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Minutes of the Federal Open Market Committee, January 30–31, 2018

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Minutes of the Federal Open Market Committee, January 30–31, 2018 _ Page 1 Minutes of the Federal Open Market Committee January 30–31, 2018 A joint meeting of the Federal Open Market Committee Simon Potter, Manager, System Open Market Account and the Board of Governors was held in the offices of the Board of Governors of the Federal Reserve System Lorie K. Logan, Deputy Manager, System Open in Washington, D.C., on Tuesday, January 30, 2018, at Market Account 10:00 a.m. and continued on Wednesday, January 31, 2018, at 9:00 a.m.1 Ann E. Misback, Secretary, Office of the Secretary, Board of Governors PRESENT: Janet L. Yellen, Chair Matthew J. Eichner,2 Director, Division of Reserve William C. Dudley, Vice Chairman Bank Operations and Payment Systems, Board of Thomas I. Barkin Governors; Andreas Lehnert, Director, Division of Raphael W. Bostic Financial Stability, Board of Governors Lael Brainard Loretta J. Mester Rochelle M. Edge, Deputy Director, Division of Jerome H. Powell Monetary Affairs, Board of Governors; Maryann F. Randal K. Quarles Hunter, Deputy Director, Division of Supervision John C. Williams and Regulation, Board of Governors James Bullard, Charles L. Evans, Esther L. George, David Reifschneider and John M. Roberts, Special Michael Strine, and Eric Rosengren, Alternate Advisers to the Board, Office of Board Members, Members of the Federal Open Market Committee Board of Governors Patrick Harker, Robert S. Kaplan, and Neel Kashkari, Linda Robertson, Assistant to the Board, Office of Presidents of the Federal Reserve Banks of Board Members, Board of Governors Philadelphia, Dallas, and Minneapolis, respectively Joseph W. Gruber, Senior Associate Director, Division James A. Clouse, Secretary of International Finance, Board of Governors; Matthew M. Luecke, Deputy Secretary Michael G. Palumbo, Senior Associate Director, David W. Skidmore, Assistant Secretary Division of Research and Statistics, Board of Michelle A. Smith, Assistant Secretary Governors Mark E. Van Der Weide, General Counsel Michael Held, Deputy General Counsel Antulio N. Bomfim, Ellen E. Meade, Stephen A. Steven B. Kamin, Economist Meyer, Edward Nelson, and Joyce K. Zickler, Thomas Laubach, Economist Senior Advisers, Division of Monetary Affairs, David W. Wilcox, Economist Board of Governors; Jeremy B. Rudd, Senior Adviser, Division of Research and Statistics, Board David Altig, Kartik B. Athreya, Thomas A. Connors, of Governors Mary Daly, David E. Lebow, Trevor A. Reeve, Argia M. Sbordone, Ellis W. Tallman, William William F. Bassett, Associate Director, Division of Wascher, and Beth Anne Wilson, Associate Financial Stability, Board of Governors Economists 1 The Federal Open Market Committee is referenced as the “FOMC” and the “Committee” in these minutes. 2 Attended through the discussion of developments in finan- cial markets and open market operations. Page 2 Federal Open Market Committee _ Andrew Figura, Assistant Director, Division of The elected members and alternate members were as fol- Research and Statistics, Board of Governors; Jason lows: Wu, Assistant Director, Division of Monetary William C. Dudley, President of the Federal Reserve Affairs, Board of Governors Bank of New York, with Michael Strine, First Vice Pres- ident of the Federal Reserve Bank of New York, as al- Penelope A. Beattie,3 Assistant to the Secretary, Office ternate of the Secretary, Board of Governors Thomas I. Barkin, President of the Federal Reserve Dana L. Burnett and Michele Cavallo, Section Chiefs, Bank of Richmond, with Eric Rosengren, President of Division of Monetary Affairs, Board of Governors the Federal Reserve Bank of Boston, as alternate Loretta J. Mester, President of the Federal Reserve Bank David H. Small, Project Manager, Division of of Cleveland, with Charles L. Evans, President of the Monetary Affairs, Board of Governors Federal Reserve Bank of Chicago, as alternate Andrea Ajello, Kurt F. Lewis, and Bernd Schlusche, Raphael W. Bostic, President of the Federal Reserve Principal Economists, Division of Monetary Bank of Atlanta, with James Bullard, President of the Affairs, Board of Governors; Ekaterina Peneva and Federal Reserve Bank of St. Louis, as alternate Daniel J. Vine, Principal Economists, Division of John C. Williams, President of the Federal Reserve Bank Research and Statistics, Board of Governors of San Francisco, with Esther L. George, President of the Federal Reserve Bank of Kansas City, as alternate Camille Bryan, Lead Financial Analyst, Division of International Finance, Board of Governors By unanimous vote, the Committee selected Janet L. Yellen to serve as Chairman through February 2, 2018, Ellen J. Bromagen, First Vice President, Federal and Jerome H. Powell to serve as Chairman, effective Reserve Bank