View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

For release at 10 a.m. EST

March 3, 2020

The fundamentals of the U.S. economy remain strong. However, the coronavirus poses
evolving risks to economic activity. In light of these risks and in support of achieving its
maximum employment and price stability goals, the Federal Open Market Committee decided
today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to
1-1/4 percent. The Committee is closely monitoring developments and their implications for the
economic outlook and will use its tools and act as appropriate to support the economy.
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.

-0-

For media inquiries, call 202-452-2955.

For release at 10 a.m. EST

March 3, 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 March 3, 2020:
•

The Board of Governors of the Federal Reserve System voted unanimously to set the
interest rate paid on required and excess reserve balances at 1.10 percent, effective March
4, 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 March 4, 2020, 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 to 1-1/4 percent. In light of recent and expected
increases in the Federal Reserve's non-reserve liabilities, the Committee directs
the Desk to continue purchasing Treasury bills at least into the second quarter of
2020 to maintain over time ample reserve balances at or above the level that
prevailed in early September 2019. The Committee also directs the Desk to
continue conducting term and overnight repurchase agreement operations at least
through April 2020 to ensure that the supply of reserves remains ample even
during periods of sharp increases in non-reserve liabilities, and to mitigate the risk
of money market pressures that could adversely affect policy implementation. In
addition, the Committee directs the Desk to conduct 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 1.00 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 all principal
payments from the Federal Reserve's holdings of Treasury securities and to
continue reinvesting all principal payments from the Federal Reserve's holdings
of agency debt and agency mortgage-backed securities received during each
calendar month. Principal payments from agency debt and agency mortgagebacked securities up to $20 billion per month will continue to be reinvested in
Treasury securities to roughly match the maturity composition of Treasury
securities outstanding; principal payments in excess of $20 billion per month will
continue to be reinvested in agency mortgage-backed securities. Small deviations
from these amounts for operational reasons are acceptable.

(more)

For release at 10 a.m. EST

March 3, 2020

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 a 1/2 percentage point decrease in the primary credit rate to 1.75
percent, effective March 4, 2020. In taking this action, the Board approved requests to
establish that rate submitted by the Boards of Directors of the Federal Reserve Banks of
Minneapolis and New York.

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