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On the Federal Reserve website, find the minutes (not the press release) of the most recent FOMC meeting. Summarize the factors that led to the decision regarding the federal funds rate at that meeting and analyze how the Fed decision affect small business and your personal finance.
fomcminutes20190130.pdf

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Page 1
Minutes of the Federal Open Market Committee
January 29–30, 2019
A joint meeting of the Federal Open Market Committee
and the Board of Governors was held in the offices of
the Board of Governors of the Federal Reserve System
in Washington, D.C., on Tuesday, January 29, 2019, at
10:00 a.m. and continued on Wednesday, January
30, 2019, at 9:00 a.m. 1
PRESENT:
Jerome H. Powell, Chairman
John C. Williams, Vice Chairman
Michelle W. Bowman
Lael Brainard
James Bullard
Richard H. Clarida
Charles L. Evans
Esther L. George
Randal K. Quarles
Eric Rosengren
Patrick Harker, Robert S. Kaplan, Neel Kashkari,
Loretta J. Mester, and Michael Strine, Alternate
Members of the Federal Open Market Committee
Thomas I. Barkin, Raphael W. Bostic, and Mary C.
Daly, Presidents of the Federal Reserve Banks of
Richmond, Atlanta, and San Francisco, respectively
James A. Clouse, Secretary
Matthew M. Luecke, Deputy Secretary
David W. Skidmore, Assistant Secretary
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel
Michael Held, Deputy General Counsel
Steven B. Kamin, Economist
Thomas Laubach, Economist
Stacey Tevlin, Economist
Thomas A. Connors, Rochelle M. Edge, Beverly Hirtle,
Daniel G. Sullivan, Christopher J. Waller, William
Wascher, Jonathan L. Willis, and Beth Anne
Wilson, Associate Economists
Simon Potter, Manager, System Open Market Account
The Federal Open Market Committee is referenced as the
“FOMC” and the “Committee” in these minutes.
1
Lorie K. Logan, Deputy Manager, System Open
Market Account
Ann E. Misback, Secretary, Office of the Secretary,
Board of Governors
Matthew J. Eichner, 2 Director, Division of Reserve
Bank Operations and Payment Systems, Board of
Governors; Andreas Lehnert, Director, Division of
Financial Stability, Board of Governors
Jennifer J. Burns, Deputy Director, Division of
Supervision and Regulation, Board of Governors;
Michael T. Kiley, Deputy Director, Division of
Financial Stability, Board of Governors; Trevor A.
Reeve, Deputy Director, Division of Monetary
Affairs, Board of Governors
Jon Faust, Senior Special Adviser to the Chairman,
Office of Board Members, Board of Governors
Antulio N. Bomfim, Special Adviser to the Chairman,
Office of Board Members, Board of Governors
Brian M. Doyle, Joseph W. Gruber, Ellen E. Meade,
and John M. Roberts, Special Advisers to the
Board, Office of Board Members, Board of
Governors
Linda Robertson, Assistant to the Board, Office of
Board Members, Board of Governors
Christopher J. Erceg, Senior Associate Director,
Division of International Finance, Board of
Governors; David E. Lebow and Michael G.
Palumbo, Senior Associate Directors, Division of
Research and Statistics, Board of Governors
Edward Nelson and Robert J. Tetlow, Senior Advisers,
Division of Monetary Affairs, Board of Governors;
Jeremy B. Rudd, Senior Adviser, Division of
Research and Statistics, Board of Governors
Attended through the discussion of the long-run monetary
policy implementation frameworks.
