_____________________________________________________________________________________________

Page 1

Minutes of the Federal Open Market Committee

January 30–31, 2024

A joint meeting of the Federal Open Market Committee Stephanie R. Aaronson, Senior Associate Director,
and the Board of Governors of the Federal Reserve Sys- Division of Research and Statistics, Board
tem was held in the offices of the Board of Governors
Jose Acosta, Senior System Administrator II, Division
on Tuesday, January 30, 2024, at 10:00 a.m. and contin-
of Information Technology, Board
ued on Wednesday, January 31, 2024, at 9:00 a.m. 1
Isaiah C. Ahn, Information Management Analyst,
Attendance
Division of Monetary Affairs, Board
Jerome H. Powell, Chair
John C. Williams, Vice Chair Roc Armenter, Executive Vice President, Federal
Thomas I. Barkin Reserve Bank of Philadelphia
Michael S. Barr
Alyssa Arute, Manager, Division of Reserve Bank
Raphael W. Bostic
Operations and Payment Systems, Board
Michelle W. Bowman
Lisa D. Cook Penelope A. Beattie, 2 Section Chief, Office of the
Mary C. Daly Secretary, Board
Philip N. Jefferson David Bowman, Senior Associate Director, Division of
Adriana D. Kugler Monetary Affairs, Board
Loretta J. Mester
Christopher J. Waller Celso Brunetti, 3 Assistant Director, Division of
Research and Statistics, Board
Susan M. Collins, Austan D. Goolsbee, Kathleen
O’Neill, Jeffrey R. Schmid, and Sushmita Shukla, Juan C. Climent, Special Adviser to the Board, Division
Alternate Members of the Committee of Board Members, Board
Patrick Harker, Neel Kashkari, and Lorie K. Logan, Daniel M. Covitz, Deputy Director, Division of
Presidents of the Federal Reserve Banks of Research and Statistics, Board
Philadelphia, Minneapolis, and Dallas, respectively Jennifer S. Crystal, Senior Adviser, Division of
Joshua Gallin, Secretary International Finance, Board
Matthew M. Luecke, Deputy Secretary Stephanie E. Curcuru, Deputy Director, Division of
Brian J. Bonis, Assistant Secretary International Finance, Board
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel Ryan Decker, Special Adviser to the Board, Division of
Richard Ostrander, Deputy General Counsel Board Members, Board
Trevor A. Reeve, Economist Sarah Devany, First Vice President, Federal Reserve
Stacey Tevlin, Economist Bank of San Francisco
Beth Anne Wilson, Economist
Rochelle M. Edge, Deputy Director, Division of
Shaghil Ahmed, James A. Clouse, Edward S. Knotek II, Monetary Affairs, Board
David E. Lebow, Sylvain Leduc, Paula Tkac, and
William Wascher, Associate Economists Eric C. Engstrom, Associate Director, Division of
Research and Statistics, Board
Roberto Perli, Manager, System Open Market Account
Jon Faust, Senior Special Adviser to the Chair, Division
Julie Ann Remache, Deputy Manager, System Open of Board Members, Board
Market Account

1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of the economic and finan-
“FOMC” and the “Committee” in these minutes; the Board cial situation.
of Governors of the Federal Reserve System is referenced as 3 Attended opening remarks for Tuesday’s session only.

the “Board” in these minutes.

_____________________________________________________________________________________________
Page 2 Federal Open Market Committee

Jenn Gallagher, Assistant to the Board, Division of Anna Paulson, Executive Vice President, Federal
Board Members, Board Reserve Bank of Chicago
Carlos Garriga, Senior Vice President, Federal Reserve Eugenio P. Pinto, Special Adviser to the Board,
Bank of St. Louis Division of Board Members, Board
Michael S. Gibson, Director, Division of Supervision Andrea Raffo, Senior Vice President, Federal Reserve
and Regulation, Board Bank of Minneapolis
Joseph W. Gruber, Executive Vice President, Federal Andres Schneider, Principal Economist, Division of
Reserve Bank of Kansas City Monetary Affairs, Board
Luca Guerrieri, Associate Director, Division of Samuel Schulhofer-Wohl, Senior Vice President,
International Finance, Board Federal Reserve Bank of Dallas
Christopher J. Gust, Associate Director, Division of Felipe F. Schwartzman, Senior Economist, Federal
Monetary Affairs, Board Reserve Bank of Richmond
Andrew Haughwout, Acting Director of Research, Chiara Scotti,3 Senior Vice President, Federal Reserve
Federal Reserve Bank of New York Bank of Dallas
Valerie S. Hinojosa, Section Chief, Division of Zeynep Senyuz, Deputy Associate Director, Division
Monetary Affairs, Board of Monetary Affairs, Board
Jane E. Ihrig, Special Adviser to the Board, Division of Arsenios Skaperdas, Senior Economist, Division of
Board Members, Board Monetary Affairs, Board
Michael T. Kiley, Deputy Director, Division of Balint Szoke, Senior Economist, Division of Monetary
Financial Stability, Board Affairs, Board
Kyungmin Kim, Principal Economist, Division of Clara Vega, Special Adviser to the Board, Division of
Monetary Affairs, Board Board Members, Board
Elizabeth K. Kiser, Senior Associate Director, Division Annette Vissing-Jørgensen, Senior Adviser, Division of
of Research and Statistics, Board Monetary Affairs, Board
Andreas Lehnert, Director, Division of Financial Jeffrey D. Walker, Associate Director, Division of
Stability, Board Reserve Bank Operations and Payment Systems,
Board
Kurt F. Lewis, Special Adviser to the Chair, Division of
Board Members, Board Fabian Winkler, Principal Economist, Division of
Monetary Affairs, Board
Dan Li, 4 Assistant Director, Division of Monetary
Affairs, Board Paul R. Wood, Special Adviser to the Board, Division
of Board Members, Board
Laura Lipscomb, Special Adviser to the Board,
Division of Board Members, Board Egon Zakrajsek, Executive Vice President, Federal
Reserve Bank of Boston
Ann E. Misback, Secretary, Office of the Secretary,
Board Rebecca Zarutskie, Special Adviser to the Board,
Division of Board Members, Board
Phillip Monin, Senior Economist, Division of
Monetary Affairs, Board
Michelle M. Neal, Head of Markets, Federal Reserve
Bank of New York
Christopher J. Nekarda, Principal Economist, Division
of Research and Statistics, Board

