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Accessible Version Meeting of the Federal Open Market Committee April 2627, 2011 Presentation Materials Presentation Materials (PDF) Pages 218 to 244 of the Transcript Appendix 1: Materials used by Mr. Sack Material for FOMC Presentation: Financial Market Developments and Desk Operations Brian Sack April 26, 2011 Class II FOMC Restricted FR Exhibit 1 Topleft panel (1) Title: Implied Federal Funds Rate Path Series: Future federal funds rates implied by Eurodollar and federal funds futures contracts Horizon: 03/14/11 and 04/21/11 Description: The implied federal funds rate path did not change much during the intermeeting period. Source: Federal Reserve Bank of New York Topright panel (2) Title: Commodity Prices Series: Brent oil frontmonth futures contract and Thomson Reuters/Jefferies CRB Commodity Index Horizon: August 3, 2009 April 21, 2011 Description: During the intermeeting period the Brent oil and the commodities index rose. Source: Bloomberg Middleleft panel (3) Title: Forward Breakeven Inflation Rates (5Year 5Year Rates) Series: Federal Reserve Board rate and Barclays Capital rate Horizon: August 3, 2009 April 21, 2011 Description: During the intermeeting period both measures of the 5year 5year inflation rate rose. Source: Federal Reserve Board of Governors, Barclays Capital Middleright panel (4) Title: Treasury Yields Series: 2year, 5year, and 10year Treasury yields Horizon: August 3, 2009 April 21, 2011 Description: Treasury yields ended the period slightly higher than their levels at the time of the last FOMC meeting. Source: Bloomberg Bottomleft panel (5) Market Reaction to S&P Announcement Immediate Response* Daily Change** 2Y Treasury 3 bps 2 bps 10Y Treasury +4 bps 1 bps 30Y Treasury +9 bps +2 bps S&P 500*** 0.7% 0.7% DXY Dollar 0.3% +0.1% *Change from 9 to 9:30 AM Return to table **Change from 9 AM to close Return to table ***Change computed from futures prices. Return to table Source: Bloomberg Bottomright panel (6) Title: Treasury Debt Outstanding Series: Current Debt Limit and amount of outstanding Treasury debt Horizon: October 1, 2010 July 29, 2011 Description: The estimate is that Treasury will reach the debt limit in midJuly. Source: Federal Reserve Board of Governors Exhibit 2 Topleft panel (7) Title: Japanese Equity Prices Series: Nikkei Index Horizon: November 1, 2010 April 22, 2011 Description: The Nikkei fell dramatically after the earthquake and nuclear problems and has not yet retraced. Source: Bloomberg Topright panel (8) Title: Japanese Yen Series: USDJPY index Horizon: November 1, 2010 April 22, 2011 Description: The yen strengthened sharply in the immediate aftermath of the earthquake. Source: Bloomberg Middleleft panel (9) Title: Euro Area Sovereign Debt Spreads Series: Greece, Portugal, Spain, and Italy 2year spreads to Germany Horizon: August 3, 2009 April 21, 2011 Description: Sovereign debt yield surged in Greece and Portugal during the intermeeting period. Source: Bloomberg Middleright panel (10) Title: Foreign Exchange Rates Series: Euro/Dollar and Broad Dollar Index Horizon: August 3, 2009 April 21, 2011 Description: The euro appreciated again the dollar, while the broad dollar depreciated. Source: Federal Reserve Board of Governors, Bloomberg Bottomleft panel (11) Title: U.S. Equity Prices Series: US KBW Bank Index and S&P 500 Horizon: August 3, 2009 April 21, 2011 Description: The S&P 500 rose during the intermeeting period, while the US Bank Index fell. Source: Bloomberg Bottomright panel (12) Title: VIX Index Series: VIX Index Horizon: August 3, 2009 April 21, 2011 Description: Uncertainty about the outlook has diminished since the Japanese earthquake. Source: Bloomberg Exhibit 3 Topleft panel (13) Title: SOMA Purchases of Treasury Securities Series: LSAP 2 purchases and reinvestments Horizon: June 2010 November 2011 Description: Assuming LSAP 2 ends at the end of June and reinvestments continue, the Desk's purchases would decline to an average pace of about $10 billion per month. Source: Federal Reserve Bank of New York Topright panel (14) SOMA Portfolio June 2011 April 2010 Holdings* Treasury 1,634 777 Agency 117 168 MBS 903 1,161 Total 2,654 2,106 Duration 4.64 4.36 * Holdings in $ billions Return to table Source: Federal