of Chicago February 3, 2018, until the selection of his successor at the first regularly scheduled meeting of the Committee Jeff Fuhrer and Daniel G. Sullivan, Executive Vice in 2019. Presidents, Federal Reserve Banks of Boston and Chicago, respectively By unanimous vote, the following officers of the Com- Todd E. Clark,3 Evan F. Koenig, Keith Sill, and Mark mittee were selected to serve until the selection of their L.J. Wright, Senior Vice Presidents, Federal successors at the first regularly scheduled meeting of the Reserve Banks of Cleveland, Dallas, Philadelphia, Committee in 2019: and Minneapolis, respectively William C. Dudley Vice Chairman Carlos Garriga and Jonathan L. Willis, Vice Presidents, James A. Clouse Secretary Federal Reserve Banks of St. Louis and Kansas Matthew M. Luecke Deputy Secretary City, respectively David W. Skidmore Assistant Secretary Michelle A. Smith Assistant Secretary Annual Organizational Matters4 Mark E. Van Der Weide General Counsel In the agenda for this meeting, it was reported that ad- Michael Held Deputy General Counsel vices of the election of the following members and alter- Richard M. Ashton Assistant General Counsel nate members of the Federal Open Market Committee Steven B. Kamin Economist for a term beginning January 30, 2018, had been received Thomas Laubach Economist and that these individuals had executed their oaths of of- David W. Wilcox Economist fice. David Altig Kartik B. Athreya 3 Attended Tuesday session only. 4 Committee organizational documents are available at www.federalreserve.gov/monetarypolicy/rules_authoriza- tions.htm. _ Minutes of the Meeting of January 30–31, 2018 Page 3 Thomas A. Connors tion 14(b) of the Federal Reserve Act (“Eligible Secu- Mary Daly rities”) for the System Open Market Account David E. Lebow (“SOMA”): Trevor A. Reeve i. As an outright operation with securities dealers Argia M. Sbordone and foreign and international accounts maintained Ellis W. Tallman at the Selected Bank: on a same-day or deferred de- William Wascher livery basis (including such transactions as are com- Beth Anne Wilson Associate Economists monly referred to as dollar rolls and coupon swaps) at market prices; or By unanimous vote, the Federal Reserve Bank of New ii. As a temporary operation: on a same-day or York was selected to execute transactions for the System deferred delivery basis, to purchase such Eligible Se- Open Market Account (SOMA). curities subject to an agreement to resell (“repo By unanimous vote, the Committee selected Simon Pot- transactions”) or to sell such Eligible Securities sub- ter and Lorie K. Logan to serve at the pleasure of the ject to an agreement to repurchase (“reverse repo Committee as manager and deputy manager of the transactions”) for a term of 65 business days or less, SOMA, respectively, on the understanding that these se- at rates that, unless otherwise authorized by the lections were subject to their being satisfactory to the Committee, are determined by competitive bidding, Federal Reserve Bank of New York. after applying reasonable limitations on the volume Secretary’s note: Advice subsequently was re- of agreements with individual counterparties; ceived that the manager and deputy manager se- B. To allow Eligible Securities in the SOMA to ma- lections indicated above were satisfactory to the ture without replacement; Federal Reserve Bank of New York. C. To exchange, at market prices, in connection with a Treasury auction, maturing Eligible Securities in By unanimous vote, the Authorization for Domestic the SOMA with the Treasury, in the case of Eligible Open Market Operations was approved with revisions Securities that are direct obligations of the United to incorporate transactions of securities lending into the States or that are fully guaranteed as to principal and existing operational readiness testing provision and to interest by the United States; and improve the document’s readability. The Guidelines for D. To exchange, at market prices, maturing Eligible the Conduct of System Open Market Operations in Securities in the SOMA with an agency of the United Federal-Agency Issues remained suspended. States, in the case of Eligible Securities that are direct obligations of that agency or that are fully guaranteed AUTHORIZATION FOR DOMESTIC OPEN as to principal and interest by that agency. MARKET OPERATIONS (As amended effective January 30, 2018) SECURITIES LENDING OPEN MARKET TRANSACTIONS 2. In order to ensure the effective conduct of open market operations, the Committee authorizes the Se- 1. The Federal Open Market Committee (the “Com- lected Bank to operate a program to lend Eligible Secu- mittee”) authorizes and directs the Federal Reserve Bank rities held in the SOMA to dealers on an overnight basis selected by the Committee to execute open market trans- (except that the Selected Bank may lend Eligible
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