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September 17–18, 2013 Authorized for Public Release Appendix 1: Materials used by Mr. Potter 200 of 241 September 17–18, 2013 Authorized for Public Release Class II FOMC – Restricted (FR) Material for Briefing on Financial Developments and Open Market Operations Simon Potter September 17, 2013 201 of 241 September 17–18, 2013 Authorized for Public Release 202 of 241 Exhibit 1 Class II FOMC – Restricted (FR) (1) Asset Performance Over Intermeeting Period* Change Since July FOMC Change Since AprilMay FOMC (2) Implied Federal Funds Rate Path* 2.50 2.00 Changes in Basis Points 2-Year Treasury (0.43%) 10-Year Treasury (2.88%) 5-Year 5-Year Forward BEI (2.33%) Primary Mortgage Rate** (4.57%) +12 +27 -9 +26 +22 +121 -45 +117 1.50 1.00 0.50 Changes in Percent S&P 500 Index (1688) DXY Dollar Index (81.45) +0.1 -0.5 +5.7 -0.4 *Current levels in parenthesis. **FHLMC 30-year survey rate. Source: Bloomberg, Barclays 0.00 Sep '13 Sep '14 Average Interquartile Range Importance Apr.-May FOMC 120 Sep '16 (4) Factors Contributing to Ten-Year Yield Increase Over Intermeeting Period* BPS/Year 140 Sep '15 *Derived from federal funds futures and Eurodollar futures. Source: Bloomberg, Federal Reserve Bank of New York (3) Swaption-Implied Volatility* July FOMC 5 4 100 3 80 2 1 60 40 09/01/12 01/01/13 05/01/13 09/01/13 Change in Uncertainty Uncertainty Change in Change in View on Over Over Fed View on Economic Policy Rate Monetary Leadership Asset Outlook Path Policy Succession Purchases (6) Probability of Unemployment Rate Outcomes at First Rate Hike* (5) Distribution of Market Beliefs on Balance Sheet Actions* LSAP 2 Other *Responses are expressed in terms of importance of each factor, where 1 is not important and 5 is very important. Source: Federal Reserve Bank of New York Survey *3-month 10-year swaption. Source: Barclays Percent 09/13/13 07/30/13 04/30/13 Percent Average Dealers 100 Sept. 2013 Pace Reduction*** Average Interquartile Range Percent 100 80 80 60 60 40 40 20 20 0 0 Sept. 2010 Survey** Oct. 2010 Survey July 2013 Survey Sept. 2013 Survey *Dots scaled by number of dealers. Unmatched sample in 2010 vs.2013. **Sept. 2010 survey asks about probability of purchases in the next quarter. ***Greater of probabilities assigned to Treasury and MBS pace reduction. Source: Federal Reserve Bank of New York Survey < 6.0% 6.0 - 6.5% > 6.5% Unemployment Rate *Probabilities from dealer responses. Conditioned on assumption that projected inflation 1 to 2 years ahead remains below 2.5 percent and longer-term inflation expectations remain well anchored prior to the first rate hike. Source: Federal Reserve Bank of New York Survey September 17–18, 2013 Authorized for Public Release 203 of 241 Exhibit 2 Class II FOMC – Restricted (FR) (7) Ten-Year Sovereign Yields U.S. U.K. Germany Japan JEC Percent 3.5 (8) Changes in Short Rates Since the July ECB and BoE Meetings* 60 50 40 30 20 10 0 -10 -20 Sep '13 FOMC 3.0 2.5 2.0 1.5 1.0 0.5 0.0 09/01/12 01/01/13 Eurodollar Euribor Short Sterling BPS 05/01/13 Sep '14 Sep '17 Sep '18 *Since 07/03/13. Source: Bloomberg (9) Euro Area Forward Rate Spreads* (10) Price-Earnings Ratios Italy Spain BPS OMT Details Announced Draghi Speech 600 Sep '16 Contract Expiry 09/01/13 Source: Bloomberg 700 Sep '15 FOMC S&P 500 Index Eurostoxx 50 Index MSCI Emerging Markets Index Ratio 18 JEC FOMC 16 500 14 400 300 12 200 01/01/12 07/01/12 01/01/13 07/01/13 *5-year, 5-year forward sovereign rate spreads to German equivalent. Source: Bloomberg 10 01/01/13 Brazilian Real Indian Rupee Turkish Lira EM Currency Index 110 JEC 07/01/13 Source: Bloomberg (11) Currency Performance Against the Dollar Indexed to 05/21/13 04/01/13 (12) Emerging Market Sovereign Yields* Brazil, India, and Turkey (LHS) Other Emerging Markets (RHS) Percent Percent 11.0 FOMC 105 JEC 6.0 FOMC 10.0 5.0 9.0 4.0 8.0 3.0 100 95 90 85 80 09/01/12 Depreciation Against Dollar 01/01/13 Source: Bloomberg, J.P. Morgan 05/01/13 09/01/13 7.0 09/01/12 01/01/13 05/01/13 2.0 09/01/13 *2012 GDP-weighted average of five-year yields. Source: Bloomberg, Haver Analytics, FRBNY Staff Calculations September 17–18, 2013 Authorized for Public Release 204 of 241 Exhibit 3 Class II FOMC – Restricted (FR) (13) Median Expected Monthly Purchase Pace Announced at FOMC Meetings $ Billions (14) Probability Distribution of End-2014 SOMA Portfolio Holdings* Treasury 50 MBS 70 60 50 40 30 20 10 0 40 30 20 10 0 -1 First Cut +1 +2 < 7.2% End-2013 Unemployment 7.2 - 7.3% End-2013 