4 Attended Tuesday’s session only.

_____________________________________________________________________________________________
Minutes of the Meeting of January 30–31, 2024 Page 3

Annual Organizational Matters 5 Brian M. Doyle

The agenda for this meeting reported that advices of the Edward S. Knotek II
election of the following members and alternate mem- David E. Lebow
bers of the Federal Open Market Committee for a term Sylvain Leduc
beginning January 30, 2024, were received and that these Paula Tkac
individuals executed their oaths of office. William Wascher
Alexander L. Wolman Associate Economists
The elected members and alternate members were as fol-
lows:
By unanimous vote, the Committee selected the Federal
John C. Williams, President of the Federal Reserve Bank Reserve Bank of New York to execute transactions for
of New York, with Sushmita Shukla, First Vice President the System Open Market Account (SOMA).
of the Federal Reserve Bank of New York, as alternate;
By unanimous vote, the Committee selected Roberto
Thomas I. Barkin, President of the Federal Reserve Perli and Julie Ann Remache to serve at the pleasure of
Bank of Richmond, with Susan M. Collins, President of the Committee as manager and deputy manager of the
the Federal Reserve Bank of Boston, as alternate; SOMA, respectively, on the understanding that these se-
lections were subject to being satisfactory to the Federal
Loretta J. Mester, President of the Federal Reserve Bank
Reserve Bank of New York.
of Cleveland, with Austan D. Goolsbee, President of the
Federal Reserve Bank of Chicago, as alternate; Secretary’s note: The Federal Reserve Bank of
New York subsequently sent advice that the se-
Raphael W. Bostic, President of the Federal Reserve
lections indicated previously were satisfactory.
Bank of Atlanta, with Kathleen O’Neill, Interim Presi-
dent of the Federal Reserve Bank of St. Louis, as alter- By unanimous vote, the Committee approved the
nate; FOMC Authorizations and Continuing Directives for
Open Market Operations, with a revision to Section II,
Mary C. Daly, President of the Federal Reserve Bank of
Continuing Directive for Domestic Open Market Oper-
San Francisco, with Jeffrey R. Schmid, President of the
ations, to add a standing seven-day term option to the
Federal Reserve Bank of Kansas City, as alternate.
existing standing Foreign and International Monetary
By unanimous vote, the following officers of the Com- Authorities Repurchase Agreement Operations.
mittee were selected to serve until the selection of their
Ahead of the vote on policies relating to investment and
successors at the first regularly scheduled meeting of the
trading, information security, and external communica-
Committee in 2025:
tions, the Chair commented on the critical importance
Jerome H. Powell Chair of earning and keeping the public’s trust in the impar-
John C. Williams Vice Chair tiality of the Committee’s decisionmaking. A revised in-
Joshua Gallin Secretary vestment and trading policy was proposed which ex-
Matthew M. Luecke Deputy Secretary panded the scope of employees subject to the Commit-
Brian J. Bonis Assistant Secretary tee’s investment and trading rules, and introduced new
Michelle A. Smith Assistant Secretary investment restrictions on all employees with access to
Mark E. Van Der Weide General Counsel FOMC information. All participants indicated support
Richard Ostrander Deputy General Counsel for, and agreed to abide by, the FOMC Policy on Invest-
Charles C. Gray Assistant General Counsel ment and Trading for Committee Participants and Fed-
Trevor A. Reeve Economist eral Reserve System Staff, the Program for Security of
Stacey Tevlin Economist FOMC Information, the FOMC Policy on External
Beth Anne Wilson Economist Communications of Committee Participants, and the
FOMC Policy on External Communications of Federal
Shaghil Ahmed Reserve System Staff. The Committee voted unani-
Kartik B. Athreya 6 mously to approve those four policies.5
James A. Clouse

5 Committee organizational documents are available at 6Kartik B. Athreya’s selection was effective upon employment
www.federalreserve.gov/monetarypolicy/rules_authoriza- at the Federal Reserve Bank of New York.
tions.htm.
_____________________________________________________________________________________________
Page 4 Federal Open Market Committee

