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Minutes of the Federal Open Market Committee June 9-10, 2020

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Minutes of the Federal Open Market Committee June 9-10, 2020 _____________________________________________________________________________________________ Page 1 Minutes of the Federal Open Market Committee June 9–10, 2020 A joint meeting of the Federal Open Market Committee Ann E. Misback, Secretary, Office of the Secretary, and the Board of Governors was held by Board of Governors videoconference on Tuesday, June 9, 2020, at 10:00 a.m. and continued on Wednesday, June 10, 2020, at Matthew J. Eichner,2 Director, Division of Reserve 9:00 a.m.1 Bank Operations and Payment Systems, Board of Governors; Michael S. Gibson, Director, Division PRESENT: of Supervision and Regulation, Board of Jerome H. Powell, Chair Governors; Andreas Lehnert, Director, Division of John C. Williams, Vice Chair Financial Stability, Board of Governors Michelle W. Bowman Lael Brainard Rochelle M. Edge, Deputy Director, Division of Richard H. Clarida Monetary Affairs, Board of Governors; Michael T. Patrick Harker Kiley, Deputy Director, Division of Financial Robert S. Kaplan Stability, Board of Governors Neel Kashkari Loretta J. Mester Jon Faust, Senior Special Adviser to the Chair, Office Randal K. Quarles of Board Members, Board of Governors Thomas I. Barkin, Raphael W. Bostic, Mary C. Daly, Joshua Gallin, Special Adviser to the Chair, Office of Charles L. Evans, and Michael Strine, Alternate Board Members, Board of Governors Members of the Federal Open Market Committee William F. Bassett, Antulio N. Bomfim, Wendy E. James Bullard, Esther L. George, and Eric Rosengren, Dunn, Ellen E. Meade, Chiara Scotti, and Ivan Presidents of the Federal Reserve Banks of St. Vidangos, Special Advisers to the Board, Office of Louis, Kansas City, and Boston, respectively Board Members, Board of Governors James A. Clouse, Secretary Linda Robertson, Assistant to the Board, Office of Matthew M. Luecke, Deputy Secretary Board Members, Board of Governors Michelle A. Smith, Assistant Secretary Mark E. Van Der Weide, General Counsel Brian M. Doyle,3 Senior Associate Director, Division of Michael Held, Deputy General Counsel International Finance, Board of Governors; Eric Thomas Laubach, Economist M. Engen, Senior Associate Director, Division of Stacey Tevlin, Economist Research and Statistics, Board of Governors Beth Anne Wilson, Economist Edward Nelson4 and Robert J. Tetlow, Senior Advisers, Shaghil Ahmed, Marc Giannoni, Trevor A. Reeve, Division of Monetary Affairs, Board of Governors; William Wascher, and Mark L.J. Wright, Associate Jeremy B. Rudd, Senior Adviser, Division of Economists Research and Statistics, Board of Governors Lorie K. Logan, Manager, System Open Market Sally Davies, Associate Director, Division of Account International Finance, Board of Governors; David López-Salido, Associate Director, Division of Monetary Affairs, Board of Governors 1 The Federal Open Market Committee is referenced as the 3 Attended through the discussion of economic developments “FOMC” and the “Committee” in these minutes. and the outlook, and all of Wednesday’s session. 2 Attended through the discussion of developments in finan- 4 Attended through the discussion of forward guidance, asset cial markets and open market operations. purchases, and yield caps or targets. _____________________________________________________________________________________________Page 2 Federal Open Market Committee Burcu Duygan-Bump, Andrew Figura, Shane M. Division of International Finance, Board of Sherlund, and Paul A. Smith, Deputy Associate Governors Directors, Division of Research and Statistics, Board of Governors; Jeffrey D. Walker,2 Deputy Randall A. Williams, Senior Information Manager, Associate Director, Division of Reserve Bank Division of Monetary Affairs, Board of Governors Operations and Payment Systems, Board of Governors; Paul R. Wood,4 Deputy Associate James Hebden4 and James M. Trevino,4 Senior Director, Division of International Finance, Board Technology Analysts, Division of Monetary of Governors Affairs, Board of Governors Brian J. Bonis, Etienne Gagnon, and Zeynep Senyuz, Andre Anderson, First Vice President, Federal Reserve Assistant Directors, Division of Monetary Affairs, Bank of Atlanta Board of Governors David Altig, Joseph W. Gruber, Anna Paulson, Daleep Matthias Paustian,4 Assistant Director and Chief, Singh, and Christopher J. Waller, Executive Vice Division of Research and Statistics, Board of Presidents, Federal Reserve Banks of Atlanta, Governors Kansas City, Chicago, New York, and St. Louis, respectively Penelope A. Beattie,5 Section Chief, Office of the Secretary, Board of Governors; Dana L. Burnett, Edward S. Knotek II, Paolo A. Pesenti, Julie Ann Section Chief, Division of Monetary Affairs, Board Remache,2 Samuel Schulhofer-Wohl,2 