Unemployment > 7.3% End-2013 Unemployment Percent +3 +4 +5 <2500 2500- 3000- 3500- 4000- 4500- >5000 3000 3500 4000 4500 5000 +6 Par Amount ($ Billions) Meetings Around First Expected Cut *Average probabilities from dealer responses. Source: Federal Reserve Bank of New York Survey Source: Federal Reserve Bank of New York Survey (15) Treasury Bill Yield Curve (16) Treasury Purchase Operation Offer-to-Cover Ratios* 2011 Episode, 30 Days Ahead 2011 Episode, 5 Days Ahead 09/13/13 Percent 0.30 All Offers Favorable Offers** Multiple 0.25 5.0 0.20 4.0 0.15 3.0 0.10 New Program FOMC 2.0 0.05 0.00 -30 +0 +30 +60 +90 +120 +150 Days to Maturity, Relative to Est. Debt Limit Deadline Source: Federal Reserve Bank of New York 1.0 09/01/12 Execution to Cover Execution to Worst 0 (18) Dollar Roll Implied Financing Rates* 3.5% Front Month 4.0% Front Month 4.5% Front Month BPS 100 0 -4 -50 -6 -100 -10 09/01/12 09/01/13 50 -2 -8 05/01/13 *8-operation moving average. **Those classified in the FRBNY’s favorable-to-market bucket, which generally includes offers up to 2 to 6 ticks above market depending on sector. Source: Federal Reserve Bank of New York (17) MBS Purchase Operation Execution To Cover and Worst Prices BPS 01/01/13 -150 Apr.-May July FOMC FOMC 01/01/13 05/01/13 09/01/13 * 10-day moving average, volume-weighted by day. Shows spread between executed price and next best proposition and spread between executed price and worst proposition. Source: Federal Reserve Bank of New York -200 -250 Fails Charge -300 09/01/12 01/01/13 Apr.-May FOMC 05/01/13 July FOMC 09/01/13 *30-year FNMA dollar rolls. Front month is currently October-November roll. Source: J.P. Morgan September 17–18, 2013 Authorized for Public Release 205 of 241 Class II FOMC – Restricted (FR) Exhibit 4 (Last) (20) Thirty-Year Fixed Rate TBA MBS Outstanding (Excluding SOMA Holdings)* (19) Gross TBA Issuance and MBS Purchases* $ Billions 140 120 Gross TBA Issuance Total MBS Purchases Actuals $ Billions Forecasts 500 100 80 400 60 300 40 200 20 100 0 09/2012 Production Coupons 600 03/2013 09/2013 03/2014 *Gross TBA issuance excludes 10- and 20-year, non-TBA eligible, and specified pool issuance. Assumes September 2013 Tealbook Alt-B interest rate path and a constant purchase pace of $40 billion per month. Source: BlackRock, Federal Reserve Bank of New York 0 3.0 3.5 *Excludes CMOs. Source: Credit Suisse, KDS 4.0 4.5 Coupon (Percent) 5.0 September 17–18, 2013 Authorized for Public Release Appendix 2: Materials used by Mr. Burke 206 of 241 September 17–18, 2013 Authorized for Public Release Class II FOMC – Restricted (FR) Overnight Reverse Repurchase Agreement Resolution September 17, 2013 207 of 241 September 17–18, 2013 Authorized for Public Release 208 of 241 Overnight Reverse Repurchase Agreement Resolution September 17, 2013 “The Federal Open Market Committee (FOMC) authorizes the Federal Reserve Bank of New York to conduct a series of fixed-rate, overnight reverse repurchase operations involving U.S. Government securities, and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency of the United States, for the purpose of assessing operational readiness. The reverse repurchase operations authorized by this resolution shall be (i) offered at a fixed rate that may vary from zero to five basis points, (ii) offered at up to a capped allotment per counterparty of $1 billion per day and (iii) for an overnight term, or such longer term as is warranted to accommodate weekend, holiday, and similar trading conventions. The System Open Market Account Manager will inform the FOMC in advance of the terms of the planned operations. These operations may be announced when authorized by the Chairman, may begin when authorized by the Chairman on or after September 23, 2013, and shall be authorized through the FOMC meeting that ends on January 29, 2014.” Page 1 of 1 September 17–18, 2013 Authorized for Public Release Appendix 3: Materials used by Mr. Wilcox 209 of 241 September 17–18, 2013 Authorized for Public Release Class II FOMC – Restricted (FR) Material for Forecast Summary David Wilcox September 17, 2013 210 of 241 September 17–18, 2013 Authorized for Public Release 211 of 241 Forecast Summary Confidence Intervals Based on FRB/US Stochastic Simulations Real GDP GDP Gap Percent change, annual rate September TB July TB 70% confidence interval Percent 10 1 0 8 -1 6 -2 4 -3 -4 2 -5 0 2012 2013 2014 2015 2016 -2 PCE Prices Excluding Food and Energy Percent change, annual rate -6 2008 2009 2010 2011 2012 2013 2014 2015 2016 -7 