Information received since the Federal Open Market Committee met in
July indicates that the labor market has continued to strengthen and
that economic activity has been rising moderately so far this year. Job
gains have remained solid in recent months, and the unemployment rate
has stayed low. Household spending has been expanding at a moderate
rate, and growth in business fixed investment has picked up in recent
quarters. On a 12-month basis, overall inflation and the measure
excluding food and energy prices have declined this year and are running
below 2 percent. Market-based measures of inflation compensation remain
low; survey-based measures of longer-term inflation expectations are
little changed, on balance.
Consistent with its statutory mandate,
the Committee seeks to foster maximum employment and price stability.
Hurricanes Harvey, Irma, and Maria have devastated many communities,
inflicting severe hardship. Storm-related disruptions and rebuilding
will affect economic activity in the near term, but past experience
suggests that the storms are unlikely to materially alter the course of
the national economy over the medium term. Consequently, the Committee
continues to expect that, with gradual adjustments in the stance of
monetary policy, economic activity will expand at a moderate pace, and
labor market conditions will strengthen somewhat further. Higher prices
for gasoline and some other items in the aftermath of the hurricanes
will likely boost inflation temporarily; apart from that effect,
inflation on a 12-month basis is expected to remain somewhat below 2
percent in the near term but to stabilize around the Committee's 2
percent objective over the medium term. Near-term risks to the economic
outlook appear roughly balanced, but the Committee is monitoring
inflation developments closely.
In view of realized and expected
labor market conditions and inflation, the Committee decided to maintain
the target range for the federal funds rate at 1 to 1-1/4 percent. The
stance of monetary policy remains accommodative, thereby supporting some
further strengthening in labor market conditions and a sustained return
to 2 percent inflation.
In determining the timing and size of
future adjustments to the target range for the federal funds rate, the
Committee will assess realized and expected economic conditions relative
to its objectives of maximum employment and 2 percent inflation. This
assessment will take into account a wide range of information, including
measures of labor market conditions, indicators of inflation pressures
and inflation expectations, and readings on financial and international
developments. The Committee will carefully monitor actual and expected
inflation developments relative to its symmetric inflation goal. The
Committee expects that economic conditions will evolve in a manner that
will warrant gradual increases in the federal funds rate; the federal
funds rate is likely to remain, for some time, below levels that are
expected to prevail in the longer run. However, the actual path of the
federal funds rate will depend on the economic outlook as informed by
incoming data.
In October, the Committee will initiate the balance
sheet normalization program described in the June 2017 Addendum to the
Committee's Policy Normalization Principles and Plans.
Voting for
the FOMC monetary policy action were: Janet L. Yellen, Chair; William C.
Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley
Fischer; Patrick Harker; Robert S. Kaplan; Neel Kashkari; and Jerome H.
Powell.
Implementation Note issued September 20, 2017
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