Text of the Fed’s monetary policy statement

Recent indicators point to modest growth in spending and output. Job gains have been robust in recent months and the unemployment rate has remained low. Inflation has decreased slightly, but remains high. Russia’s war against Ukraine is causing enormous human and economic hardship and contributing to high global uncertainty. The Committee is very attentive to the risks of inflation. The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the long run. In support of these goals, the Committee has decided to increase the target range for the federal funds rate from 4-1/2 to 4-3/4 percent. The Committee expects that continued increases in the target range will be appropriate to achieve a monetary policy stance tightening enough to bring inflation down to 2% over time. In determining the size 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 to reduce its holdings of Treasuries and agency debt securities and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to bringing inflation back to its 2% target. In assessing the appropriate monetary policy stance, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be willing to change the monetary policy stance as appropriate if risks emerge that could hinder the achievement of the Committee’s objectives. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflationary pressures and inflation expectations, as well as financial and international developments. They voted for monetary policy action Jerome H. Powell, chairman; John C. Williams, vice president; Michael S. Barr; Michelle W. Archer; Lael Brainard; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Lorie K. Logan; and Christopher J. Waller. For media inquiries, email [email protected] or call 202-452-2955. For release at 2:00 pm EST February 1, 2023 Decisions Relating to Implementing Monetary Policy The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement dated February 1, 2023: Federal Reserve System Board of Governors unanimously voted to raise the interest rate paid on reserve balances to 4.65 percent, effective February 2, 2023. at the Federal Reserve Bank of New York, until otherwise instructed, to transact in the System Open Market account in accordance with the following internal policy directive: “Effective February 2, 2023, the Federal Open Market Committee directs the Desk to: o Engage in open market operations necessary to maintain the federal funds rate in a target range of 4-1/2 to 4-3/4 percent. o Conduct overnight repurchase agreements t transactions with a rate m offering minimum of 4.75% and with an aggregate operating cap of $500 billion; the overall operating limit may be temporarily increased at the discretion of the President. o Conduct overnight reverse repurchase transactions at a bid rate of 4.55% and with a per counterparty limit of $160 billion per day; the limit per counterparty may be temporarily increased at the discretion of the President. o Re-auction the amount of principal payments from holdings of maturing Federal Reserve Treasury securities each calendar month that exceeds a limit of $60 billion per month. Redeem coupon Treasury bills up to this monthly limit and Treasury bills to the extent coupon principal payments are less than the monthly limit. o Reinvest in agency mortgage-backed securities (MBS) the amount of principal payments from agency debt holdings of the Federal Reserve and agency MBS received in each calendar month that exceed a cap of $35 billion per month. o Allow for modest deviations from the amounts reported for reinvestments, if necessary for operational reasons. o Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of Federal Reserve agency MBS transactions.” the prime credit rate to 4.75 percent, effective February 2, 2023. In taking this action, The Board has approved requests to establish this rate made by the boards of directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Richmond, Atlanta, Chicago, Kansas City, Dallas and San Francisco This information will be updated as appropriate to reflect the decisions of the Federal Open Market Committee or the Board of Governors regarding the details of the Federal Reserve’s operating instruments and the approach used to implement monetary policy Further information relating to open market operations and reinvestments is available on the website of the Federal Reserve Federal Reserve Bank of New York.

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