the increase, 0.75%,…

Federal Open Market Committee, 4/5/2022 Federal Open Market Committee meeting, US Fed. 03-04/05/2022 FOMC increases the Fed Funds Rate by 0.5%. Confronted with consumer price inflation at a 40-year high of 8.5% in the year to March, the FOMC followed up its 0.25% increase in the Fed Funds Rate last March with a further increase, this time of 0.5% on 4th May, taking borrowing costs up to 0.75% – 1%. It also announced that on 1st June, it will stop fully re-investing maturing assets purchased over the last two years. For three months, $30b. worth of Treasuries and $17.5b. of…

Federal Open Market Committee, 16/03/2022 Federal Open Market Committee meeting, US Fed. 03-04/05/2022 FOMC increases the Fed Funds Rate by 0.5%.       Confronted with consumer price inflation at a 40-year high of 8.5% in the year to March, the FOMC followed up its 0.25% increase in the Fed Funds Rate last March with a further increase, this time of 0.5% on 4th May, taking borrowing costs up to 0.75% – 1%. It also announced that on 1st June, it will stop fully re-investing maturing assets purchased over the last two years. For three months, $30b. worth of Treasuries and $17.5b.…

Federal Open Market Committee, 26/01/2022 Federal Open Market Committee meeting, US Fed. 25-26/01/2022 Fed Funds Rate likely to rise, but not yet.       US consumer price inflation rose to 7% in the year to December, the highest value since June 1982. This figure was weighing heavily on the minds of the FOMC during its meeting on 25th-26th January. No new initiatives were announced. The “taper” of the asset purchase scheme will continue as planned, with the asset purchases stopping altogether in March 2022. The Fed Funds Rate will continue at its historic low of 0.25% for now, although in the…

Federal Open Market Committee, 15/12/2021 Federal Open Market Committee meeting, US Fed. 14-15/12/2021 Fed increases the taper, but is it enough?      Since the last FOMC meeting, US consumer price inflation has risen further, rising to 6.8% in the year to December, the highest value since June 1982. The Fed has insisted for much of 2021 that inflation would only be transitory and would subside once supply chain issues were resolved. However, in a speech tosession of the US Senate banking Committee on 30th November, Fed Chairman Jay Powell admitted that it was “time to retire” the word “transitory” when…

Federal Open Market Committee, 4/11/2021 Federal Open Market Committee meeting, US Fed. 3-4/11/2021 Fed finally announces its tapering programme     After hinting strongly at its previous meeting in September that a “tapering” of asset purchases may not be too far away, the Federal Reserve’s Open Market Committee provided some further details after its meeting on 3rd – 4th  November. This month, the Fed will reduce its purchases of Treasury securities by $10b. and its purchase of agency mortgage-backed securities by $5b. Further reductions by the same amounts will also take place in December, but although further similar reductions are pencilled…

Federal Open Market Committee, 22/09/2021 Federal Open Market Committee meeting, US Fed. 21-22/9/2021 Fed signals that tapering will begin shortly     “The Committee judges that a moderation in the pace of asset purchases may soon be warranted.” This statement was issued after the most recent meeting of the Federal Reserve’s Open Markets Committee on 21st – 22nd September. No date was set for the much-anticipated “tapering” to begin and the statement was hedged with the inevitable caveats about the need for further progress towards maximum employment and price stability. Indeed, the FOMC stated that it “would be prepared to adjust…

Federal Open Market Committee, 29/07/2021 Federal Open Markets Committee meeting, US Fed. 28-29/7/2021 Fed remains in denial about inflation     After reaching 5% in the year to May, consumer price inflation in the USA rose further to 5.4% a month later, the highest reading since August 2008. Producer prices rose higher still, reaching 7.3% over the same period. This suggests that the USA could be heading for a prolonged period of high inflation, especially given the surge in broad money growth in recent months. June saw only a modest increase – $24b. – in M3, but the values for each…

Federal Open Market Committee, 16/06/2021 Federal Open Markets Committee meeting, US Fed. 15-16/6/2021. Fed expects current inflationary surge to be transitory     In the year to May, consumer price inflation in the USA hit 5%, the highest reading since August 2008. Fuel and transportation costs recorded the biggest increase but virtually every sector of the economy saw prices rising above the Fed’s 2% target. Even though these prices refer to the Consumer Price Index rather than the Fed’s preferred Personal Consumption Expenditure index (PCE), it is very apparent that inflation is well above target. Factory gate prices rose by 6.6%,…

Federal Open Market Committee, 28/04/2021 Federal Open Market Committee meeting, US Fed. 27-28/04/2022 First signs of dissent from within the Fed?    The Federal Reserve’s Open Markets Committee met on 27th – 28th April 2021 and voted unanimously to continue with its very substantial monthly asset purchase scheme. It also re-stated that very accommodative monetary policy will be maintained until inflation rises above 2% for a sustained period. In the first quarter of 2021, US broad money (as measured by M3, calculated by Shadow Government Statistics) grew at an annual rate of 10.3%, the highest reading since July of last…

Federal Open Market Committee, 17/03/2021 Federal Open Market Committee meeting, US Fed. 16-17/03/2021 Will the Fed underestimate the inflationary surge?    The Federal Reserve’s Open Markets Committee met on 16th-17th March 2021 and voted unanimously to keep interest rates low and to continue with its very substantial monthly asset purchase scheme. It also re-stated that very accommodative monetary policy will be maintained until inflation rises above 2% for a sustained period. The Shadow Government Statistics agency (which the Institute for International Monetary Research uses to obtain the US broad money (M3) data) has not published February’s numbers, but in the…

Federal Open Market Committee, 27/01/2021 Federal Open Market Committee meeting, US Fed. 26-27/01/2021 No new initiatives at Fed’s first FOMC meeting of 2021   The Federal Reserve’s Open Markets Committee met 27th January 2021 and no new initiatives were announced. The Committee reaffirmed its commitment to keep interest rates low and to continue with its very substantial monthly asset purchase scheme. It also re-stated that very accommodative monetary policy will be maintained until inflation rises above 2% for a sustained period. There was no mention of the extraordinary high levels of broad money growth in recent months. In December, the…

Federal Open Market Committee, 16/09/2020 Federal Open Market Committee meeting, US Fed. 15-16/09/2020 US Federal Reserve to continue with loose monetary policy   The Federal Reserve’s Open Market Committee met on 15th-16th September. As expected, no new initiatives were announced although the Committee reaffirmed its commitment to keep interest rates low and to continue with its very substantial monthly asset purchase scheme.  Concern was expressed that US consumer price inflation had frequently fallen short of the Fed’s 2% target during much of the last decade. The very accommodative monetary policy will therefore be maintained until inflation rises above this level,…