Ahead of the vote on the Statement on Longer-Run expected timing for the end of runoff shifted slightly ear-
Goals and Monetary Policy Strategy, the Chair indicated lier, and the portfolio size at the end of runoff was
the next five-year review of the statement would begin slightly higher than in the December surveys.
in the latter half of this year, and the results would be
Regarding developments in money markets and Desk
announced about a year later. All participants indicated
operations, the effective federal funds rate was stable
support for the Statement on Longer-Run Goals and
over the intermeeting period. While the Secured Over-
Monetary Policy Strategy, and the Committee voted
night Financing Rate experienced temporary and modest
unanimously to reaffirm it without revision.5
upward pressure over the past few month-ends, includ-
Developments in Financial Markets and Open ing the year-end, such a pattern was common before the
Market Operations pandemic. The usage of the overnight reverse repur-
The manager turned first to a review of developments in chase agreement (ON RRP) facility continued to fall
financial markets over the intermeeting period. Finan- over the period, with balances below $600 billion in late
cial conditions eased modestly but remained about as January. Since June 2023, when the debt ceiling was sus-
tight as they were last summer and much tighter than pended, usage of the ON RRP facility had declined at a
when the hiking cycle began. Over the intermeeting pe- much faster pace than the Federal Reserve securities
riod, declines in nominal Treasury yields were concen- portfolio, and reserve balances had increased some.
trated at the front end of the yield curve. Staff models
As part of its ongoing market surveillance, the staff con-
suggested that the declines in shorter-term yields were
tinued to monitor a wide range of money market indica-
mostly attributable to a lower expected policy rate path
tors; those gauges suggested that the supply of reserves
and were concentrated in expected real rates, while ex-
remained abundant. The staff also noted that once the
pected inflation was little changed. Pricing of inflation
ON RRP facility is either depleted or stabilized at a low
derivatives continued to suggest a near-term path of in-
level, reserves will decline at a pace comparable with the
flation consistent with a return to 2 percent later this
runoff of the Federal Reserve’s securities portfolio, all
year. Broad equity prices reached new highs over the
else equal.
intermeeting period, but they were driven mostly by the
strong gains of large-capitalization technology compa- By unanimous vote, the Committee ratified the Desk’s
nies; broader measures of equity valuations were more domestic transactions over the intermeeting period.
subdued. Still, equities appeared priced for continued There were no intervention operations in foreign curren-
economic resilience. cies for the System’s account during the intermeeting pe-
riod.
The manager turned next to expectations for monetary
policy. Market participants broadly viewed recent infla- Staff Review of the Economic Situation
tion data and the December Summary of Economic Pro- The data available at the time of the January 30–31 meet-
jections (SEP) as increasing the odds that rate cuts might ing indicated that growth in U.S. real gross domestic
start sooner than previously thought. The modal path product (GDP) was solid in the fourth quarter of 2023
of the federal funds rate from the Open Market Desk’s but had stepped down from the third quarter’s strong
Survey of Primary Dealers and Survey of Market Partic- pace. Labor market conditions continued to be tight but
ipants was little changed from December but showed an showed further signs of easing. Consumer price infla-
increased likelihood of earlier rate cuts. The modal path tion had declined markedly over the course of the year,
implied by options prices declined some over the inter- though it remained above 2 percent.
meeting period. Both modal paths were closer to the
Labor demand and supply continued to gradually move
December median SEP projection than the average path
into better alignment. The average monthly pace of
for the policy rate implied by futures prices, which had
nonfarm payroll employment gains in the fourth quarter
declined more substantially over the period. The fu-
was slower than in the third quarter. The unemployment
tures-based path likely reflected the effect of investors’
rate remained at 3.7 percent in December, the same as
perceived probability of more substantial rate cuts rather
its third-quarter average. However, the labor force par-
than their baseline expectations.
ticipation rate moved down, as did the employment-to-
Communications over the period heightened market at- population ratio. The African American unemployment
tention around a potential slowing of balance sheet run- rate declined, and the rate for Hispanics rose; both rates
off. Most Desk survey respondents expected a slowing were higher than those for Asians and for whites. The
of the pace to start by July, although there was consider- private-sector job openings rate was little changed in
able uncertainty about the exact start date. The average November and December, and the quits rate edged
_____________________________________________________________________________________________
Minutes of the Meeting of January 30–31, 2024 Page 5