Reserve Bank of New York Middleleft panel (15) Title: Change in MBS Spreads Series: Optionadjusted spreads for 4.0%, 4.5%, 5.0%, and 5.5% coupons for the two day window and change to date Horizon: Change from 03/18/11 to 03/22/11 and change from 03/18/11 to 04/21/11 Description: MBS spreads widened immediately after the Treasury's announcement and have since retraced. Source: Barclays Capital Middleright panel (16) Title: MBS Held in Official Portfolios Series: U.S. Treasury and Federal Reserve portfolios Horizon: 3.5% 6.5% coupons Description: The decision for the Federal Reserve to sell MBS could be more consequential for market pricing given the much larger size of the Federal Reserve's holdings. Source: Federal Reserve Bank of New York, U.S. Treasury Bottomleft panel (17) Title: Short Term Funding Rates* Series: Treasury GC Repo rate and Federal Funds Effective rate Horizon: August 3, 2009 April 21, 2011 Description: Since the FDIC fee implementation both the Treasury GC repo and Fed Funds effective have fallen. *5 day moving average Return to text Source: Federal Reserve Bank of New York Bottomright panel (18) Title: SOMA Securities Lending Volume Series: 10day moving average of securities lending Horizon: August 3, 2009 April 21, 2011 Description: There has been a significant pickup in activity in the Desk's securities lending program. Source: Federal Reserve Bank of New York Exhibit 4 Topleft panel (19) Expected Use of Exit Tools Relative to First Target Rate Increase (% of Respondents)* Before Concurrent After Never 100 0 0 0 IOER 5 95 0 0 RRPs 85 15 0 0 TDFs 90 10 0 0 Treasury Redem. 55 5 25 15 MBS Redem. 95 0 5 0 Treasury Sales 0 5 75 20 MBS Sales 0 0 80 20 "Extended Period" * Views on agency debt sales and redemptions largely followed those for MBS. Return to text Source: Federal Reserve Bank of New York Policy Survey Topright panel (20) Title: Expected Timing of Exit Tools Relative to First Target Rate Increase Series: "Extended period" language, IOER, RRPs, TDFs, Treasury redemptions, MBS redemptions, Treasury sales, and MBS sales Horizon: 6 meetings before first target rate increase to 7 meetings after first rate increase Description: Most survey respondents expect policy language to occur three meetings before the change in the target rate. Source: Federal Reserve Bank of New York Policy Survey Middleleft panel (21) Title: Expected Size of Domestic Assets in SOMA Series: Tealbook estimate, Median Policy Survey, and interquartile range Horizon: Yearend 2009 to yearend 2015 Description: Expectations place the Federal Reserve's balance sheet on a gradual downward trajectory. Source: Federal Reserve Bank of New York Policy Survey Middleright panel (22) Title: Level of Reserves at First Target Rate Increase Series: Amount of reserves Horizon: At first target rate increase Description: The majority of respondents anticipate that reserve will be $1.2 trillion or higher at the time of the first increase in the target rate. Source: Federal Reserve Bank of New York Policy Survey Bottomleft panel (23) Title: Draining Capacity over Intermeeting Period Series: RRPs, TDFs, and RRPs & TDFs Horizon: Intermeeting period Description: Respondents think that we could use the tools to drain $500 billion of reserve over a sixweek period. Source: Federal Reserve Bank of New York Policy Survey Bottomright panel (24) Expected Spread between IOER Rate and Federal Reserve Rate (in BPS)* Level of Excess Reserves $1.5 Trillion $500 Billion $0 $25 Billion 0.25% 16 9 2 1 1.00% 17 14 5 3 2.00% IOER Rate $1 Trillion 25 15 6 0 * Median values Return to text Source: Federal Reserve Bank of New York Policy Survey Appendix 2: Materials used by Mr. Nelson Material for FOMC Briefing on Strategies for Removing Policy Accommodation William R. Nelson April 26, 2011 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 preannounced 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? 