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For release at 2 p.m. EST

December 16, 2020

The Federal Reserve is committed to using its full range of tools to support the
U.S. economy in this challenging time, thereby promoting its maximum employment and
price stability goals.
The COVID-19 pandemic is causing tremendous human and economic hardship
across the United States and around the world. Economic activity and employment have
continued to recover but remain well below their levels at the beginning of the year.
Weaker demand and earlier declines in oil prices have been holding down consumer price
inflation. Overall financial conditions remain accommodative, in part reflecting policy
measures to support the economy and the flow of credit to U.S. households and
businesses.
The path of the economy will depend significantly on the course of the virus. The
ongoing public health crisis will continue to weigh on economic activity, employment,
and inflation in the near term, and poses considerable risks to the economic outlook over
the medium term.
The Committee seeks to achieve maximum employment and inflation at the rate
of 2 percent over the longer run. With inflation running persistently below this longerrun goal, 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. The Committee expects to maintain an
accommodative stance of monetary policy until these outcomes are achieved. The
Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent
and expects it will be appropriate to maintain this target range until labor market
conditions have reached levels consistent with the Committee’s assessments of maximum
employment and inflation has risen to 2 percent and is on track to moderately exceed
2 percent for some time. In addition, the Federal Reserve will continue to increase its
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For release at 2 p.m. EST

December 16, 2020
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holdings of Treasury securities by at least $80 billion per month and of agency mortgagebacked securities by at least $40 billion per month until substantial further progress has
been made toward the Committee’s maximum employment and price stability goals.
These asset purchases help foster smooth market functioning and accommodative
financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will
continue to monitor the implications of incoming information for the economic outlook.
The Committee would be prepared to adjust the stance of monetary policy as appropriate
if risks emerge that could impede the attainment of the Committee’s goals. The
Committee’s assessments will take into account a wide range of information, including
readings on public health, labor market conditions, inflation pressures and inflation
expectations, and 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; Richard H. Clarida; Patrick
Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.
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For release at 2 p.m. EST

December 16, 2020

Decisions Regarding Monetary Policy Implementation
The Federal Reserve has made the following decisions to implement the monetary policy
stance announced by the Federal Open Market Committee in its statement on
December 16, 2020:
•

The Board of Governors of the Federal Reserve System voted unanimously to
maintain the interest rate paid on required and excess reserve balances at
0.10 percent, effective December 17, 2020.

•

As part of its policy decision, the Federal Open Market Committee voted to
authorize and direct the Open Market Desk at the Federal Reserve Bank of New
York, until instructed otherwise, to execute transactions in the System Open Market
Account in accordance with the following domestic policy directive:
“Effective December 17, 2020, the Federal Open Market Committee directs the
Desk to:
o Undertake open market operations as necessary to maintain the federal
funds rate in a target range of 0 to 1/4 percent.
o Increase the System Open Market Account holdings of Treasury
securities by $80 billion per month and of agency mortgage-backed
securities (MBS) by $40 billion per month.
o Increase holdings of Treasury securities and agency MBS by additional
amounts and purchase agency commercial mortgage-backed securities
(CMBS) as needed to sustain smooth functioning of markets for these
securities.
o Conduct term and overnight repurchase agreement operations to support
effective policy implementation and the smooth functioning of short-term
U.S. dollar funding markets.
o Conduct overnight reverse repurchase agreement operations at an offering
rate of 0.00 percent and with a per-counterparty limit of $30 billion per
day; the per-counterparty limit can be temporarily increased at the
discretion of the Chair.
o Roll over at auction all principal payments from the Federal Reserve's
holdings of Treasury securities and reinvest all principal payments from
the Federal Reserve's holdings of agency debt and agency MBS in agency
MBS.
o Allow modest deviations from stated amounts for purchases and
reinvestments, if needed for operational reasons.
o Engage in dollar roll and coupon swap transactions as necessary to
facilitate settlement of the Federal Reserve's agency MBS transactions.”
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December 16, 2020
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•

In a related action, the Board of Governors of the Federal Reserve System
voted unanimously to approve the establishment of the primary credit rate at the
existing level of 0.25 percent.

This information will be updated as appropriate to reflect decisions of the Federal Open
Market Committee or the Board of Governors regarding details of the Federal Reserve’s
operational tools and approach used to implement monetary policy.
More information regarding open market operations and reinvestments may be found on
the Federal Reserve Bank of New York’s website.
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