down; both rates were below their levels at the start of part by rebounding global demand for high-tech prod-
2023. Easing labor market imbalances were also appar- ucts.
ent in the wage data, with the December 12-month
Foreign headline inflation continued to fall. However,
changes in the employment cost index and in average
the pace of decline had varied across countries as well as
hourly earnings for all employees each below their year-
sectors, with a moderation in goods prices generally hav-
earlier levels.
ing outpaced that in services prices. Most major foreign
Consumer price inflation continued to slow. The price central banks kept their policy rates unchanged over the
index for total personal consumption expenditures intermeeting period and emphasized the need to main-
(PCE) increased 2.6 percent over the 12 months ending tain a stance of policy that is sufficiently restrictive to
in December, while core PCE price inflation—which ex- ensure that inflation falls back to their targets.
cludes changes in energy prices and many consumer
Staff Review of the Financial Situation
food prices—was 2.9 percent over the same period.
Over the intermeeting period, nominal Treasury yields
Both total and core PCE price inflation were well below
declined, and the expected market-implied path for the
their year-earlier levels. The trimmed mean measure of
federal funds rate through 2024 shifted downward, as
12-month PCE price inflation constructed by the Fed-
market participants viewed monetary policy communi-
eral Reserve Bank of Dallas was 3.3 percent in Decem-
cations, on balance, as pointing to notably less restrictive
ber, also lower than its level a year earlier. Survey
policy than expected. Indicators of broad financial con-
measures of consumers’ short-run inflation expectations
ditions eased over the period, but the staff’s Financial
moved lower in December, while survey measures of
Conditions Impulse on Growth index remained restric-
medium- to longer-term inflation expectations were
tive. Similarly, financing conditions for households and
broadly in line with the levels seen in the decade before
businesses continued to be moderately restrictive, as
the pandemic.
borrowing costs remained elevated.
According to the advance estimate, real GDP rose at a
The market-implied path for the federal funds rate
solid pace in the fourth quarter. Private domestic final
through 2024 decreased over the intermeeting period. A
purchases—which comprises PCE and private fixed in-
straight read of federal funds futures rates suggested that
vestment and which often provides a better signal than
market participants were placing higher odds on signifi-
GDP of underlying economic momentum—also rose
cant policy easing in 2024 than they did just before the
solidly, though at a slower rate.
December FOMC meeting. Beyond 2024, the policy
Real exports grew robustly in the fourth quarter of 2023, rate path implied by overnight index swap quotes de-
driven in part by a jump in exports of industrial supplies, clined. Consistent with the decline in the implied policy
which had declined markedly earlier last year. By con- path, short- and intermediate-term Treasury yields also
trast, real imports grew at a tepid pace, as gains in im- declined notably. Real yields declined more than nomi-
ports of capital goods and services were partially offset nal yields, implying somewhat higher measures of infla-
by declines in imports of consumer goods and autos. All tion compensation. Market-based measures of interest
told, net exports contributed about ½ percentage point rate uncertainty remained highly elevated by historical
to U.S. GDP growth in the fourth quarter after making standards.
roughly neutral contributions in the preceding two quar-
Broad stock price indexes increased, and spreads on in-
ters.
vestment- and speculative-grade bonds narrowed mod-
Foreign economic growth remained subdued in the estly over the intermeeting period. The one-month op-
fourth quarter. In the advanced foreign economies tion-implied volatility on the S&P 500 increased some-
(AFEs), a significant tightening of monetary policy over what over the period but remained low by historical
the past two years, the erosion of real household in- standards.
comes from high inflation rates, and the repercussions
Movements in foreign markets over the intermeeting pe-
of last year’s energy shock in Europe continued to weigh
riod were modest, on net, with most foreign asset prices
on economic activity. In China, a property-sector slump
and the exchange value of the dollar little changed. Mar-
and depressed consumer confidence continued to weigh
ket participants generally considered current levels of
on domestic demand, with the government rolling out a
most AFE policy rates to be at the peaks of their respec-
series of policy measures to support growth. Economic
tive tightening cycles. Declines in market-based
activity in Asia excluding China firmed, supported in
measures of U.S. policy expectations contributed to a
moderate step-down in short-term yields in most AFEs,
_____________________________________________________________________________________________
Page 6 Federal Open Market Committee

while longer-term foreign yields were little changed. Ma- cards tightened in the fourth quarter and were expected
jor AFE equity indexes increased slightly. to tighten further over 2024. Auto loan balances grew
modestly in November. A modest share of banks re-
Conditions in short-term funding markets remained sta-
ported in the SLOOS that they tightened standards on
ble over the intermeeting period, with typical dynamics
auto loans in the fourth quarter and expected to tighten
observed surrounding year-end. Usage of the ON RRP
them further over 2024.
facility continued to decline over the period, primarily
reflecting money market funds reallocating their assets The credit quality of businesses and households deterio-
to Treasury bills and private-market repurchase agree- rated slightly but remained broadly solid, as delinquency
ments, which offered slightly more attractive market rates in most sectors were relatively low. Delinquency
rates relative to the ON RRP rate. Banks’ total deposit rates on conventional mortgages remained low, while
levels were roughly unchanged in the fourth quarter of delinquency rates on credit cards and auto loans rose in
last year, as outflows of core deposits were about offset the third quarter to levels notably above those just be-
by inflows of large time deposits. fore the pandemic. The credit quality of nonfinancial
firms borrowing in the corporate bond and leveraged
In domestic credit markets, borrowing costs for most
loan markets remained sound overall. Aggregate delin-
businesses, households, and municipalities decreased
quency rates on CMBS backed by office properties con-
moderately over the intermeeting period but remained
tinued to be elevated in November. In the January
elevated. Rates on loans to households declined over
SLOOS, banks reported that credit quality was expected
the intermeeting period but remained relatively high,
to deteriorate somewhat across loan categories over
while interest rates on existing credit card accounts were
2024.
little changed. Interest rates on commercial and indus-
trial (C&I) loans and small business loans increased over The staff provided an update on its assessment of the
the intermeeting period. Yields declined on a broad ar- stability of the U.S. financial system and, on balance,
ray of fixed-income securities, including investment- and characterized the system’s financial vulnerabilities as no-
speculative-grade corporate bonds, residential and com- table. The staff judged that asset valuation pressures re-
mercial mortgage-backed securities (CMBS), and munic- mained notable, as valuations across a range of markets
ipal bonds. The declines were largely driven by decreases appeared high relative to fundamentals. House prices
in Treasury yields and, to some extent, by narrower increased to the upper end of their historical range, rela-
spreads. tive to rents and Treasury yields, though underwriting
standards remained restrictive. CRE prices continued to
Credit continued to be generally available to businesses,
decline, especially in the multifamily and office sectors,
households, and municipalities. However, credit availa-
and low levels of transactions in the office sector likely
bility for smaller firms continued to tighten. Total core
indicated that prices had not yet fully reflected the sec-
loans at banks increased slightly in the fourth quarter.
tor’s weaker fundamentals. Vulnerabilities associated
Financing in capital markets continued to be available,
with business and household debt were characterized as
although issuance in most markets remained at moderate
moderate. Nonfinancial business debt growth declined,
levels.
and the ability of firms to service their debt remained
In the January Senior Loan Officer Opinion Survey on high relative to history.
Bank Lending Practices (SLOOS), banks reported tight-
Leverage in the financial sector was characterized as no-
ening standards and terms on C&I loans to firms of all
table. In the banking sector, regulatory risk-based capital
sizes over the fourth quarter. Regarding commercial real
ratios continued to increase and indicated ample loss-
estate (CRE), banks reported tightening standards across
bearing capacity in the banking system. The fair value
all loan categories in the fourth quarter. Banks reported
of banks’ longer-term fixed-rate assets, including loans,
that they expected to keep lending standards unchanged
increased in the fourth quarter as longer-term interest
for C&I loans and to tighten standards for CRE loans
rates decreased, though banks remained vulnerable to
during 2024.
significant increases in longer-term interest rates. Insur-
Credit in the residential mortgage market remained easily ers had been increasing their investments in risky corpo-
available for high-credit-score borrowers who met rate debt. Funding risks were also characterized as no-
standard conforming loan criteria, and consumer credit table. Uninsured deposits declined in the aggregate but
remained available for most borrowers. Growth in remained high for some banks. Assets in prime money
credit card balances was strong in November, though market mutual funds and other cash management vehi-
SLOOS respondents indicated that standards for credit cles continued to increase.
_____________________________________________________________________________________________
Minutes of the Meeting of January 30–31, 2024 Page 7

