FEDERAL OPEN MARKET COMMITTEE (FOMC) MEETING RESULTS:
DATE: December 13-14, 2022
- 1The Fed increased its Target Fed Funds rate by 0.50%. The Fed Funds Target range is now 4.25% - 4.50%.
- 2Similar to the November 1 - 2, 2022 meeting, this meeting's vote was unanimous!
- 3The FOMC, which began to shrink its securities portfolio on June 1,2022, announced it will continue reducing its holdings of Treasury securities, agency debt, and agency mortgagebacked securities, as described in the plans for reducing the size of the Federal Reserve's Balance Sheet that it announced at the May 2022 FOMC meeting.
- 4The Committee emphasized that its strongly committed to returning inflation to its 2% objective.
ECONOMIC HIGHLIGHTS: Economic activity continue to weaken, and inflation remains too high!
- Recent indicators point to modest growth in spending and production. Job gains have been robust in recent months, and the unemployment rate has remained low.
- Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.
- Russia's war against Ukraine is causing tremendous human and economic hardship. The war and related events are creating additional upward pressure on inflation and are weighing on global economic activity.
- The Committee is highly attentive to inflation risks.
ANNOUNCEMENTS: Fed funds rate increased. Fed funds range raised by a 0.50% to a new range of 4.25% to 4.50%, and balance sheet reductions continue.
- The Committee seeks to achieve maximum employment and inflation a the rate of 2% over the longer run.
- In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4.25% - 4.50%.
- The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.
- In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.
- In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in the Plans for Reducing the size of the Federal Reserve's Balance Sheet that were issued in May.
- The Committee is strongly committed to returning inflation to its 2% objective.
FED'S NEW ECONOMIC PROJECTIONS: Fed The FOMC's most recent Economic Projections have changed. See the changes in he chart below:
VOTING RESULTS: No dissenting votes
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lael Brainard; James Bullard; Susan M. Collins; Lisa D. Cook; Ester L. George; Philip N. Jefferson; Loretta J. Mester; and Christopher J. Waller.
NEXT MEETING: January 31 - February 1, 2022
ABOUT THE AUTHOR
Dr. Edmond J. Seifried, PhD | Chief Economist
Dr. Seifried is Professor Emeritus of Economics and Business at Lafayette College in Easton, Pennsylvania. He also serves as the Chief Economist for SB Value Partners, L.P., and Executive Consultant for the Sheshunoff CEO Affiliation Programs.
Dr. Seifried serves as the dean of the Virginia and West Virginia Banking Schools and has served on the faculty of numerous banking schools including: Stonier Graduate School of Banking, and the Graduate School of Banking of the South.