2
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Page 2
Federal Open Market Committee
Marnie Gillis DeBoer,2 Associate Director, Division of
Monetary Affairs, Board of Governors
Meredith Black, First Vice President, Federal Reserve
Bank of Dallas
Jeffrey D. Walker, Deputy Associate Director, Division
of Reserve Bank Operations and Payment Systems,
Board of Governors
David Altig and Sylvain Leduc, Executive Vice
Presidents, Federal Reserve Banks of Atlanta and
San Francisco, respectively
Eric C. Engstrom, Deputy Associate Director, Division
of Monetary Affairs, and Adviser, Division of
Research and Statistics, Board of Governors
Bruce Fallick, Marc Giannoni, Susan McLaughlin,2
Anna Nordstrom,2 Angela O’Connor,2 Keith Sill,
and Mark L.J. Wright, Senior Vice Presidents,
Federal Reserve Banks of Cleveland, Dallas, New
York, New York, New York, Philadelphia, and
Minneapolis, respectively
Glenn Follette and Norman J. Morin, Assistant
Directors, Division of Research and Statistics,
Board of Governors; Christopher J. Gust, Laura
Lipscomb,2 and Zeynep Senyuz,2 Assistant
Directors, Division of Monetary Affairs, Board of
Governors
Dana L. Burnett, Michele Cavallo,2 and Dan Li, Section
Chiefs, Division of Monetary Affairs, Board of
Governors
Sean Savage, Senior Project Manager, Division of
Monetary Affairs, Board of Governors
David H. Small, Project Manager, Division of
Monetary Affairs, Board of Governors
Kurt F. Lewis, Principal Economist, Division of
Monetary Affairs, Board of Governors;
Christopher L. Smith, Principal Economist,
Division of Research and Statistics, Board of
Governors
Ayelen Banegas, Senior Economist, Division of
Monetary Affairs, Board of Governors
Luke Pettit,2 Senior Financial Institution and Policy
Analyst, Division of Monetary Affairs, Board of
Governors
Roc Armenter,2 Kathryn B. Chen,2 Joe Peek, Alexander
L. Wolman, and Patricia Zobel,2 Vice Presidents,
Federal Reserve Banks of Philadelphia, New York,
Boston, Richmond, and New York, respectively
Samuel Schulhofer-Wohl, Senior Economist and
Research Advisor, Federal Reserve Bank of
Chicago
Annual Organizational Matters 4
In the agenda for this meeting, it was reported that advices of the election of the following members and alternate members of the Federal Open Market Committee
for a term beginning January 29, 2019, had been received
and that these individuals had executed their oaths of office.
The elected members and alternate members were as follows:
John C. Williams, President of the Federal Reserve Bank
of New York, with Michael Strine, First Vice President
of the Federal Reserve Bank of New York, as alternate
Eric Rosengren, President of the Federal Reserve Bank
of Boston, with Patrick Harker, President of the Federal
Reserve Bank of Philadelphia, as alternate
Pon Sagnanert, Financial Analyst, Division of Monetary
Affairs, Board of Governors
Charles L. Evans, President of the Federal Reserve Bank
of Chicago, with Loretta J. Mester, President of the Federal Reserve Bank of Cleveland, as alternate
Yvette McKnight, 3 Staff Assistant, Office of the
Secretary, Board of Governors
James Bullard, President of the Federal Reserve Bank of
St. Louis, with Robert S. Kaplan, President of the Federal Reserve Bank of Dallas, as alternate
3
Attended Tuesday session only.
Committee organizational documents are available at
https://www.federalreserve.gov/monetarypolicy/rules_authorizations.htm.
4
_____________________________________________________________________________________________
Minutes of the Meeting of January 29–30, 2019
Page 3
Esther L. George, President of the Federal Reserve Bank
of Kansas City, with Neel Kashkari, President of the
Federal Reserve Bank of Minneapolis, as alternate
Guidelines for the Conduct of System Open Market Operations in Federal-Agency Issues remained suspended.
By unanimous vote, the following officers of the Committee were selected to serve until the selection of their
successors at the first regularly scheduled meeting of the
Committee in 2020:
AUTHORIZATION FOR DOMESTIC OPEN
MARKET OPERATIONS
(As amended effective January 29, 2019)
Jerome H. Powell
John C. Williams
James A. Clouse
Matthew M. Luecke
David W. Skidmore
Michelle A. Smith
Mark E. Van Der Weide
Michael Held
Richard M. Ashton
Steven B. Kamin
Thomas Laubach
Stacey Tevlin
Chairman
Vice Chairman
Secretary
Deputy Secretary
Assistant Secretary
Assistant Secretary
General Counsel
Deputy General Counsel
Assistant General Counsel
Economist
Economist
Economist
Thomas A. Connors
Rochelle M. Edge
Eric M. Engen
Beverly Hirtle
Daniel G. Sullivan
Geoffrey Tootell
Christopher J. Waller
William Wascher
Jonathan L. Willis
Beth Anne Wilson
Associate Economists
By unanimous vote, the Federal Reserve Bank of New
York was selected to execute transactions for the System
Open Market Account (SOMA).
By unanimous vote, the Committee selected Simon Potter and Lorie K. Logan to serve at the pleasure of the
Committee as manager and deputy manager of the
SOMA, respectively, on the understanding that these selections were subject to their being satisfactory to the
Federal Reserve Bank of New York.
Secretary’s note: Advice subsequently was received that the manager and deputy manager selections indicated above were satisfactory to the
Federal Reserve Bank of New York.
