At 3 a.m. Taiwan time on Thursday the 15th, the US Federal Reserve (Fed) announced its December monetary policy resolution, raising its Federal Funds Rate (FFR) target range by 2 yards (50 points basis) to 4.25-4.50%, and continue to reduce the budget.
Below is the statement from the December Fed meeting, with differences in wording from the statement from the previous November meeting:
Recent spending and output indicators point to modest growth, employment growth continues to be strong, and the unemployment rate remains low. Inflation remains stubbornly high, reflecting pandemic-related supply-demand imbalances, higher food and energy prices, and broader price pressures.
The Russo-Ukrainian war has caused enormous human and economic suffering.War and related events lead to upward pressure on inflationand suppress global economic activity. The Committee pays close attention to inflation risks.
“The November statement read: …The war and related events put further upward pressure on inflationand suppress global economic activity. …”
The Committee seeks to achieve full employment and a long-term inflation rate of 2%. To support these goals,Committee decides to increase target range for federal funds rate from 4.25% to 4.50%. The Committee expects that further increases in the target range will be appropriate to achieve a monetary policy stance tightening enough to allow inflation to return to 2 per cent 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 timing of the effects of monetary policy on economic activity and inflation, and economic and financial developments.
In addition, the Committee will continue to reduce its holdings in government bonds, agency debt and agency mortgage-backed securities, as outlined in the “Plan to Reduce the Size of the Fed’s Balance Sheet” released in May. The committee is strongly committed to returning inflation to its 2% target.
In assessing the appropriate monetary policy stance, the Committee will continue to monitor the implications of subsequent information for the economic outlook and will stand ready to adjust the monetary policy stance appropriately if risks arise that could impede the achievement of the Committee’s objectives. The committee’s assessment will take into account a wide range of information, including data on public health, labor market conditions, indicators of inflationary pressure and inflation expectations, as well as data on financial and international developments.
Supporters of this monetary policy resolution include FOMC Chairman Jerome Powell, Vice Chairman John Williams, Michael Barr, Michelle Bowman, Lael Brainard, Bu James Bullard, Susan Collins, Lisa Cook, Esther George, Philip Jefferson, Loretta Mester and Christopher Waller.