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 allTreasuries 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. Appendix 3: Materials used by Mr. Sheets Material for FOMC Briefing on International Developments Nathan Sheets April 26, 2011 Exhibit 1 Commodities: 2003 to 2008* Futures Curves Topleft panel WTI Crude Oil Dollars per barrel Futures in 2003 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 27.96 25.03 23.98 23.74 23.76 23.78 23.80 23.86 ND ND ND ND ND 2004 ND 34.38 31.86 29.61 28.66 28.31 27.95 27.75 27.96 ND ND ND ND 2005 ND ND 53.71 55.97 53.47 51.40 49.98 49.03 48.28 47.93 ND ND ND 2006 ND ND ND 68.74 71.92 71.07 69.52 68.45 67.47 66.62 65.97 ND ND 2007 ND ND ND ND 61.89 69.72 70.94 70.12 68.97 68.25 67.85 66.60 ND 2008 ND ND ND ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2003 0.73 0.74 0.75 0.76 0.76 0.76 ND ND ND ND ND 2004 ND 1.34 1.22 1.10 1.02 0.95 0.92 ND ND ND ND 2005 ND ND 1.57 1.40 1.26 1.19 1.14 1.10 ND ND ND 2006 ND ND ND 2.69 2.61 2.42 2.23 2.03 1.83 ND ND 2007 ND ND ND ND 3.52 3.37 3.02 2.65 2.33 2.03 ND 2008 ND ND ND ND ND 3.95 3.79 3.58 3.39 3.21 3.05 Topright panel Copper Dollars per pound Source: Bloomberg. Consensus Forecasts of Industrial Production Bottomleft panel China Percent change over previous year Forecast in 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2003 11.2 10.0 10.2 10.2 10.0 10.0 9.8 ND ND ND ND ND 2004 ND 14.6 12.2 12.2 13.0 13.2 12.3 12.3 ND ND ND ND 2005 ND ND 13.9 12.2 13.4 13.6 12.5 12.3 11.9 ND ND ND 2006 ND ND ND 15.1 13.8 13.6 14.1 13.6 14.0 13.0 ND ND 2007 ND ND ND ND 15.3 14.7 14.6 14.4 14.2 13.6 13.7 ND 2008 ND ND ND ND ND 15.9 14.7 13.7 13.3 13.1 12.6 12.0 Source: Consensus Economics. Bottomright panel Emerging Asia excluding China Percent change over previous year Forecast in 2003 2015 ND 111.76 107.39 102.96 101.15 100.43 100.23 100.28 100.55 Source: Bloomberg. Futures in 2014 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2.96 3.44 3.70 3.45 3.59 3.81 3.52 ND ND ND ND ND Forecast in 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2004 ND 4.18 3.88 4.12 4.21 4.48 4.42 4.56 ND ND ND ND 2005 ND ND 4.16 4.49 4.89 5.09 4.87 4.85 4.68 ND ND ND 2006 ND ND ND 7.23 7.27 7.52 7.22 7.09 6.55 6.47 ND ND 2007 ND ND ND ND 6.32 6.66 6.24 6.43 6.62 6.28 5.99 ND 2008 ND ND ND ND ND 6.75 7.18 7.58 7.25 7.18 7.20 6.98 Source: Consensus Economics and staff estimates based on GDP weights. * Each line represents futures prices or forecasts made in April of the indicated year. Return to text Appendix 4: Materials used by Mr. Natalucci Material for Briefing on FOMC Participants' Economic Projections Fabio Natalucci April 26, 2011 Exhibit 1. Central tendencies and ranges of economic projections, 201113 and over the longer run Actual values for years 2006 through 2010. Change in real GDP Percent 2006 2007 2008 2009 2010 2011 2012 2013 Longer run 2.4 2.3 2.8 0.2 2.8 Upper End of Range 3.7 4.4 5.0 3.0 Upper End of Central Tendency 3.3 4.2 4.3 2.8 Lower End of Central Tendency 3.1 3.5 3.5 2.5 Lower End of Range 2.9 2.9 3.0 2.4 2006 2007 2008 2009 2010 2011 2012 2013 Longer run 4.5 4.8 6.9 10.0 9.6 Upper End of Range 9.0 8.4 8.4 6.0 Upper End of Central Tendency 8.7 7.9 7.2 5.6 Lower End of Central Tendency 8.4 7.6 6.8 5.2 Lower End of Range 8.1 7.1 6.0 5.0 2006 2007 2008 2009 2010 2011 2012 2013 Longer run 1.9 3.5 1.7 1.5 1.1 Upper End of Range 3.6 2.8 2.5 2.0 Upper End of Central Tendency 2.8 2.0 2.0 2.0 Lower End of Central Tendency 2.1 1.2 1.4 1.7 Actual Unemployment rate Percent Actual PCE inflation Percent Actual 2006 2007 2008 2009 2010 2011 2012 2013 Longer run 2.0 1.0 1.2 1.5 Lower End of Range Core PCE inflation Percent 2006 2007 2008 2009 2010 2011 2012 2013 2.3 2.4 2.0 1.7 0.8 Upper End of Range 2.0 2.0 2.0 Upper End of Central Tendency 1.6 1.8 2.0 Lower End of Central Tendency 1.3 1.3 1.4 Lower End of Range 1.1 1.1 1.2 Actual Exhibit 2. Economic projections for 20112013 and over the longer run (percent) Change in real GDP 2011 Central Tendency 2012 2013 Longer run 3.1 to 3.3 3.5 to 4.2 3.5 to 4.3 2.5 to 2.8 January projections 3.4 to 3.9 3.5 to 4.4 3.7 to 4.6 2.5 to 2.8 Range 2.9 to 3.7 2.9 to 4.4 3.0 to 5.0 2.4 to 3.0 January projections 3.2 to 4.2 3.4 to 4.5 3.0 to 5.0 2.4 to 3.0 Memo: Tealbook 4.2 4.3 2.8 3.8 4.4 4.6 3.0 2011 January Tealbook 3.2 2012 2013 Longer run Unemployment rate Central Tendency 8.4 to 8.7 7.6 to 7.9 6.8 to 7.2 5.2 to 5.6 January projections 8.8 to 9.0 7.6 to 8.1 6.8 to 7.2 5.0 to 6.0 Range 8.1 to 9.0 7.1 to 8.4 6.0 to 8.4 5.0 to 6.0 January projections 8.4 to 9.0 7.2 to 8.4 6.0 to 7.9 5.0 to 6.2 Memo: Tealbook 7.7 7.0 5.2 8.9 7.8 7.0 5.2 2011 January Tealbook 8.7 