By unanimous vote, the Committee approved the Authorization for Domestic Open Market Operations with
a revision that makes clear that small value tests for rollovers and maturities are included in the $5 billion limit
of the operational readiness testing program. The
OPEN MARKET TRANSACTIONS
1. The Federal Open Market Committee (the “Committee”) authorizes and directs the Federal Reserve Bank
selected by the Committee to execute open market transactions (the “Selected Bank”), to the extent necessary to
carry out the most recent domestic policy directive
adopted by the Committee:
A. To buy or sell in the open market securities that
are direct obligations of, or fully guaranteed as to principal and interest by, the United States, and securities
that are direct obligations of, or fully guaranteed as to
principal and interest by, any agency of the United
States, that are eligible for purchase or sale under Section 14(b) of the Federal Reserve Act (“Eligible Securities”) for the System Open Market Account
(“SOMA”):
i.
As an outright operation with securities dealers
and foreign and international accounts maintained
at the Selected Bank: on a same-day or deferred delivery basis (including such transactions as are commonly referred to as dollar rolls and coupon swaps)
at market prices; or
ii. As a temporary operation: on a same-day or
deferred delivery basis, to purchase such Eligible Securities subject to an agreement to resell (“repo
transactions”) or to sell such Eligible Securities subject to an agreement to repurchase (“reverse repo
transactions”) for a term of 65 business days or less,
at rates that, unless otherwise authorized by the
Committee, are determined by competitive bidding,
after applying reasonable limitations on the volume
of agreements with individual counterparties;
B. To allow Eligible Securities in the SOMA to mature without replacement;
C. To exchange, at market prices, in connection
with a Treasury auction, maturing Eligible Securities in
the SOMA with the Treasury, in the case of Eligible
Securities that are direct obligations of the United
States or that are fully guaranteed as to principal and
interest by the United States; and
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Federal Open Market Committee
D. To exchange, at market prices, maturing Eligible
Securities in the SOMA with an agency of the United
States, in the case of Eligible Securities that are direct
obligations of that agency or that are fully guaranteed
as to principal and interest by that agency.
SECURITIES LENDING
2. In order to ensure the effective conduct of open
market operations, the Committee authorizes the Selected Bank to operate a program to lend Eligible Securities held in the SOMA to dealers on an overnight basis
(except that the Selected Bank may lend Eligible Securities for longer than an overnight term to accommodate
weekend, holiday, and similar trading conventions).
A. Such securities lending must be:
i.
At rates determined by competitive bidding;
ii. At a minimum lending fee consistent with the
objectives of the program;
iii. Subject to reasonable limitations on the total
amount of a specific issue of Eligible Securities that
may be auctioned; and
iv. Subject to reasonable limitations on the
amount of Eligible Securities that each borrower
may borrow.
B. The Selected Bank may:
i.
Reject bids that, as determined in its sole discretion, could facilitate a bidder’s ability to control a
single issue;
ii. Accept Treasury securities or cash as collateral
for any loan of securities authorized in this paragraph 2; and
iii. Accept agency securities as collateral only for a
loan of agency securities authorized in this paragraph 2.
OPERATIONAL READINESS TESTING
3. The Committee authorizes the Selected Bank to
undertake transactions of the type described in paragraphs 1 and 2 from time to time for the purpose of testing operational readiness, subject to the following limitations:
A. All transactions authorized in this paragraph 3
shall be conducted with prior notice to the Committee;
B. The aggregate par value of the transactions authorized in this paragraph 3 that are of the type described in paragraph 1.A.i, 1.B, 1.C and 1.D shall not
exceed $5 billion per calendar year; and
C. The outstanding amount of the transactions described in paragraphs 1.A.ii and 2 shall not exceed
$5 billion at any given time.
TRANSACTIONS WITH CUSTOMER ACCOUNTS
4. In order to ensure the effective conduct of open
market operations, while assisting in the provision of
short-term investments or other authorized services for
foreign central bank and international accounts maintained at a Federal Reserve Bank (the “Foreign Accounts”) and accounts maintained at a Federal Reserve
Bank as fiscal agent of the United States pursuant to section 15 of the Federal Reserve Act (together with the
Foreign Accounts, the “Customer Accounts”), the Committee authorizes the following when undertaken on
terms comparable to those available in the open market:
A. The Selected Bank, for the SOMA, to undertake
reverse repo transactions in Eligible Securities held in
the SOMA with the Customer Accounts for a term of
65 business days or less; and
B. Any Federal Reserve Bank that maintains Customer Accounts, for any such Customer Account,
when appropriate and subject to all other necessary
authorization and approvals, to:
i.
Undertake repo transactions in Eligible Securities with dealers with a corresponding reverse repo
transaction in such Eligible Securities with the Customer Accounts; and
ii. Undertake intra-day repo transactions in Eligible Securities with Foreign Accounts.
