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May 04, 2022

The Federal Reserve releases the FOMC statement

Released at 2:00 PM EST

Although overall economic activity declined in the first quarter, household spending and business fixed investment remained strong. Job gains have been solid in recent months, and the unemployment rate has fallen dramatically. Inflation remains high, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

Russia’s invasion of Ukraine caused enormous human and economic hardship. The implications for the US economy are highly uncertain. The invasion and related events create additional upward pressure on inflation and are likely to affect economic activity. Additionally, the COVID-related shutdown in China is likely to exacerbate supply chain disruptions. The Committee is very careful about inflation risks.

The committee seeks to maximize employment and inflation at a rate of 2% over the long term. With appropriate consistency in the monetary policy stance, the Committee expects inflation to return to its 2 per cent target and the labor market to remain strong. In support of these objectives, the Committee has decided to raise the target range for the federal funds rate to 3/4 to 1 percent and expects that continued increases in the target range will be appropriate. In addition, the Committee decided to begin reducing its holdings of Treasury securities, agency debt, and agency mortgage-backed securities on June 1, as outlined in plans to reduce the size of the Federal Reserve’s balance sheet issued concurrently with this statement. .

In assessing the appropriate position for monetary policy, the Committee will continue to monitor the implications of the information received on the economic outlook. The committee will be ready to adjust the monetary policy stance as appropriate if risks arise that may hinder the achievement of the committee’s objectives. The committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

The vote for monetary policy action was Jerome H. Powell, president; John C. Williams, Vice President; Michael W. Bowman, Lyle Brainard, James Pollard, Esther L. George; Patrick Harker Loretta J. and Christopher J. Waller. Patrick Harker voted as an alternate member at this meeting.

Implementation Memorandum issued on May 4, 2022

Last update: May 4, 2022