2012 2013 Longer run PCE inflation Central Tendency 2.1 to 2.8 1.2 to 2.0 1.4 to 2.0 1.7 to 2.0 January projections 1.3 to 1.7 1.0 to 1.9 1.2 to 2.0 1.6 to 2.0 Range 2.0 to 3.6 1.0 to 2.8 1.2 to 2.5 1.5 to 2.0 January projections 1.0 to 2.0 0.7 to 2.2 0.6 to 2.0 1.5 to 2.0 Memo: Tealbook 1.2 1.5 2.0 1.3 1.0 1.2 2.0 2011 January Tealbook 2.2 2012 2013 Core PCE inflation Central Tendency 1.3 to 1.6 1.3 to 1.8 1.4 to 2.0 January projections 1.0 to 1.3 1.0 to 1.5 1.2 to 2.0 Range 1.1 to 2.0 1.1 to 2.0 1.2 to 2.0 January projections 0.7 to 1.8 0.6 to 2.0 0.6 to 2.0 Memo: Tealbook 1.4 1.4 1.5 2011 January Tealbook 2012 2013 1.0 1.0 1.2 Note: The changes in real GDP and inflation are measured Q4/Q4 Exhibit 3. Risks and uncertainty in economic projections Topleft panel Uncertainty about GDP growth Number of participants Lower Similar Higher April projections 1 5 11 January projections 1 3 14 Topright panel Risks to GDP growth Number of participants Downside Balanced Upside April projections 5 9 3 January projections 1 14 3 Bottomleft panel Uncertainty about PCE inflation Number of participants Lower Similar Higher April projections 1 3 13 January projections 1 3 14 Bottomright panel Risks to PCE inflation Number of participants Downside Balanced Upside April projections 1 7 9 January projections 2 13 3 Appendix 5: Materials used by Mr. English Material for FOMC Briefing on Monetary Policy Alternatives Bill English April 27, 2011 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 runup in oil prices in recent weeks. Nonetheless, longerterm 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 longerterm 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 assetpurchase 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. [Note: In the April FOMC Statement Alternatives, emphasis (strikethrough) indicates strikethrough text in the original document, and strong emphasis (bold) indicates bold red underlined text in the original document.] April FOMC StatementAlternative 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, longerterm 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 longerterm 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 mid2012. 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. April FOMC StatementAlternative 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 longerterm 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 longerterm 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. April FOMC StatementAlternative 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 longerterm 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 longerterm 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 longerterm 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. 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 longrun 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 longerterm 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 mortgagebacked securities in longerterm 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. [Note: In the April 2011 FOMC Directive Alternatives, emphasis (strikethrough) indicates strikethrough text in the original document, and strong emphasis (bold) indicates bold red underlined text in the original document.] 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 longrun 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 longerterm 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 mortgagebacked securities in longerterm 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. 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 longrun 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 longerterm 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 mortgagebacked securities in longerterm 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. 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 longrun 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 longerterm 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 midMay 2011. The Committee also directs the Desk to reinvest principal payments from agency debt and agency mortgagebacked securities in longerterm 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. Return to top Home | Monetary policy | FOMC | FOMC transcripts Accessibility | Contact Us Last update: January 12, 2017