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April 26–27, 2011 Authorized for Public Release Appendix 1: Materials used by Mr. Sack 218 of 244 April 26–27, 2011 Authorized for Public Release Class II FOMC - Restricted FR Material for FOMC Presentation: Financial Market Developments and Desk Operations Brian Sack April 26, 2011 219 of 244 April 26–27, 2011 Authorized for Public Release 220 of 244 Class II FOMC – Restricted FR Exhibit 1 (1) Implied Federal Funds Rate Path* Percent 1.3 (2) Commodity Prices Indexed to 08/03/09 185 04/21/11 FOMC 03/14/11 1.0 165 0.8 145 0.5 125 0.3 105 Brent Oil* Commodities Index** 85 0.0 04/22/11 08/22/11 12/22/11 04/22/12 08/22/12 *Based on federal funds and eurodollar futures rates. Source: Federal Reserve Bank of New York (3) Forward Breakeven Inflation Rates (5-Year 5-Year Rates) Percent 3.5 FOMC 08/03/09 01/03/10 06/03/10 11/03/10 04/03/11 *Front-month futures contract **Thomson Reuters/Jefferies CRB Commodity Index Source: Bloomberg (4) Treasury Yields Percent 4.0 3.0 3.0 2.5 FOMC 2.0 2.0 1.0 1.5 08/03/09 Federal Reserve Board Barclays Capital 0.0 01/03/10 06/03/10 11/03/10 04/03/11 Source: Federal Reserve Board of Governors, Barclays Capital (5) Market Reaction to S&P Announcement 08/03/09 2-Year 01/03/10 5-Year 06/03/10 10-Year 11/03/10 04/03/11 Source: Bloomberg $ Trillions (6) Treasury Debt Outstanding 14.8 2Y Treasury 10Y Treasury 30Y Treasury S&P 500*** DXY Dollar Immediate Response* -3 bps +4 bps +9 bps -0.7% -0.3% *Change from 9 to 9:30 AM **Change from 9 AM to close ***Change computed from futures prices. Source: Bloomberg Daily Change** -2 bps -1 bps +2 bps -0.7% +0.1% 14.4 14.0 Projected Current Debt Limit 13.6 13.2 12.8 10/01/10 12/01/10 02/01/11 04/01/11 06/01/11 Source: Federal Reserve Board of Governors April 26–27, 2011 Authorized for Public Release 221 of 244 Class II FOMC – Restricted FR Exhibit 2 (7) Japanese Equity Prices* Indexed to 08/03/09 (8) Japanese Yen ¥/$ 110 90 FOMC 100 85 90 FOMC 80 Yen Appreciation 80 75 11/01/10 12/11/10 01/20/11 03/01/11 04/10/11 *Nikkei Index Source: Bloomberg 2,500 2,000 1,500 01/20/11 03/01/11 04/10/11 FOMC Greece (LHS) Portugal (RHS) Spain (RHS) Italy (RHS) 1000 800 1,000 (10) Foreign Exchange Rates Indexed to BPS 08/03/09 1200 130 600 FOMC Euro/Dollar Broad Dollar Index 120 110 400 500 200 0 08/03/09 12/11/10 Source: Bloomberg (9) Euro Area Sovereign Debt Spreads* BPS 11/01/10 0 01/03/10 06/03/10 11/03/10 04/03/11 *2-year spreads to Germany Source: Bloomberg 90 08/03/09 Dollar Appreciation 01/03/10 06/03/10 11/03/10 04/03/11 Source: Federal Reserve Board of Governors, Bloomberg (11) U.S. Equity Prices Indexed to 08/03/09 100 (12) VIX Index BPS 50 140 FOMC FOMC 130 40 120 30 110 20 100 90 08/03/09 10 US Bank Index* S&P 500 01/03/10 *KBW Bank Index Source: Bloomberg 06/03/10 11/03/10 04/03/11 0 08/03/09 01/03/10 Source: Bloomberg 06/03/10 11/03/10 04/03/11 April 26–27, 2011 Authorized for Public Release 222 of 244 Class II FOMC – Restricted FR Exhibit 3 (14) SOMA Portfolio (13) SOMA Purchases of Treasury Securities $ Billions 120 Forecast June 2011 60 LSAP2 40 Reinvestments 20 1,634 117 903 2,654 777 168 1,161 2,106 Duration 80 April 2010 Holdings* Treasury Agency MBS Total 100 4.64 4.36 Oct-11 Aug-11 Jun-11 Apr-11 Feb-11 Dec-10 Oct-10 Aug-10 Jun-10 0 *Holdings in $ billions Source: Federal Reserve Bank of New York Source: Federal Reserve Bank of New York (15) Change in MBS Spreads* (16) MBS Held in Official Portfolios $ Billions BPS 14.0 12.0 10.0 500 Two Day Window Change to Date 8.0 4.0 200 2.0 0.0 100 -2.0 -4.0 0 4.0% 4.5% 5.0% 5.5% *Option-adjusted spread Source: Barclays Capital 0.3 Federal Reserve 300 6.0 Percent U.S. Treasury 400 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% Source: Federal Reserve Bank of New York, U.S. Treasury (17) Short Term Funding Rates* $ Billions (18) SOMA Securities Lending Volume* 30 Treasury GC Repo Federal Funds Effective FOMC 25 0.2 20 15 0.1 10 FDIC Fee Implementation 0.0 08/03/09 5 0 01/03/10 06/03/10 *5-day moving average Source: Federal Reserve Bank of New York 11/03/10 04/03/11 08/03/09 01/03/10 06/03/10 *10-day moving average Source: Federal Reserve Bank of New York 11/03/10 04/03/11 April 26–27, 2011 Authorized for Public Release 223 of 244 Class II FOMC – Restricted FR Exhibit 4 (19) Expected Use of Exit Tools Relative to First Target Rate Increase (% of Respondents)* Be fore Ne ve r 0 0 0 