Unemployment Rate Percent 5 10 9 4 8 3 7 2 6 1 Natural Rate with EEB* 5 0 2012 2013 2014 2015 2016 -1 4 2012 2013 2014 2015 2016 3 *Effect of emergency unemployment compensation and state-federal extended benefit programs. Alternative Measures of Labor Market Slack Total Payroll Employment Millions September TB July TB September 2012 TB 144 141 Percentage points Unemployment rate gap Job availability (Conference Board)* Jobs hard-to-fill (NFIB survey)* 5 4 3 2 138 1 0 135 -1 -2 2012 2013 2014 2015 2016 132 1990 1993 1996 1999 2002 2005 2008 2011 -3 *Index levels normalized to have same mean and standard deviation as staff unemployment gap. Page 1 of 2 September 17–18, 2013 Authorized for Public Release 212 of 241 Evolution of various key activity, inflation, and financial projections 2013 H1 H2 2013 2014 2015 1. Real GDP growth* Current TB Sept. 2012 2.0 2.1 2.5 2.7 2.3 2.4 3.1 3.2 3.4 3.6 2. Unemployment rate** Current TB Sept. 2012 7.5 8.2 7.2 8.0 7.2 8.0 6.6 7.6 5.8 6.7 63.4 63.7 63.3 63.7 63.3 63.7 63.3 63.7 63.2 NA 4. Headline PCE inflation* Current TB Sept. 2012 0.6 1.4 1.6 1.4 1.1 1.4 1.2 1.4 1.4 1.5 5. Core PCE inflation* Current TB Sept. 2012 1.1 1.6 1.4 1.6 1.2 1.6 1.5 1.6 1.6 1.7 6. Ten-year Treasury yield** Current TB 1.99 Sept. 2012 2.40 3.10 3.00 3.10 3.00 3.60 3.65 4.00 4.25 7. Mortgage rate** Current TB Sept. 2012 3.64 3.95 4.65 4.55 4.65 4.55 5.05 5.15 5.40 5.80 8. Stock market (2012:Q1=100)*** Current TB 114.7 Sept. 2012 105.1 123.4 110.1 123.4 110.1 132.8 119.3 143.0 127.1 9. Real broad dollar (2012:Q1=100)** Current TB 100.8 101.8 Sept. 2012 100.6 99.1 101.8 99.1 99.0 95.9 96.5 92.9 3. Participation rate** Current TB Sept. 2012 *Percent change at annual rate; annual figures are Q4-over-Q4 percent changes. **Quarterly average at end of period. ***Level at end of period. Page 2 of 2 September 17–18, 2013 Authorized for Public Release Appendix 4: Materials used by Mr. Kamin 213 of 241 September 17–18, 2013 Authorized for Public Release Class II FOMC – Restricted (FR) Material for The International Outlook Steven B. Kamin September 17, 2013 214 of 241 September 17–18, 2013 Authorized for Public Release 215 of 241 Exhibit 1 Class II FOMC - Restricted (FR) The International Outlook 1. Total Foreign GDP 3. U.S. GDP Percent change, annual rate Percent change, annual rate 6 6 EME crisis simulation Previous Tealbook 4 4 2 2 0 0 -2 2010 2011 2012 2013 2014 2015 -2 2016 2010 2011 2012 2013 2014 2015 2016 2. Emerging Market Economies GDP Percent change, 4-quarter Asian Crisis Latin American Crisis 10 Russian Crisis Mexican Crisis 12 8 6 4 2 0 -2 -4 1980 1985 1990 1995 2000 4. EMBI+ Sovereign Spread 2010 2015 5. EME Vulnerability Index Basis points Mexican Crisis 2005 Asian Crisis Average ranking* 2000 Latin American Crisis Russian Crisis Mexican Asian Crisis Crisis Russian Crisis 1600 25 1200 20 800 15 400 10 0 1991 1995 1999 2003 2007 30 2011 5 1980 1985 1990 1995 2000 2005 2010 * Based on 4 indicators for 13 EMEs: CA/GDP, gross government debt/GDP, average inflation, and increase in bank credit to the private sector/GDP. Page 1 of 1 September 17–18, 2013 Authorized for Public Release Appendix 5: Materials used by Mr. Kiley 216 of 241 September 17–18, 2013 Authorized for Public Release Class II FOMC – Restricted (FR) Material for Briefing on Financial Stability Michael T. Kiley September 17, 2013 217 of 241 September 17–18, 2013 Authorized for Public Release 218 of 241 Exhibit 1 Recent Developments Total Agency REIT Assets 10-year Treasury Yield and Options Implied Volatility Basis Points Ratio Percent Billions of dollars 30 3.0 Implied volatility (left) 10-year Treasury yield (right) 120 2.8 2.6 Sept. 16 100 450 Quarterly 25 400 Average Assets to Equity (left scale) Total Assets (right scale) 350 20 300 2.4 80 250 2.2 15 2.0 10 200 Q2 1.8 60 1.6 1.4 Sept. Nov. 2012 Jan. Mar. May 2013 July 150 100 5 50 0 Sept. 0 2001 2003 2005 2007 2009 2011 2013 Source: Bloomberg. Note: Implied volatility from options on the ten-year swap rate that expire in six months (6m10y swaption). Source: Bloomberg and staff calculations from JP Morgan data. Weekly Price Impact Coefficients Net Unrealized Gains on AFS Securities 32nds of a point per $1 bil net order flow Billions of dollars 4 15 60 Weekly, SA 2 year note (left) 5 year note (right) 40 Large Commercial Banks Banks in top 4 BHCs 3 20 10 0 2 Sept. 4 5 -40 1 July 1 -60 0 0 2006 2007 2008 2009 2010 2011 2012 2013 -80 1998 2014 2001 2004 2007 2010 2013 Note: ’Large Commercial Banks’ are the top 25 banks by assets. Top 