LSA Connect

Fed Note:

The FOMC completed their January meeting, with no stated changes in monetary policy, and no dissents. The target fed funds rate remains at 1.50-1.75%.

The formal statement was little changed, noting low inflation and economic growth expanding at a ‘moderate’ pace, although household spending was downgraded from ‘strong’ to ‘moderate’ as well, in the only notable difference from December. While insignificant to monetary policy overall, the Fed did raise a unique rate it pays to banks for excess reserves kept at the Fed from 1.55% to 1.60%—more toward the ‘mid-range’ of the fed funds target. This relates to an ongoing desire to balance incentives for borrowing and lending in the short-term ‘repo’ markets, which has proven a little tricky in recent months.

As for the Fed’s key decision items, little has changed from the prior meeting. This is in line with the lack of policy adjustment today or even hints of future action. Continue reading →