Transactions undertaken with Customer Accounts under the provisions of this paragraph 4 may provide for a
service fee when appropriate. Transactions undertaken
with Customer Accounts are also subject to the authorization or approval of other entities, including the Board
of Governors of the Federal Reserve System and, when
involving accounts maintained at a Federal Reserve
Bank as fiscal agent of the United States, the United
States Department of the Treasury.
_____________________________________________________________________________________________
Minutes of the Meeting of January 29–30, 2019
Page 5
ADDITIONAL MATTERS
5. The Committee authorizes the Chairman of the
Committee, in fostering the Committee’s objectives during any period between meetings of the Committee, to
instruct the Selected Bank to act on behalf of the Committee to:
A. Adjust somewhat in exceptional circumstances
the stance of monetary policy and to take actions that
may result in material changes in the composition and
size of the assets in the SOMA; or
B. Undertake transactions with respect to Eligible
Securities in order to appropriately address temporary
disruptions of an operational or highly unusual nature
in U.S. dollar funding markets.
Any such adjustment described in subparagraph A of
this paragraph 5 shall be made in the context of the
Committee’s discussion and decision about the stance of
policy at its most recent meeting and the Committee’s
long-run objectives to foster maximum employment and
price stability, and shall be based on economic, financial,
and monetary developments since the most recent meeting of the Committee. The Chairman, whenever feasible, will consult with the Committee before making any
instruction under this paragraph 5.
The Committee voted unanimously to reaffirm without
revision the Authorization for Foreign Currency Operations and the Foreign Currency Directive as shown below.
AUTHORIZATION FOR FOREIGN CURRENCY
OPERATIONS
(As reaffirmed effective January 29, 2019)
IN GENERAL
1. The Federal Open Market Committee (the “Committee”) authorizes the Federal Reserve Bank selected by
the Committee (the “Selected Bank”) to execute open
market transactions for the System Open Market Account as provided in this Authorization, to the extent
necessary to carry out any foreign currency directive of
the Committee:
A. To purchase and sell foreign currencies (also
known as cable transfers) at home and abroad in the
open market, including with the United States Treasury, with foreign monetary authorities, with the Bank
for International Settlements, and with other entities
in the open market. This authorization to purchase
and sell foreign currencies encompasses purchases and
sales through standalone spot or forward transactions
and through foreign exchange swap transactions. For
purposes of this Authorization, foreign exchange
swap transactions are: swap transactions with the
United States Treasury (also known as warehousing
transactions), swap transactions with other central
banks under reciprocal currency arrangements, swap
transactions with other central banks under standing
dollar liquidity and foreign currency liquidity swap arrangements, and swap transactions with other entities
in the open market.
B. To hold balances of, and to have outstanding forward contracts to receive or to deliver, foreign currencies.
2. All transactions in foreign currencies undertaken
pursuant to paragraph 1 above shall, unless otherwise
authorized by the Committee, be conducted:
A. In a manner consistent with the obligations regarding exchange arrangements under Article IV of
the Articles of Agreement of the International Monetary Fund (IMF).1
B. In close and continuous cooperation and consultation, as appropriate, with the United States Treasury.
C. In consultation, as appropriate, with foreign
monetary authorities, foreign central banks, and international monetary institutions.
D. At prevailing market rates.
STANDALONE SPOT AND FORWARD
TRANSACTIONS
3. For any operation that involves standalone spot or
forward transactions in foreign currencies:
A. Approval of such operation is required as follows:
i.
The Committee must direct the Selected Bank
in advance to execute the operation if it would result
in the overall volume of standalone spot and forward transactions in foreign currencies, as defined
in paragraph 3.C of this Authorization, exceeding
$5 billion since the close of the most recent regular
meeting of the Committee. The Foreign Currency
Subcommittee (the “Subcommittee”) must direct
the Selected Bank in advance to execute the operation if the Subcommittee believes that consultation
with the Committee is not feasible in the time available.
ii. The Committee authorizes the Subcommittee
to direct the Selected Bank in advance to execute the
operation if it would result in the overall volume of
standalone spot and forward transactions in foreign
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Page 6
Federal Open Market Committee
currencies, as defined in paragraph 3.C of this Authorization, totaling $5 billion or less since the close
of the most recent regular meeting of the Committee.
B. Such an operation also shall be:
i.
Generally directed at countering disorderly
market conditions; or
ii. Undertaken to adjust System balances in light
of probable future needs for currencies; or
iii. Conducted for such other purposes as may be
determined by the Committee.
C. For purposes of this Authorization, the overall
volume of standalone spot and forward transactions
in foreign currencies is defined as the sum (disregarding signs) of the dollar values of individual foreign currencies purchased and sold, valued at the time of the
transaction.
WAREHOUSING
4. The Comm …
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