4 BHCs are BofA, Citi, JPMC, and Wells. Source: FR 2644. Note: Based on 5 minute intervals. Source: BrokerTec, staff estimates. Domestic Corporate Bond Spreads to Similar Maturity Treasury Percent Issuance of Riskier Corporate Credit Percent 8 Billions of dollars 16 120 Monthly rate Monthly 7 14 Ten-year BBB (left) Ten-year High Yield (right) 6 12 5 10 4 8 3 Q2 Q1 Speculative grade bonds Leveraged loans H2 H1 6 Sept. 2 1 0 1997 2001 2005 2009 Jul/Aug (p) 80 60 40 20 0 1993 100 4 2 1989 -20 2013 0 2009 2010 2011 2012 2013 Source: Thomson Reuters LPC LoanConnector and SDC. Note: Estimated from curve fit to Merrill Lynch bond yields. Treasury yields from smoothed yield curve estimated from off-the-run securities. Page 1 of 2 September 17–18, 2013 Authorized for Public Release 219 of 241 Exhibit 2 Indicators of Vulnerabilities Private Nonfinancial Sector Credit-to-GDP Ratio Price to Rent Ratio Jan. 2002 = 100 Ratio 1.9 200 Quarterly Monthly 180 P10,P90 1.8 Final estimate of trend ratio Actual ratio Q1 160 1.7 1.6 1.5 140 1.4 120 1.3 1.2 100 Median June 1.1 80 1.0 60 1990 1995 2000 2005 2010 2015 0.9 1983 1988 1993 1998 2003 2008 2013 Note: Calculated using an HP filter with lambda=400,000 Source: FOFA, NIPA, and staff calculations. Source: For house prices, CoreLogic; for rent data, Bureau of Labor Statistics. Regulatory Capital Ratios at BHCs Net Short-term Wholesale Debt of Financial Sector-to-GDP Ratio Percent Ratio 0.40 12 Quarterly, SA Quarterly Tier 1 common ratio Leverage ratio Q2 11 0.35 Final estimate of trend ratio Actual ratio 0.30 10 0.25 Q1 9 0.20 8 0.15 7 0.10 6 0.05 5 2001 2003 2005 2007 2009 2011 0.00 1983 2013 Source: FR Y-9C. 1988 1993 1998 2003 2008 Note: Calculated using an HP filter with lambda=400,000 Source: FOF and staff calculations. Summary • The cyclical vulnerability of the financial system appears moderate • A number of potential shocks could prove challenging - for example, related to the debt ceiling, EMEs, and geopolitical risks • Staff continue to pursue initiatives related to those pockets of concern we have identified Evaluate risk management at agency REITs Ensure compliance of banks with the recent guidance for leveraged-loan issuance Scrutinize interest-rate risk at banks Evaluate exposures to emerging market economies Page 2 of 2 2013 September 17–18, 2013 Authorized for Public Release Appendix 6: Materials used by Mr. Gust 220 of 241 September 17–18, 2013 Authorized for Public Release Class I FOMC – Restricted Controlled (FR) Material for Briefing on the Summary of Economic Projections Christopher Gust September 17, 2013 221 of 241 September 17–18, 2013 Authorized for Public Release 222 of 241 Exhibit 1. Central tendencies and ranges of economic projections, 2013–16 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 3 2008 2009 2010 2011 2012 2013 2014 2015 2016 Longer run Percent Unemployment rate 10 9 8 7 6 5 2008 2009 2010 2011 2012 2013 2014 2015 2016 Longer run Percent PCE inflation 3 2 1 2008 2009 2010 2011 2012 2013 2014 2015 2016 Longer run Percent Core PCE inflation 3 2 1 2008 2009 2010 2011 2012 2013 Note: The data for the actual values of the variables are annual. Page 1 of 5 2014 2015 2016 Longer run September 17–18, 2013 Authorized for Public Release 223 of 241 Exhibit 2. Economic projections for 2013-2016 and over the longer run (percent) 2013 Central Tendency Change in real GDP 2014 2015 2016 Longer run 2.0 to 2.3 2.3 to 2.6 2.9 to 3.1 3.0 to 3.5 3.0 to 3.5 2.9 to 3.6 2.5 to 3.3 --- 2.2 to 2.5 2.3 to 2.5 1.8 to 2.4 2.0 to 2.6 2.2 to 3.3 2.2 to 3.6 2.2 to 3.7 2.3 to 3.8 2.2 to 3.5 --- 2.1 to 2.5 2.0 to 3.0 Memo: Tealbook 2.3 3.1 3.4 3.2 2.3 June Tealbook 2.5 3.4 3.6 --- 2.3 2016 Longer run June projections Range June projections 2013 Central Tendency Unemployment rate 2014 2015 7.1 to 7.3 7.2 to 7.3 6.4 to 6.8 6.5 to 6.8 5.9 to 6.2 5.8 to 6.2 5.4 to 5.9 --- 5.2 to 5.8 5.2 to 6.0 6.9 to 7.3 6.9 to 7.5 6.2 to 6.9 6.2 to 6.9 5.3 to 6.3 5.7 to 6.4 5.2 to 6.0 --- 5.2 to 6.0 5.0 to 6.0 Memo: Tealbook 7.2 6.6 5.8 5.2 June Tealbook 7.3 6.6 5.8 5.3 --- 5.2 2013 PCE inflation 2014 2015 2016 Longer run June projections Range June projections Central Tendency 1.1 to 1.2 0.8 to 1.2 1.3 to 1.8 1.4 to 2.0 1.6 to 2.0 1.6 to 2.0 1.7 to 2.0 --- 2.0 2.0 1.0 to 1.3 0.8 to 1.5 1.2 to 2.0 1.4 to 2.0 1.4 to 2.3 1.6 to 2.3 1.5 to 2.3 --- 2.0 2.0 Memo: Tealbook 1.1 1.2 1.4 2.0 June Tealbook 0.9 1.4 1.6 1.6 --- June projections Range June projections 2013 Central Tendency Core PCE inflation 2014 2015 2016 1.2 to 1.3 1.2 to 