Staff Economic Outlook demand, many participants attributed the recent expan-
The economic forecast prepared by the staff for the Jan- sion in economic activity to favorable supply develop-
uary meeting was slightly stronger than the December ments. Participants noted that the pace of job gains had
projection, as the upward revision to 2023 GDP growth moderated since early last year but remained strong and
implied by incoming data boosted the level of output that the unemployment rate had remained low. Inflation
throughout the projection period. The lagged effects of had eased over the past year but remained elevated.
earlier monetary policy actions, through their continued
Regarding the economic outlook, participants judged
contribution to tight financial and credit conditions,
that the current stance of monetary policy was restrictive
were still expected to push output growth in 2024 and
and would continue to put downward pressure on eco-
2025 below the staff’s estimate of potential growth; in
nomic activity and inflation. Accordingly, they expected
2026, output was expected to rise in line with potential.
that supply and demand in product and labor markets
The projected path for the unemployment rate was re-
would continue to move into better balance. In light of
vised down slightly, reflecting the upward revision to the
the policy restraint in place, along with more favorable
level of output.
inflation data amid ongoing improvements in supply
Total and core PCE price inflation were both projected conditions, participants viewed the risks to achieving the
to step down in 2024 as demand and supply in product Committee’s employment and inflation goals as moving
and labor markets moved into better alignment. By into better balance. However, participants noted that
2026, total and core PCE price inflation were expected the economic outlook was uncertain and that they re-
to be close to 2 percent. mained highly attentive to inflation risks.
The staff continued to view the uncertainty around the In their discussion of inflation, participants observed
baseline projection as elevated but noted that this uncer- that inflation had eased over the past year but remained
tainty had diminished substantially over the past year. above the Committee’s 2 percent inflation objective.
Risks around the inflation forecast were seen as tilted They remained concerned that elevated inflation contin-
slightly to the upside; although inflation had come in ued to harm households, especially those with limited
close to expectations throughout most of 2023, the staff means to absorb higher prices. While the inflation data
placed some weight on the possibility that further pro- had indicated significant disinflation in the second half
gress in reducing inflation could take longer than ex- of last year, participants observed that they would be
pected. The risks around the forecast for real activity carefully assessing incoming data in judging whether in-
were viewed as skewed to the downside, as any substan- flation was moving down sustainably toward 2 percent.
tial setback in reducing inflation might lead to a tighten-
Participants noted improvements in both headline and
ing of financial conditions that would slow the pace of
core inflation and discussed the underlying components
real activity by more than the staff anticipated in their
of these series. Although total PCE inflation in Decem-
baseline forecast. In addition, the possibility of a larger-
ber remained above the Committee’s 2 percent objective
than-expected erosion of households’ financial positions
on a 12-month basis, on a 6-month basis, total PCE in-
was seen as a downside risk to the projection for real
flation was near 2 percent at an annual rate, and core
activity.
PCE inflation was just below 2 percent. Participants
Participants’ Views on Current Conditions and the judged that some of the recent improvement in inflation
Economic Outlook reflected idiosyncratic movements in a few series. Nev-
In their discussion of current economic conditions, par- ertheless, they viewed that there had been significant
ticipants noted that recent indicators suggested that eco- progress recently on inflation returning to the Commit-
nomic activity had been expanding at a solid pace. Real tee’s longer-run goal. Many participants indicated that
GDP growth in the fourth quarter of last year came in they expected core nonhousing services inflation to
above 3 percent at an annual rate, below the strong gradually decline further as the labor market continued
growth posted in the third quarter but still above most to move into better balance and wage growth moderated
forecasters’ expectations. Participants observed that the further. Various participants noted that housing services
unexpected strength in real GDP growth in the fourth inflation was likely to fall further as the deceleration in
quarter reflected stronger-than-expected net exports and rents on new leases continued to pass through to
inventory investment, which tend to be volatile and may measures of such inflation. While many participants
carry little signal for future growth. Still, consumption pointed to disinflationary pressures associated with im-
continued to grow at a solid pace. In addition to strong provements in aggregate supply—such as increases in
the labor force or better productivity growth—a couple
_____________________________________________________________________________________________
Page 8 Federal Open Market Committee