Robert G. of Governors; Dario Caldara,6 Section Chief, Valletta, and Nathaniel Wuerffel,2 Senior Vice Division of International Finance, Board of Presidents, Federal Reserve Banks of Cleveland, Governors New York, New York, Chicago, San Francisco, and New York, respectively Mark A. Carlson, Senior Economic Project Manager, Division of Monetary Affairs, Board of Governors; Roc Armenter, Matthew D. Raskin,2 and Patricia Canlin Li,4 Senior Economic Project Manager, Zobel, Vice Presidents, Federal Reserve Banks of Division of International Finance, Board of Philadelphia, New York, and New York, Governors respectively David H. Small, Project Manager, Division of Robert Lerman,2 Assistant Vice President, Federal Monetary Affairs, Board of Governors Reserve Bank of New York Hess T. Chung,4 Group Manager, Division of Research Daniel Cooper and John A. Weinberg, Senior and Statistics, Board of Governors Economists and Policy Advisors, Federal Reserve Banks of Boston and Richmond, respectively Michele Cavallo, Bernd Schlusche,4 and Mary Tian, Principal Economists, Division of Monetary The Chair opened the meeting with an acknowledgment Affairs, Board of Governors; Maria Otoo, Principal of the extraordinary and deeply troubling events of the Economist, Division of Research and Statistics, last two weeks. Injustice, prejudice, and the callous dis- Board of Governors regard for life had led to social unrest and a sense of des- pair. The Chair noted that it was incumbent upon the Sriya Anbil,4 Erin E. Ferris, and Fabian Winkler, Senior leaders of the Federal Reserve System to continue to Economists, Division of Monetary Affairs, Board communicate with force and clarity about the Federal of Governors; David S. Miller,4 Senior Economist, Reserve’s core values, and to reaffirm its unflinching Division of Research and Statistics, Board of commitment to those values in pursuing the Federal Re- Governors; Gaston Navarro, Senior Economist, serve’s mandated goals. In that spirit, the Chair noted that he intended to offer the following remarks at the 5 Attended through the discussion of economic developments 6 Attended from the discussion of economic developments and the outlook. and the outlook through the end of Tuesday’s session. _____________________________________________________________________________________________Minutes of the Meeting of June 9–10, 2020 Page 3 end of the postmeeting press conference. All partici- focused on outcome-based forward guidance for the pants supported the statement affirming the Federal Re- federal funds rate—which ties changes in the target serve’s core values and its commitment to do everything range for the federal funds rate to the achievement of it can to foster racial equality as well as diversity and in- specified macroeconomic outcomes, such as reaching a clusion both within the Federal Reserve System and in given level of the unemployment rate or inflation—and society more broadly. asset purchase programs of the kind used during and fol- lowing the previous recession. The staff presented re- I want to acknowledge the tragic events that sults from model simulations that suggested that for- have again put a spotlight on the pain of racial ward guidance and large-scale asset purchases can help injustice in this country. The Federal Reserve support the labor market recovery and the return of in- serves the entire nation. We operate in, and are flation to the Committee’s symmetric 2 percent inflation part of, many of the communities across the goal. The simulations suggested that the Committee country where Americans are grappling with would have to maintain highly accommodative financial and expressing themselves on issues of racial conditions for many years to quicken meaningfully the equality. recovery from the current severe downturn. The brief- I speak for my colleagues throughout the Fed- ing addressed factors that might alter the potency of for- eral Reserve System when I say that there is no ward guidance and asset purchase programs, along with place at the Federal Reserve for racism, and a number of considerations for the design of these ac- there should be no place for it in our society. tions. The staff cautioned that businesses and house- Everyone deserves the opportunity to partici- holds might not be as forward looking as assumed in the pate fully in our society and in our economy. model simulations, which could reduce the effectiveness of policies that are predicated on influencing expecta- These foundational principles guide us in all we do, from monetary policy to our focus on diver- tions about the path of policy several years into the fu- ture. Alternatively, prompt and forceful policy actions sity and inclusion in our workplace, and to our by the Committee might help focus the public’s expec- work regulating and supervising banks to ensure tations around
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