1.3 1.5 to 1.7 1.5 to 1.8 1.7 to 2.0 1.7 to 2.0 1.9 to 2.0 --- 1.2 to 1.4 1.1 to 1.5 1.4 to 2.0 1.5 to 2.0 1.6 to 2.3 1.7 to 2.3 1.7 to 2.3 --- Memo: Tealbook 1.2 1.5 1.6 June Tealbook 1.2 1.6 1.8 1.7 --- June projections Range June projections NOTE: The changes in real GDP and inflation are measured Q4/Q4. Page 2 of 5 2.0 September 17–18, 2013 Authorized for Public Release 224 of 241 Exhibit 3. Overview of FOMC participants’ assessments of appropriate monetary policy Number of participants Appropriate timing of policy firming September projections June projections 12 3 2 2013 2014 2015 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 2016 Appropriate pace of policy firming Percent Target federal funds rate at year-end 6 September projections 5 4 3 2 1 0 2013 2014 2015 2016 Longer run Appropriate pace of policy firming Percent Target federal funds rate at year-end 6 June projections 5 4 3 2 1 0 2013 2014 2015 2016 Longer run Note: In the upper panel, the height of each bar denotes the number of FOMC participants who judge that, under appropriate monetary policy, the first increase in the target federal funds rate from its current range of 0 to 1/4 percent will occur in the specified calendar year. In the middle and lower panels, each circle indicates the value (rounded to the nearest 1/4 percentage point) of an individual participant’s judgment of the appropriate level of the target federal funds rate at the end of the specified calendar year or over the longer run. Page 3 of 5 September 17–18, 2013 Authorized for Public Release 225 of 241 Exhibit 4. Scatterplot of unemployment and PCE inflation rates in the initial year of policy firming (in percent) PCE inflation 2.5 2.0 1.5 1.0 5.0 5.5 6.0 Unemployment Rate 6.5 7.0 Year of Firming 2014 2015 2016 Note: When the projections of two or more participants are identical, larger markers, which represent one participant each, are used so that each projection can be seen. Page 4 of 5 September 17–18, 2013 Authorized for Public Release 226 of 241 Exhibit 5. Uncertainty and risks in economic projections Number of participants Uncertainty about GDP growth 20 18 16 14 12 10 8 6 4 2 September projections June projections Lower Broadly similar Higher Number of participants Risks to GDP growth Weighted to downside Broadly balanced Number of participants Uncertainty about the unemployment rate Lower Broadly similar 20 18 16 14 12 10 8 6 4 2 Higher Risks to the unemployment rate Weighted to downside Lower Broadly similar 20 18 16 14 12 10 8 6 4 2 Higher Broadly balanced Lower Broadly similar Higher Broadly balanced 20 18 16 14 12 10 8 6 4 2 Weighted to upside Number of participants Risks to core PCE inflation Weighted to downside Page 5 of 5 Weighted to upside Risks to PCE inflation Weighted to downside 20 18 16 14 12 10 8 6 4 2 20 18 16 14 12 10 8 6 4 2 Number of participants Number of participants Uncertainty about core PCE inflation Weighted to upside Number of participants Number of participants Uncertainty about PCE inflation 20 18 16 14 12 10 8 6 4 2 September projections June projections Broadly balanced 20 18 16 14 12 10 8 6 4 2 Weighted to upside September 17–18, 2013 Authorized for Public Release Appendix 7: Materials used by Mr. Meyer 227 of 241 September 17–18, 2013 Authorized for Public Release 228 of 241 Class I FOMC – Restricted Controlled (FR) Material for FOMC Briefing on Monetary Policy Alternatives Steve Meyer September 17-18, 2013 September 17–18, 2013 Authorized for Public Release 229 of 241 Summary of Economic Projections and Market Expectations Unemployment Rate Key Questions Total PCE Prices 4 Quarter Percent Change Percent • • • Is June "economic scenario" still most likely? • • • 10 Median Sep’12 SEP Median Jun’13 SEP Median Sep’13 SEP • • • • • • When will the FOMC cut the pace of purchases? Will the Committee change its forward guidance? • • 9 5 Median Sep’12 SEP Median Jun’13 SEP Median Sep’13 SEP 8 3 • • •• • • • 7 6 • 5 2011 SEP Balance Sheet Projections 2013 2015 2017 2013 2015 • • PD Citi WSJ MS Barclays 12 participants see a cut in pace this year and purchases ending around mid-2014 as in Tealbook 3 see larger total purchases or later tapering 2 see earlier end and smaller total purchases 2017 Number of Dealers 100 10 90 9 80 8 70 7 60 6 50 5 40 4 30 3 20 2 10 1 0 Sept. Later this Year >2013 0 Low Probability < _ 35% Appropriate Pace of Policy Firming: SEP (September 2013) Moderate Probability 55-60% High Probability > _ 70% Possible Changes to Forward Guidance Percent • 6 Target