of participants judged that the downward pressure on ratio of job openings to unemployed workers had de-
core goods prices from the normalization of supply clined over the past year but still remained somewhat
chains was likely to moderate. above its pre-pandemic level. Consistent with a reduc-
tion in labor market tightness, business contacts in sev-
Participants observed that longer-term inflation expec-
eral Districts reported an easing in wage pressures or an
tations had remained well anchored at a level consistent
increased ability to hire and retain workers. Participants
with the Committee’s 2 percent inflation objective.
mentioned several developments that had boosted labor
Measures of near-term inflation expectations had also
supply last year, including higher labor force participa-
declined recently, in some cases to within their ranges in
tion, immigration, and an improved job-matching pro-
the years before the pandemic. Some participants
cess; however, a few participants judged that further in-
pointed to reports from contacts that firms could not as
creases in labor supply may be limited, pointing, for in-
easily pass on price increases to consumers or were mak-
stance, to the decline in labor force participation in De-
ing less frequent price adjustments than they had in re-
cember. While labor market conditions were generally
cent years.
seen as strong, several participants noted that recent job
In their discussion of the household sector, participants gains were concentrated in a few sectors, which, in their
observed that consumer spending had been stronger view, pointed to downside risks to the outlook for em-
than expected, supported by low unemployment and ployment.
solid income growth. A number of participants judged
Participants discussed the uncertainty surrounding the
that consumption growth was likely to moderate this
economic outlook. As an upside risk to both inflation
year, as growth in labor income was expected to slow
and economic activity, participants noted that momen-
and pandemic-related excess savings were expected to
tum in aggregate demand may be stronger than currently
diminish. In addition, some participants noted signs that
assessed, especially in light of surprisingly resilient con-
the finances of some households—especially those in
sumer spending last year. Furthermore, several partici-
the low- and moderate-income categories—were in-
pants mentioned the risk that financial conditions were
creasingly coming under pressure, which these partici-
or could become less restrictive than appropriate, which
pants saw as a downside risk to the outlook for con-
could add undue momentum to aggregate demand and
sumption. In particular, they pointed to increased usage
cause progress on inflation to stall. Participants also
of credit card revolving balances and buy-now-pay-later
noted some other sources of upside risks to inflation, in-
services, as well as increased delinquency rates for some
cluding possible disruptions to supply chains from geo-
types of consumer loans.
political developments, a potential rebound in core
The reports of business contacts cited by participants goods prices as the effects of supply-side improvements
varied across industries and Districts. In a few Districts, dissipate, or the possibility that wage growth remains el-
contacts reported that the pace of economic activity was evated. Downside risks to inflation and economic activ-
steady or solid, while in several others, contacts ex- ity noted by participants included geopolitical risks that
pressed increased optimism about the economic outlook could result in a material pullback in demand, possible
and prospects for investment. District reports from negative spillovers from lower growth in some foreign
manufacturers were mixed, as some contacts saw in- economies, the risk that financial conditions could re-
creased activity, whereas others saw subdued or weaken- main restrictive for too long, or the possibility that a
ing activity. A couple of participants noted that although weakening of household balance sheets could contribute
soft commodity prices and elevated borrowing costs had to a greater-than-expected deceleration in consumption.
contributed to a decline in farm incomes recently, agri- A few participants mentioned the possibility that eco-
cultural land values remained resilient, and delinquencies nomic activity could surprise to the upside and inflation
on farm loans continued to be low. A few participants to the downside because of more-favorable-than-ex-
remarked that financing and credit conditions were par- pected supply-side developments.
ticularly challenging for small businesses.
In the discussion of financial stability, participants ob-
Participants noted that the labor market remained tight, served that risks to the banking system had receded no-
but demand and supply in that market had continued to tably since last spring, though they noted vulnerabilities
come into better balance. Payroll growth had remained at some banks that they assessed warranted monitoring.
strong in the last few months of 2023 but had slowed These participants noted potential risks for some banks
from its pace seen a year ago, while the unemployment associated with increased funding costs, significant reli-
rate remained low. Participants also observed that the ance on uninsured deposits, unrealized losses on assets
_____________________________________________________________________________________________
Minutes of the Meeting of January 30–31, 2024 Page 9

