September 16 FOMC Summary

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  • In its last scheduled meeting before the US presidential election, the FOMC voted to keep the Fed Funds target rate unchanged within the 0.00% to 0.25% range. This outcome was widely expected.
  • Two members of the committee voted against the decision on the basis of differences with longer-term policy plans.
  • The forward guidance on monetary policy indicated strong support within the committee for maintaining the current target range through 2023.


  • The statement added language reflecting Chairman Powell’s announcement in late August that the Fed would transition to an average inflation targeting methodology with respect to its 2% inflation target.
  • The statement explicitly calls for the committee to target inflation in excess of 2% for a period of time, noting “…the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent.”

Asset Purchases

  • In a change from recent statements, the Fed statement did not include commercial mortgage-backed securities in its pledge to increase asset holdings over the coming months.
  • The monetary policy Implementation Note directs Federal Reserve staff to increase Treasury and agency mortgage-backed securities holdings at the “current pace” but now directs the purchase of commercial mortgage-backed securities only “as needed.”

Economic Projections

  • The Fed’s median economic projections for 2020 anticipate improved outcomes versus what the Fed was predicting in June.
  • The 2020 real GDP estimate moved up to -3.7% versus the -6.5% estimate from June. Likewise, the unemployment rate estimate dropped from 9.3% to 7.6%. The Fed’s PCE inflation expectation rose to 1.2% from 0.8%.
  • The FOMC is next scheduled to meet November 4-5, immediately following the US presidential election.



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