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For release at 2 p.m. EST

January 31, 2018

Information received since the Federal Open Market Committee met in December
indicates that the labor market has continued to strengthen and that economic activity has
been rising at a solid rate. Gains in employment, household spending, and business fixed
investment have been solid, and the unemployment rate has stayed low. On a 12-month
basis, both overall inflation and inflation for items other than food and energy have
continued to run below 2 percent. Market-based measures of inflation compensation
have increased in recent months but remain low; survey-based measures of longer-term
inflation expectations are little changed, on balance.
Consistent with its statutory mandate, the Committee seeks to foster maximum
employment and price stability. The Committee expects that, with further gradual
adjustments in the stance of monetary policy, economic activity will expand at a
moderate pace and labor market conditions will remain strong. Inflation on a 12-month
basis is expected to move up this year and to stabilize around the Committee’s 2 percent
objective over the medium term. Near-term risks to the economic outlook appear roughly
balanced, but the Committee is monitoring inflation developments closely.
In view of realized and expected labor market conditions and inflation, the
Committee decided to maintain the target range for the federal funds rate at 1-1/4 to
1-1/2 percent. The stance of monetary policy remains accommodative, thereby
supporting strong labor market conditions and a sustained return to 2 percent inflation.
In determining the timing and size of future adjustments to the target range for the
federal funds rate, the Committee will assess realized and expected economic conditions
relative to its objectives of maximum employment and 2 percent inflation. This
assessment will take into account a wide range of information, including measures of
labor market conditions, indicators of inflation pressures and inflation expectations, and

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For release at 2 p.m. EST

January 31, 2018
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readings on financial and international developments. The Committee will carefully
monitor actual and expected inflation developments relative to its symmetric inflation
goal. The Committee expects that economic conditions will evolve in a manner that will
warrant further gradual increases in the federal funds rate; the federal funds rate is likely
to remain, for some time, below levels that are expected to prevail in the longer run.
However, the actual path of the federal funds rate will depend on the economic outlook as
informed by incoming data.
Voting for the FOMC monetary policy action were Janet L. Yellen, Chair;
William C. Dudley, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael
Brainard; Loretta J. Mester; Jerome H. Powell; Randal K. Quarles; and John C. Williams.
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For release at 2 p.m. EST

January 31, 2018

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 January 31, 2018:
•

The Board of Governors of the Federal Reserve System voted unanimously to maintain
the interest rate paid on required and excess reserve balances at 1.50 percent, effective
February 1, 2018.

•

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 February 1, 2018, the Federal Open Market Committee directs the
Desk to undertake open market operations as necessary to maintain the federal
funds rate in a target range of 1-1/4 to 1-1/2 percent, including overnight reverse
repurchase operations (and reverse repurchase operations with maturities of more
than one day when necessary to accommodate weekend, holiday, or similar
trading conventions) at an offering rate of 1.25 percent, in amounts limited only
by the value of Treasury securities held outright in the System Open Market
Account that are available for such operations and by a per-counterparty limit of
$30 billion per day.
The Committee directs the Desk to continue rolling over at auction the amount of
principal payments from the Federal Reserve’s holdings of Treasury securities
maturing during each calendar month that exceeds $12 billion, and to reinvest in
agency mortgage-backed securities the amount of principal payments from the
Federal Reserve’s holdings of agency debt and agency mortgage-backed
securities received during each calendar month that exceeds $8 billion. Small
deviations from these amounts for operational reasons are acceptable.
The Committee also directs the Desk to engage in dollar roll and coupon swap
transactions as necessary to facilitate settlement of the Federal Reserve’s agency
mortgage-backed securities transactions.”

•

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 2.00 percent.
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January 31, 2018
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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.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102