resulting from the rise in longer-term interest rates, or supply in the labor market had continued to move into
high CRE exposures. Participants judged that liquidity better balance. Participants commented that maintain-
in the financial system remained more than ample and ing the target range for the federal funds rate at this
discussed the importance of considering liquidity condi- meeting would promote further progress toward the
tions as the Federal Reserve’s balance sheet continues to Committee’s goals and allow participants to gather addi-
normalize. While participants noted that they were not tional information to evaluate this progress.
seeing any signs of liquidity pressures at banks, several
In discussing the policy outlook, participants judged that
participants noted that, as a matter of prudent contin-
the policy rate was likely at its peak for this tightening
gency planning, banks should continue to improve their
cycle. They pointed to the decline in inflation seen dur-
readiness to use the Federal Reserve’s discount window,
ing 2023 and to growing signs of demand and supply
and that the Federal Reserve should continue to improve
coming into better balance in product and labor markets
the operational efficiency of the window. In addition,
as informing that view. Participants generally noted that
some participants commented on the difficulties associ-
they did not expect it would be appropriate to reduce the
ated with banks relying on some forms of private whole-
target range for the federal funds rate until they had
sale funding during times of stress. A few participants
gained greater confidence that inflation was moving sus-
remarked on the importance of measures aimed at in-
tainably toward 2 percent. Many participants remarked
creasing the resilience of the Treasury market. A few
that the Committee’s past policy actions and ongoing
participants noted cyber risks and the importance of
improvements in supply conditions were working to-
firms being able to recover from cyber events. A few
gether to move supply and demand into better balance.
participants also commented on the financial condition
Participants noted that the future path of the policy rate
of low- and moderate-income households who have ex-
would depend on incoming data, the evolving outlook,
hausted their savings, as well as the importance of mon-
and the balance of risks. Several participants empha-
itoring data on rising delinquencies on credit cards and
sized the importance of continuing to communicate
autos.
clearly about the Committee’s data-dependent approach.
In their consideration of appropriate monetary policy ac-
In discussing risk-management considerations that
tions at this meeting, participants noted that recent indi-
could bear on the policy outlook, participants remarked
cators suggested that economic activity had been ex-
that while the risks to achieving the Committee’s em-
panding at a solid pace. Job gains had moderated since
ployment and inflation goals were moving into better
early last year but remained strong, and the unemploy-
balance, they remained highly attentive to inflation risks.
ment rate had remained low. Inflation had eased over
In particular, they saw upside risks to inflation as having
the past year but remained elevated. Participants also
diminished but noted that inflation was still above the
noted that the risks to achieving the Committee’s em-
Committee’s longer-run goal. Some participants noted
ployment and inflation goals were moving into better
the risk that progress toward price stability could stall,
balance and that the Committee remained highly atten-
particularly if aggregate demand strengthened or supply-
tive to inflation risks. Participants continued to be reso-
side healing slowed more than expected. Participants
lute in their commitment to bring inflation down to the
highlighted the uncertainty associated with how long a
Committee’s 2 percent objective.
restrictive monetary policy stance would need to be
In light of current economic conditions and their impli- maintained. Most participants noted the risks of moving
cations for the outlook for economic activity and infla- too quickly to ease the stance of policy and emphasized
tion, as well as the balance of risks, all participants judged the importance of carefully assessing incoming data in
it appropriate to maintain the target range for the federal judging whether inflation is moving down sustainably to
funds rate at 5¼ to 5½ percent at this meeting. All par- 2 percent. A couple of participants, however, pointed to
ticipants also judged it appropriate to continue the pro- downside risks to the economy associated with main-
cess of reducing the Federal Reserve’s securities hold- taining an overly restrictive stance for too long.
ings, as described in the previously announced Plans for
Participants observed that the continuing process of re-
Reducing the Size of the Federal Reserve’s Balance
ducing the size of the Federal Reserve’s balance sheet
Sheet.
was an important part of the Committee’s overall ap-
Participants viewed maintaining the current stance of proach to achieving its macroeconomic objectives and
policy as appropriate given the incoming data, which in- that balance sheet runoff had so far proceeded smoothly.
dicated that inflation had continued to move toward the In light of ongoing reductions in usage of the ON RRP
Committee’s 2 percent objective and that demand and
_____________________________________________________________________________________________
Page 10 Federal Open Market Committee