5 IO ER Afte r 100 "Exte nde d Pe riod" Concurre nt 95 0 (20) Expected Timing of Exit Tools Relative to First Target Rate Increase 0 RRPs 85 15 0 0 TDFs 90 10 0 0 Tre asury Re de m. 55 5 25 15 MBS Re de m. 95 0 5 0 Tre asury Sale s 0 5 75 20 MBS Sale s 0 0 80 20 “Extended Period” IOER Median Interquartile Range RRPs TDFs Treasury Redem. MBS Redem. Treasury Sales MBS Sales -6 *Views on agency debt sales and redemptions largely followed those for MBS. Source: Federal Reserve Bank of New York Policy Survey $ Trillions (21) Expected Size of Domestic Assets in SOMA -2 0 2 Number of meetings 4 6 Source: Federal Reserve Bank of New York Policy Survey (22) Level of Reserves at First Target Rate Increase % of Respondents 40 3.0 -4 35 2.5 30 25 2.0 20 1.5 15 Tealbook Median Interquartile Range 1.0 0.5 10 5 0 0.0 2009 2010 2011 2012 2013 2014 Source: Federal Reserve Bank of New York Policy Survey 201400 2015 End-of-Year 601800 (23) Draining Capacity over Intermeeting Period 1001- 1201- 14011200 1400 1600 $ Billions (24) Expected Spread between IOER Rate and Federal Funds Rate (in BPS)* Median Interquartile Range 700 8011000 Source: Federal Reserve Bank of New York Policy Survey $ Billions 800 401600 Level of Excess Reserves 600 $1.5 $1 $500 Trillion Trillion Billion 500 $0 - $25 Billion 0.25% IOER Rate 300 200 16 9 2 -1 1.00% 17 14 5 -3 2.00% 400 25 15 6 0 100 RRPs TDFs RRPs & TDFs Source: Federal Reserve Bank of New York Policy Survey *Median values Source: Federal Reserve Bank of New York Policy Survey April 26–27, 2011 Authorized for Public Release Appendix 2: Materials used by Mr. Nelson 224 of 244 April 26–27, 2011 Authorized for Public Release Material for FOMC Briefing on Strategies for Removing Policy Accommodation William R. Nelson April 26, 2011 225 of 244 April 26–27, 2011 Authorized for Public Release 226 of 244 Questions for Discussion: Strategies for Removing Policy Accommodation 1. Should the first step in exit be to stop the current policy of reinvesting the principal payments from agency securities? Should that first step also include a halt to reinvestments of the principal payments from Treasury securities? 2. In removing policy accommodation would you prefer to put asset sales on a largely predetermined and pre-announced path, or would you prefer to actively vary the pace of asset sales in response to changes in the economic outlook? 3. In sequencing actions to remove accommodation, would you favor starting to sell assets before, after, or at the same time as increasing the funds rate? Would you place a high priority on reducing the size of the SOMA portfolio quickly, even if that would delay liftoff of the funds rate? 4. Do you agree with each of the following statements? x x x The exit strategy should shrink the SOMA portfolio over the intermediate term to a level no larger than what is necessary to implement the Committee’s monetary policy framework. The exit strategy should return the SOMA portfolio to an all-Treasuries composition over the intermediate term, which will require sales of agency securities. Asset sales should be implemented within a framework that has been communicated to the public in advance, and at a pace that potentially could be adjusted in response to changes in economic or financial conditions. 1 of 1 April 26–27, 2011 Authorized for Public Release Appendix 3: Materials used by Mr. Sheets 227 of 244 April 26–27, 2011 Authorized for Public Release Material for FOMC Briefing on International Developments Nathan Sheets April 26, 2011 228 of 244 April 26–27, 2011 Authorized for Public Release 229 of 244 Exhibit 1 Commodities: 2003 to 2008* Futures Curves Copper WTI Crude Oil Dollars per barrel Dollars per pound 120 2008 2008 4 2007 100 3 2006 80 2006 2007 2005 60 2 2005 40 2004 2004 1 2003 20 2003 0 2004 2006 Source: Bloomberg. 2008 2010 2012 0 2004 2014 2006 Source: Bloomberg. 