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For release at 2 p.m. EDT

March 16, 2016

Information received since the Federal Open Market Committee met in January suggests
that economic activity has been expanding at a moderate pace despite the global economic and
financial developments of recent months. Household spending has been increasing at a moderate
rate, and the housing sector has improved further; however, business fixed investment and net
exports have been soft. A range of recent indicators, including strong job gains, points to
additional strengthening of the labor market. Inflation picked up in recent months; however, it
continued to run below the Committee’s 2 percent longer-run objective, partly reflecting declines
in energy prices and in prices of non-energy imports. Market-based measures of inflation
compensation remain low; survey-based measures of longer-term inflation expectations are little
changed, on balance, in recent months.
Consistent with its statutory mandate, the Committee seeks to foster maximum
employment and price stability. The Committee currently expects that, with gradual adjustments
in the stance of monetary policy, economic activity will expand at a moderate pace and labor
market indicators will continue to strengthen. However, global economic and financial
developments continue to pose risks. Inflation is expected to remain low in the near term, in part
because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the
transitory effects of declines in energy and import prices dissipate and the labor market
strengthens further. The Committee continues to monitor inflation developments closely.
Against this backdrop, the Committee decided to maintain the target range for the federal
funds rate at 1/4 to 1/2 percent. The stance of monetary policy remains accommodative, thereby
supporting further improvement in labor market conditions and a 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
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-2objectives 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 readings on financial and international
developments. In light of the current shortfall of inflation from 2 percent, the Committee will
carefully monitor actual and expected progress toward its inflation goal. The Committee expects
that economic conditions will evolve in a manner that will warrant only 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.
The Committee is maintaining its existing policy of reinvesting principal payments from
its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed
securities and of rolling over maturing Treasury securities at auction, and it anticipates doing so
until normalization of the level of the federal funds rate is well under way. This policy, by
keeping the Committee’s holdings of longer-term securities at sizable levels, should help
maintain accommodative financial conditions.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C.
Dudley, Vice Chairman; Lael Brainard; James Bullard; Stanley Fischer; Loretta J. Mester;
Jerome H. Powell; Eric Rosengren; and Daniel K. Tarullo. Voting against the action was Esther
L. George, who preferred at this meeting to raise the target range for the federal funds rate to 1/2
to 3/4 percent.

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March 16, 2016

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 March 16,
2016:
•

The Board of Governors of the Federal Reserve System left unchanged the
interest rate paid on required and excess reserve balances at 0.50 percent.

•

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 March 17, 2016, 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 1/4 to 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 0.25 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 maturing Treasury
securities at auction and to continue reinvesting principal payments on all agency
debt and agency mortgage-backed securities in agency mortgage-backed
securities. 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.”
More information regarding open market operations may be found on the Federal
Reserve Bank of New York’s website.

•

The Board of Governors of the Federal Reserve System took no action to change
the discount rate (the primary credit rate), which remains at 1.00 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.