facility, many participants suggested that it would be ap- on labor market conditions, inflation pressures and in-
propriate to begin in-depth discussions of balance sheet flation expectations, and financial and international de-
issues at the Committee’s next meeting to guide an even- velopments.
tual decision to slow the pace of runoff. Some partici-
Given that the stresses that emerged at some banks early
pants remarked that, given the uncertainty surrounding
last year have subsided, members agreed to remove from
estimates of the ample level of reserves, slowing the pace
the statement the reference to the resilience of the U.S.
of runoff could help smooth the transition to that level
banking system as well as to tighter financial and credit
of reserves or could allow the Committee to continue
conditions and their effects on the economic outlook.
balance sheet runoff for longer. In addition, a few par-
Members also agreed to note the progress made toward
ticipants noted that the process of balance sheet runoff
the 2 percent inflation objective and the resilience of
could continue for some time even after the Committee
economic activity over the past year by stating that the
begins to reduce the target range for the federal funds
Committee “judges that the risks to achieving its em-
rate.
ployment and inflation goals are moving into better bal-
Committee Policy Actions ance.” Regarding considerations relevant for future pol-
In their discussions of monetary policy for this meeting, icy actions, members agreed, given their assessment of
members agreed that economic activity had been ex- the policy rate being likely at its peak for this tightening
panding at a solid pace. Job gains had moderated since cycle, to remove the reference to “the extent of any ad-
early last year but remained strong, and the unemploy- ditional policy firming that may be appropriate to return
ment rate had remained low. Inflation had eased over inflation to 2 percent over time,” as was included in the
the past year but remained elevated. Members judged December statement. In its place, they agreed to adopt
that the risks to achieving the Committee’s employment phrasing referencing their “considering any adjustments
and inflation goals were moving into better balance. to the target range for the federal funds rate.” Members
Members viewed the economic outlook to be uncertain also agreed that the statement should convey that “the
and agreed that they remained highly attentive to infla- Committee will carefully assess incoming data, the
tion risks. evolving outlook, and the balance of risks” and that it
“does not expect it will be appropriate to reduce the tar-
In support of the Committee’s goals to achieve maxi-
get range until it has gained greater confidence that in-
mum employment and inflation at the rate of 2 percent
flation is moving sustainably toward 2 percent.”
over the longer run, members agreed to maintain the tar-
get range for the federal funds rate at 5¼ to 5½ percent. At the conclusion of the discussion, the Committee
Members concurred that, in considering any adjustments voted to direct the Federal Reserve Bank of New York,
to the target range for the federal funds rate, they would until instructed otherwise, to execute transactions in the
carefully assess incoming data, the evolving outlook, and SOMA in accordance with the following domestic policy
the balance of risks. Members agreed that they did not directive, for release at 2:00 p.m.:
expect that it would be appropriate to reduce the target
“Effective February 1, 2024, the Federal Open
range until they have gained greater confidence that in-
Market Committee directs the Desk to:
flation is moving sustainably toward 2 percent. In addi-
tion, members agreed to continue to reduce the Federal • Undertake open market operations as nec-
Reserve’s holdings of Treasury securities and agency essary to maintain the federal funds rate in
debt and agency mortgage-backed securities, as de- a target range of 5¼ to 5½ percent.
scribed in its previously announced plans. All members
• Conduct standing overnight repurchase
affirmed their strong commitment to returning inflation
agreement operations with a minimum bid
to the Committee’s 2 percent objective.
rate of 5.5 percent and with an aggregate
Members agreed that, in assessing the appropriate stance operation limit of $500 billion.
of monetary policy, they would continue to monitor the
implications of incoming information for the economic • Conduct standing overnight reverse repur-
outlook. They would be prepared to adjust the stance of chase agreement operations at an offering
monetary policy as appropriate if risks emerge that could rate of 5.3 percent and with a per-counter-
impede the attainment of the Committee’s goals. Mem- party limit of $160 billion per day.
bers also agreed that their assessments would take into
account a wide range of information, including readings
_____________________________________________________________________________________________
Minutes of the Meeting of January 30–31, 2024 Page 11

• Roll over at auction the amount of principal inflation is moving sustainably toward 2 per-
payments from the Federal Reserve’s hold- cent. In addition, the Committee will continue
ings of Treasury securities maturing in each reducing its holdings of Treasury securities and
calendar month that exceeds a cap of agency debt and agency mortgage-backed secu-
$60 billion per month. Redeem Treasury rities, as described in its previously announced
coupon securities up to this monthly cap plans. The Committee is strongly committed to
and Treasury bills to the extent that coupon returning inflation to its 2 percent objective.
principal payments are less than the In assessing the appropriate stance of monetary
monthly cap. policy, the Committee will continue to monitor
• Reinvest into agency mortgage-backed se- the implications of incoming information for
curities (MBS) the amount of principal pay- the economic outlook. The Committee would
ments from the Federal Reserve’s holdings be prepared to adjust the stance of monetary
of agency debt and agency MBS received in policy as appropriate if risks emerge that could
each calendar month that exceeds a cap of impede the attainment of the Committee’s
$35 billion per month. goals. The Committee’s assessments will take
into account a wide range of information, in-
• Allow modest deviations from stated cluding readings on labor market conditions, in-
amounts for reinvestments, if needed for flation pressures and inflation expectations, and
operational reasons. financial and international developments.”
• Engage in dollar roll and coupon swap Voting for this action: Jerome H. Powell, John C.
transactions as necessary to facilitate settle- Williams, Thomas I. Barkin, Michael S. Barr, Raphael W.
ment of the Federal Reserve’s agency MBS Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C.
transactions.” Daly, Philip N. Jefferson, Adriana D. Kugler, Loretta J.
The vote also encompassed approval of the statement Mester, and Christopher J. Waller.
below for release at 2:00 p.m.: Voting against this action: None.
“Recent indicators suggest that economic activ- Consistent with the Committee’s decision to leave the
ity has been expanding at a solid pace. Job gains target range for the federal funds rate unchanged, the
have moderated since early last year but remain Board of Governors of the Federal Reserve System
strong, and the unemployment rate has re- voted unanimously to maintain the interest rate paid on
mained low. Inflation has eased over the past reserve balances at 5.4 percent, effective Febru-
year but remains elevated. ary 1, 2024. The Board of Governors of the Federal Re-
The Committee seeks to achieve maximum em- serve System voted unanimously to approve the estab-
ployment and inflation at the rate of 2 percent lishment of the primary credit rate at the existing level of
over the longer run. The Committee judges that 5.5 percent, effective February 1, 2024.
the risks to achieving its employment and infla- It was agreed that the next meeting of the Committee
tion goals are moving into better balance. The would be held on Tuesday–Wednesday, March 19–
economic outlook is uncertain, and the Com- 20, 2024. The meeting adjourned at 10:25 a.m. on Janu-
mittee remains highly attentive to inflation risks. ary 31, 2024.
In support of its goals, the Committee decided Notation Vote
to maintain the target range for the federal By notation vote completed on January 2, 2024, the
funds rate at 5¼ to 5½ percent. In considering Committee unanimously approved the minutes of the
any adjustments to the target range for the fed- Committee meeting held on December 12–13, 2023.
eral funds rate, the Committee will carefully as-
sess incoming data, the evolving outlook, and
the balance of risks. The Committee does not
expect it will be appropriate to reduce the target _______________________
range until it has gained greater confidence that Joshua Gallin
Secretary