The Federal Open Market Committee (FOMC) held a joint meeting with the Board of Governors of the Federal Reserve System. During this second of eight scheduled meetings this year, members reviewed U.S. financial conditions and the nation’s economic situation.
According to the meeting minutes, the meeting, which took place on March 19 and 20, highlighted a slight easing since the January FOMC meeting, higher equity prices offsetting increased interest rates, and a nominal rise in Treasury yields. It was also noted that both the estimate of the expected federal funds rate path derived from futures prices and the modal federal funds rate path implied by options prices had risen during the inter-meeting period. In addition, broad equity prices have grown since January, fueled by substantial increases in valuations of large-capitalization technology companies, and U.S. money markets have stabilized.
According to the minutes, the effectiveness of rate control was also discussed—emphasizing that the effective federal funds rate is within the committee's target range and has remained insensitive to daily changes in the supply of reserves since January. However, it was noted that significant uncertainty exists over the demand for reserves.
The Staff Review of the Economic Situation examined the U.S. real gross domestic product, which expanded at a solid pace during the first quarter, per data available at the time of the meeting. Labor market conditions have continued to show signs of strengthening. Although consumer price inflation, measured by the 12-month change in the price index for personal consumption expenditures (PCE), still exceeds 2%, it is trending downward. The Staff Economic Outlook pointed out that total and core PCE price inflation are both expected to drop to 2-1/2% by the end of 2024 as demand and supply in product and labor markets become more balanced. They are projected to reach 2% by 2026.
According to the Federal Reserve website, FOMC is comprised of 12 members: the seven members of the Board of Governors of the Federal Reserve System, the president of the Federal Reserve Bank of New York; and four of the remaining 11 Reserve Bank presidents, who serve one-year terms on a rotating basis.
