FOMC Statement

For release at 11:00 a.m. EDT

October 11, 2019

Statement Regarding Monetary Policy Implementation

Consistent with its January 2019 Statement Regarding Monetary Policy Implementation

and Balance Sheet Normalization, the Committee reaffirms its intention to implement

monetary policy in a regime in which an ample supply of reserves ensures that control

over the level of the federal funds rate and other short-term interest rates is exercised

primarily through the setting of the Federal Reserve’s administered rates, and in which

active management of the supply of reserves is not required. To ensure that the supply of

reserves remains ample, the Committee approved by notation vote completed on October

11, 2019 the following steps:

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In light of recent and expected increases in the Federal Reserve’s non-reserve

liabilities, the Federal Reserve will purchase Treasury bills at least into the second

quarter of next year in order to maintain over time ample reserve balances at or

above the level that prevailed in early September 2019.

In addition, the Federal Reserve will conduct term and overnight repurchase

agreement operations at least through January of next year to ensure that the

supply of reserves remains ample even during periods of sharp increases in nonreserve liabilities, and to mitigate the risk of money market pressures that could

adversely affect policy implementation.

These actions are purely technical measures to support the effective implementation of

the FOMC’s monetary policy, and do not represent a change in the stance of monetary

policy. The Committee will continue to monitor money market developments as it

assesses the level of reserves most consistent with efficient and effective policy

implementation. The Committee stands ready to adjust the details of these plans as

necessary to foster efficient and effective implementation of monetary policy.

In connection with these plans, the Federal Open Market Committee voted unanimously

to authorize and direct the Federal Reserve Bank of New York, until instructed otherwise,

to execute transactions in the System Open Market Account in accordance with the

following domestic policy directive:

“Effective October 15, 2019, the Federal Open Market Committee directs the Desk to

undertake open market operations as necessary to maintain the federal funds rate in a

target range of 1-3/4 to 2 percent. In light of recent and expected increases in the

Federal Reserve’s non-reserve liabilities, the Committee directs the Desk to purchase

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Treasury bills at least into the second quarter of next year to maintain over time

ample reserve balances at or above the level that prevailed in early September 2019.

The Committee also directs the Desk to conduct term and overnight repurchase

agreement operations at least through January of next year to ensure that the supply of

reserves remains ample even during periods of sharp increases in non-reserve

liabilities, and to mitigate the risk of money market pressures that could adversely

affect policy implementation. In addition, the Committee directs the Desk to conduct

overnight reverse repurchase operations (and reverse repurchase operations with

maturities of more than one day when necessary to accommodate weekend, holiday,

or similar trading conventions) at an offering rate of 1.70 percent, in amounts limited

only by the value of Treasury securities held outright in the System Open Market

Account that are available for such operations and by a per-counterparty limit of $30

billion per day.

The Committee directs the Desk to continue rolling over at auction all principal

payments from the Federal Reserve’s holdings of Treasury securities and to continue

reinvesting all principal payments from the Federal Reserve’s holdings of agency

debt and agency mortgage-backed securities received during each calendar month.

Principal payments from agency debt and agency mortgage-backed securities up to

$20 billion per month will continue to be reinvested in Treasury securities to roughly

match the maturity composition of Treasury securities outstanding; principal

payments in excess of $20 billion per month will continue to be reinvested in agency

mortgage-backed securities. Small deviations from these amounts for operational

reasons are acceptable.

The Committee also directs the Desk to engage in dollar roll and coupon swap

transactions as necessary to facilitate settlement of the Federal Reserve’s agency

mortgage-backed securities transactions.”

More information about these plans may be found on the Federal Reserve Bank of New

York’s website.

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