2008 2010 2012 2014 Consensus Forecasts of Industrial Production Emerging Asia excluding China China Percent change over previous year 2008 Percent change over previous year 16 8 2008 2007 2006 2006 15 2004 2005 7 14 2007 6 13 5 2005 12 2004 2003 4 11 10 3 2003 9 2004 2006 2008 2010 2012 2014 2 2004 2006 2008 2010 2012 2014 Source: Consensus Economics. Source: Consensus Economics and staff estimates based on GDP weights. *Each line represents futures prices or forecasts made in April of the indicated year. Page 1 of 1 April 26–27, 2011 Authorized for Public Release Appendix 4: Materials used by Mr. Natalucci 230 of 244 April 26–27, 2011 Authorized for Public Release Material for Briefing on FOMC Participants’ Economic Projections Fabio Natalucci April 26, 2011 Page 1 of 4 231 of 244 April 26–27, 2011 Authorized for Public Release 232 of 244 Exhibit 1. Central tendencies and ranges of economic projections, 2011–13 and over the longer run Percent Change in real GDP 5 Central tendency of projections Range of projections 4 3 2 1 + 0 _ 1 Actual 2 2006 2007 2008 2009 2010 2011 2012 2013 Longer run Percent Unemployment rate 10 9 8 7 6 5 2006 2007 2008 2009 2010 2011 2012 2013 Longer run Percent PCE inflation 3 2 1 2006 2007 2008 2009 2010 2011 2012 2013 Longer run Percent Core PCE inflation 3 2 1 2006 2007 2008 2009 2010 Page 2 of 4 2011 2012 2013 April 26–27, 2011 Authorized for Public Release 233 of 244 Exhibit 2. Economic projections for 2011-2013 and over the longer run (percent) Change in real GDP 2011 2012 Central Tendency January projections Range January projections Memo: Tealbook January Tealbook January projections Range January projections Memo: Tealbook January Tealbook 3.5 to 4.2 3.5 to 4.4 3.5 to 4.3 3.7 to 4.6 2.5 to 2.8 2.5 to 2.8 2.9 to 3.7 3.2 to 4.2 2.9 to 4.4 3.4 to 4.5 3.0 to 5.0 3.0 to 5.0 2.4 to 3.0 2.4 to 3.0 3.2 4.2 4.3 2.8 3.8 4.4 4.6 3.0 2013 Longer run January projections Range January projections Memo: Tealbook January Tealbook 7.6 to 7.9 7.6 to 8.1 6.8 to 7.2 6.8 to 7.2 5.2 to 5.6 5.0 to 6.0 8.1 to 9.0 8.4 to 9.0 7.1 to 8.4 7.2 to 8.4 6.0 to 8.4 6.0 to 7.9 5.0 to 6.0 5.0 to 6.2 8.7 7.7 7.0 5.2 8.9 7.8 7.0 5.2 2013 Longer run January projections Range January projections Memo: Tealbook January Tealbook PCE inflation 2012 2.1 to 2.8 1.3 to 1.7 1.2 to 2.0 1.0 to 1.9 1.4 to 2.0 1.2 to 2.0 1.7 to 2.0 1.6 to 2.0 2.0 to 3.6 1.0 to 2.0 1.0 to 2.8 0.7 to 2.2 1.2 to 2.5 0.6 to 2.0 1.5 to 2.0 1.5 to 2.0 2.2 1.2 1.5 2.0 1.3 1.0 1.2 2.0 2011 Central Tendency Unemployment rate 2012 8.4 to 8.7 8.8 to 9.0 2011 Central Tendency Longer run 3.1 to 3.3 3.4 to 3.9 2011 Central Tendency 2013 Core PCE inflation 2012 2013 1.3 to 1.6 1.0 to 1.3 1.3 to 1.8 1.0 to 1.5 1.4 to 2.0 1.2 to 2.0 1.1 to 2.0 0.7 to 1.8 1.1 to 2.0 0.6 to 2.0 1.2 to 2.0 0.6 to 2.0 1.4 1.4 1.5 1.0 1.0 1.2 NOTE: The changes in real GDP and inflation are measured Q4/Q4 Page 3 of 4 April 26–27, 2011 Authorized for Public Release 234 of 244 Exhibit 3. Risks and uncertainty in economic projections Number of participants Number of participants Risks to GDP growth Uncertainty about GDP growth April projections January projections April projections January projections 18 18 16 14 12 10 10 8 8 6 6 4 4 2 Similar 14 12 Lower 16 2 Downside Higher Balanced Number of participants Upside Number of participants Uncertainty about PCE inflation Risks to PCE inflation 18 16 14 12 12 10 10 8 8 6 6 4 4 2 Similar 16 14 Lower 18 2 Higher Downside Page 4 of 4 Balanced Upside April 26–27, 2011 Authorized for Public Release Appendix 5: Materials used by Mr. English 235 of 244 April 26–27, 2011 Authorized for Public Release Material for FOMC Briefing on Monetary Policy Alternatives Bill English April 27, 2011 236 of 244 April 26–27, 2011 Authorized for Public Release 237 of 244 MARCH FOMC STATEMENT 1. Information received since the Federal Open Market Committee met in January suggests that the economic recovery is on a firmer footing, and overall conditions in the labor market appear to be improving gradually. Household spending and business spending on equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the summer, and concerns about global supplies of crude oil have contributed to a sharp run-up in oil prices in recent weeks. Nonetheless, longer-term inflation expectations have remained stable, and measures of underlying inflation have been subdued. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability. 3. To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability. 4. The Committee will maintain the target range for the federal funds rate at 0 to ¼ percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. 5. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. Page 1 of 8 April 26–27, 2011 Authorized for Public Release 238 of 244 APRIL FOMC STATEMENT—ALTERNATIVE A 1. Information received since the Federal Open Market Committee met in January March suggests that the economic recovery is on a firmer footing proceeding at a moderate pace, albeit somewhat more slowly than had been anticipated, and that overall conditions in the labor market appear to be are improving only gradually. Household spending and business investment in equipment and software continue to expand, but increased energy costs may be weighing on consumer purchases of nonenergy goods and services. However Investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the last summer, and concerns about global supplies of crude oil have contributed to a sharp run up further increase in oil prices in recent weeks since the Committee met in March. Nonetheless, While inflation has picked up in recent months, longer-term inflation expectations have remained stable and measures of underlying inflation have been are still subdued. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent Increases in the prices of energy and other commodities are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. Although the Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability, recent developments have increased the downside risks to the outlook for economic growth. 3. To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends will complete to purchases of $600 billion of longer-term Treasury securities by the end of the second current quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset purchase program in light of incoming information and will adjust is prepared to expand and extend the purchase program the program as if needed to best foster maximum employment and price stability. 4. The Committee will maintain the target range for the federal funds rate at 0 to ¼ percent and continues to currently anticipates that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period at least through mid-2012. 5. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. Page 2 of 8 April 26–27, 2011 Authorized for Public Release 239 of 244 APRIL FOMC STATEMENT—ALTERNATIVE B 1. Information received since the Federal Open Market Committee met in January March suggests indicates that the economic recovery is on a firmer footing proceeding at a moderate pace and overall conditions in the labor market appear to be are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the last summer, and concerns about global supplies of crude oil have contributed to a sharp run up further increase in oil prices in recent weeks since the Committee met in March. Nonetheless, Inflation has picked up in recent months, but longer-term inflation expectations have remained [generally] stable and measures of underlying inflation have been are still subdued. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent Increases in the prices of energy and other commodities have pushed up inflation in recent months are currently putting upward pressure on inflation. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipates a gradual return to higher levels of resource utilization and a decline in inflation to rates consistent with the Federal Reserve’s mandate in a context of price stability. 3. To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to will complete purchases of $600 billion of longer-term Treasury securities by the end of the second current quarter of 2011. The Committee will regularly review the pace size and composition of its securities purchases holdings and the overall size of the asset purchase program in light of incoming information and will adjust the program is prepared to adjust those holdings as needed to best foster maximum employment and price stability. 4. The Committee will maintain the target range for the federal funds rate at 0 to ¼ percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. 5. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. Page 3 of 8 April 26–27, 2011 Authorized for Public Release 240 of 244 APRIL FOMC STATEMENT—ALTERNATIVE C 1. Information received since the Federal Open Market Committee met in January March suggests indicates that the economic recovery is on a firmer footing and overall conditions in the labor market appear to be are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the summer, and concerns about global supplies of crude oil have contributed to a sharp run up further increase in oil prices in recent weeks since the Committee met in March. Nonetheless, Inflation has picked up in recent months, but longer-term inflation expectations have remained [generally] stable and measures of underlying inflation have been are still subdued. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, The unemployment rate remains elevated and measures of underlying inflation continue to be somewhat low, relative have moved somewhat closer to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. However, The recent increases in the prices of energy and other commodities are currently putting upward pressure on are boosting overall inflation. The Committee expects these effects to be transitory so long as longer-term inflation expectations remain stable, but and it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability. 3. To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate In light of incoming information, the Committee judges that the increase in its holdings of longer-term securities since November is sufficient to promote appropriate progress toward maximum employment and price stability. Accordingly, the Committee decided today to continue expanding complete only $450 billion of the intended $600 billion increase in its holdings of securities as announced in November. In particular For now, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset purchase program needed its reinvestment policy and the level of its securities holdings in light of incoming information and will adjust the program make adjustments as needed to best foster maximum employment and price stability. 4. The Committee will maintain the target range for the federal funds rate at 0 to ¼ percent and continues to anticipates that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period some time. 5. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate. Page 4 of 8 April 26–27, 2011 Authorized for Public Release 241 of 244 March 2011 FOMC Directive The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to ¼ percent. The Committee directs the Desk to execute purchases of longer-term Treasury securities in order to increase the total face value of domestic securities held in the System Open Market Account to approximately $2.6 trillion by the end of June 2011. The Committee also directs the Desk to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability. Page 5 of 8 April 26–27, 2011 Authorized for Public Release 242 of 244 April 2011 FOMC Directive — Alternative A The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to ¼ percent. The Committee directs the Desk to execute purchases of longer-term Treasury securities in order to increase the total face value of domestic securities held in the System Open Market Account to approximately $2.6 trillion by the end of June 2011. The Committee also directs the Desk to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability. Page 6 of 8 April 26–27, 2011 Authorized for Public Release 243 of 244 April 2011 FOMC Directive — Alternative B The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to ¼ percent. The Committee directs the Desk to execute purchases of longer-term Treasury securities in order to increase the total face value of domestic securities held in the System Open Market Account to approximately $2.6 trillion by the end of June 2011. The Committee also directs the Desk to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability. Page 7 of 8 April 26–27, 2011 Authorized for Public Release 244 of 244 April 2011 FOMC Directive — Alternative C The Federal Open Market Committee seeks monetary and financial conditions that will foster price stability and promote sustainable growth in output. To further its long-run objectives, the Committee seeks conditions in reserve markets consistent with federal funds trading in a range from 0 to ¼ percent. The Committee directs the Desk to execute purchases of longer-term Treasury securities in order to increase the total face value of domestic securities held in the System Open Market Account to approximately $2.6 $2.5 trillion by mid-May 2011. The Committee also directs the Desk to reinvest principal payments from agency debt and agency mortgage-backed securities in longer-term Treasury securities. The System Open Market Account Manager and the Secretary will keep the Committee informed of ongoing developments regarding the System’s balance sheet that could affect the attainment over time of the Committee’s objectives of maximum employment and price stability. Page 8 of 8
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