federal funds rate at year end • Lower unemployment rate threshold • Inflation "floor" • Post-threshold guidance • Post-liftoff guidance 5 ••• ••• ••• ••••••••••••••••• •••••••••••••• 2013 2014 ••• ••• •••• •• •• 2015 •• •• •• ••••• • • • 2016 ••• •••••••••• ••• 4 3 2 1 0 Longer run Page 1 of 13 1 Dealer Conviction About a Pace Reduction in September Respondents • 2 0 2011 Modal Timing of First Pace Reduction Percent of 4 September 17–18, 2013 Authorized for Public Release 230 of 241 JULY FOMC STATEMENT 1. Information received since the Federal Open Market Committee met in June suggests that economic activity expanded at a modest pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. Partly reflecting transitory influences, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term. 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgagebacked securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. 5. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6½ percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 Page 2 of 13 September 17–18, 2013 Authorized for Public Release 231 of 241 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. Page 3 of 13 September 17–18, 2013 Authorized for Public Release 232 of 241 FOMC STATEMENT—SEPTEMBER 2013 ALTERNATIVE A 1. Information received since the Federal Open Market Committee met in June July suggests that economic activity expanded has been expanding at a modest moderate pace during the first half of the year. Some indicators of labor market conditions have shown [ further ] improvement in recent months, on balance, but the unemployment rate remains elevated and job gains appear to have slowed somewhat. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat further and fiscal policy is restraining economic growth. Partly reflecting transitory influences Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term. 3. The Committee judges that the improvement in the outlook for the labor market and the extent of progress toward its economic objectives since it began its current asset purchase program are not yet sufficient to warrant an adjustment in the pace at which it is adding to its holdings of longer-term securities. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgagebacked securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months and The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset Page 4 of 13 September 17–18, 2013 Authorized for Public Release 233 of 241 purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. At such time as the Committee sees sufficient progress toward its objectives for the labor market and inflation, some moderation in the pace of its securities purchases will become appropriate. Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases. 5. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6½ 6 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. Moreover, the Committee anticipates that it would not raise its target for the federal funds rate if inflation between one and two years ahead were projected to be below 1¾ percent. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including Once the unemployment rate reaches 6 percent, and assuming inflation is well contained at that time, the Committee will consider a broad set of indicators in determining how long to maintain a highly accommodative stance of monetary policy. Relevant factors include additional measures of labor market conditions such as the level and growth of employment, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. Moreover, the Committee currently anticipates that it will be appropriate to normalize the federal funds rate only gradually because ongoing headwinds are likely to take a considerable time to abate fully, even after the economy has reached maximum employment and inflation has returned to its longer-run objective, it will likely be appropriate for the federal funds rate target to remain below its longer-run normal value as persistent headwinds abate. Page 5 of 13 September 17–18, 2013 Authorized for Public Release 234 of 241 FOMC STATEMENT—SEPTEMBER 2013 ALTERNATIVE B 1. Information received since the Federal Open Market Committee met in June July suggests that economic activity expanded has been expanding at a modest moderate pace during the first half of the year. Some indicators of labor market conditions have shown [ further ] improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat further and fiscal policy is restraining economic growth. Partly reflecting transitory influences Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished [ , on net, ] since the last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term. 3. Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgagebacked securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months and The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor Page 6 of 13 September 17–18, 2013 Authorized for Public Release 235 of 241 market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. In judging when to moderate the pace of asset purchases, the Committee will [ , at its coming meetings, ] be looking for further evidence consistent with assess whether incoming information continues to support the Committee’s expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases. 5. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6½ percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. [ Moreover, the Committee currently anticipates that it will be appropriate to normalize the federal funds rate only gradually because ongoing headwinds are likely to take a considerable time to abate fully, even after the economy has reached maximum employment and inflation has returned to its longer-run objective, it will likely be appropriate for the federal funds rate target to remain below its longer-run normal value as persistent headwinds abate. ] Page 7 of 13 September 17–18, 2013 Authorized for Public Release 236 of 241 FOMC STATEMENT—SEPTEMBER 2013 ALTERNATIVE C 1. Information received since the Federal Open Market Committee met in June July suggests that economic activity expanded is expanding at a modest moderate pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, with continuing gains in payroll employment, but although the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but continued to strengthen, even though mortgage rates have risen somewhat further and fiscal policy is restraining economic growth. Partly reflecting transitory influences Apart from fluctuations due to changes in energy prices, inflation has been running somewhat below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. 2. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the last fall [ and has become more confident that labor market conditions will continue to improve over the medium term ]. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it also anticipates that inflation will move back toward its 2 percent objective over the medium term. 3. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. In light of the improvement in the labor market since the Committee began its current asset purchase program a year ago, the Committee decided today to make modest downward adjustments in its asset purchases, to a monthly pace of [ $35 ] billion from $40 billion for its purchases of additional agency mortgage-backed securities, and to a monthly pace of [ $40 ] billion from $45 billion for longer-term Treasury securities. 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. Taken together, these actions The Committee’s sizable and still-increasing holdings of longer-term securities should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee’s dual mandate. 4. The Committee will closely monitor incoming information on economic and financial developments in coming months and The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. If the Committee sees continued improvement in labor market conditions and inflation moving back toward its longer-run objective, then Page 8 of 13 September 17–18, 2013 Authorized for Public Release 237 of 241 additional measured reductions in the pace of asset purchases likely would become appropriate. However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on the Committee’s economic outlook as well as its assessment of the likely efficacy and costs of such purchases. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. OR 4'. The Committee will closely monitor incoming information on economic and financial developments in coming months. If the Committee sees sufficient further progress toward its objectives for the labor market and inflation, as it expects, then additional measured reductions in the pace of asset purchases would become appropriate. The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. In particular, the Committee anticipates that by the time its asset purchases end, the unemployment rate will be around 7 percent and expected to decline further, and inflation will be moving back toward its 2 percent longer-run goal. The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. In determining the size, pace, and composition of its asset purchases, the Committee will continue to take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives. However, asset purchases are not on a preset course, and the Committee’s decisions about their pace will remain contingent on its economic outlook as well as its assessment of the likely efficacy and costs of such purchases. 5. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6½ percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. Page 9 of 13 September 17–18, 2013 Authorized for Public Release 238 of 241 JULY 2013 DIRECTIVE Consistent with its statutory mandate, the Federal Open Market Committee seeks monetary and financial conditions that will foster maximum employment and price stability. In particular, 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 undertake open market operations as necessary to maintain such conditions. The Desk is directed to continue purchasing longer-term Treasury securities at a pace of about $45 billion per month and to continue purchasing agency mortgage-backed securities at a pace of about $40 billion per month. 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 mortgagebacked securities transactions. The Committee directs the Desk to maintain its policy of rolling over maturing Treasury securities into new issues and its policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed 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 10 of 13 September 17–18, 2013 Authorized for Public Release 239 of 241 DIRECTIVE FOR SEPTEMBER 2013 ALTERNATIVE A Consistent with its statutory mandate, the Federal Open Market Committee seeks monetary and financial conditions that will foster maximum employment and price stability. In particular, 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 undertake open market operations as necessary to maintain such conditions. The Desk is directed to continue purchasing longer-term Treasury securities at a pace of about $45 billion per month and to continue purchasing agency mortgage-backed securities at a pace of about $40 billion per month. 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 mortgagebacked securities transactions. The Committee directs the Desk to maintain its policy of rolling over maturing Treasury securities into new issues and its policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed 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 11 of 13 September 17–18, 2013 Authorized for Public Release 240 of 241 DIRECTIVE FOR SEPTEMBER 2013 ALTERNATIVE B Consistent with its statutory mandate, the Federal Open Market Committee seeks monetary and financial conditions that will foster maximum employment and price stability. In particular, 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 undertake open market operations as necessary to maintain such conditions. The Desk is directed to continue purchasing longer-term Treasury securities at a pace of about $45 billion per month and to continue purchasing agency mortgage-backed securities at a pace of about $40 billion per month. 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 mortgagebacked securities transactions. The Committee directs the Desk to maintain its policy of rolling over maturing Treasury securities into new issues and its policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed 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 12 of 13 September 17–18, 2013 Authorized for Public Release 241 of 241 DIRECTIVE FOR SEPTEMBER 2013 ALTERNATIVE C Consistent with its statutory mandate, the Federal Open Market Committee seeks monetary and financial conditions that will foster maximum employment and price stability. In particular, 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 undertake open market operations as necessary to maintain such conditions. Beginning in October, the Desk is directed to continue purchasing purchase longer-term Treasury securities at a pace of about $45 $40 billion per month and to continue purchasing purchase agency mortgage-backed securities at a pace of about $40 $35 billion per month. 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. The Committee directs the Desk to maintain its policy of rolling over maturing Treasury securities into new issues and its policy of reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed 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 13 of 13
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