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Minutes of the Federal Open Market Committee

March 19–20, 2024

A joint meeting of the Federal Open Market Committee Jose Acosta, Senior System Administrator II, Division
and the Board of Governors of the Federal Reserve Sys- of Information Technology, Board
tem was held in the offices of the Board of Governors
Oladoyin Ajifowoke, Program Management Analyst,
on Tuesday, March 19, 2024, at 9:00 a.m. and continued
Division of Monetary Affairs, Board
on Wednesday, March 20, 2024, at 9:00 a.m.1
David Altig, Executive Vice President, Federal Reserve
Attendance
Bank of Atlanta
Jerome H. Powell, Chair
John C. Williams, Vice Chair Andre Anderson, First Vice President, Federal Reserve
Thomas I. Barkin Bank of Atlanta
Michael S. Barr
Roc Armenter, Executive Vice President, Federal
Raphael W. Bostic
Reserve Bank of Philadelphia
Michelle W. Bowman
Lisa D. Cook Alyssa Arute,2 Manager, Division of Reserve Bank
Mary C. Daly Operations and Payment Systems, Board
Philip N. Jefferson Penelope A. Beattie,2 Section Chief, Office of the
Adriana D. Kugler Secretary, Board
Loretta J. Mester
Christopher J. Waller Carol C. Bertaut, Senior Adviser, Division of
International Finance, Board
Susan M. Collins, Austan D. Goolsbee, Kathleen
O’Neill, and Jeffrey R. Schmid, Alternate Members David Bowman,2 Senior Associate Director, Division
of the Committee of Monetary Affairs, Board
Patrick Harker, Neel Kashkari, and Lorie K. Logan, Ellen J. Bromagen, First Vice President, Federal
Presidents of the Federal Reserve Banks of Reserve Bank of Chicago
Philadelphia, Minneapolis, and Dallas, respectively Isabel Cairó, Principal Economist, Division of
Joshua Gallin, Secretary Monetary Affairs, Board
Matthew M. Luecke, Deputy Secretary Mark A. Carlson, Adviser, Division of Monetary
Brian J. Bonis, Assistant Secretary Affairs, Board
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel Juan C. Climent, Special Adviser to the Board, Division
Richard Ostrander, Deputy General Counsel of Board Members, Board
Trevor A. Reeve, Economist Stephanie E. Curcuru, Deputy Director, Division of
Stacey Tevlin, Economist International Finance, Board
Shaghil Ahmed, Kartik B. Athreya, James A. Clouse, Ryan Decker, Special Adviser to the Board, Division of
Edward S. Knotek II, Sylvain Leduc, and William Board Members, Board
Wascher, Associate Economists Rochelle M. Edge, Deputy Director, Division of
Roberto Perli, Manager, System Open Market Account Monetary Affairs, Board
Julie Ann Remache, Deputy Manager, System Open Eric M. Engen, Senior Associate Director, Division of
Market Account Research and Statistics, Board

1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of considerations for slow-

“FOMC” and the “Committee” in these minutes; the Board ing the pace of balance sheet reduction.
of Governors of the Federal Reserve System is referenced as
the “Board” in these minutes.
Page 2 Federal Open Market Committee
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Giovanni Favara, Assistant Director, Division of Deborah L. Leonard, Capital Markets Trading
Monetary Affairs, Board Director, Federal Reserve Bank of New York
Ron Feldman, First Vice President, Federal Reserve Kurt F. Lewis, Special Adviser to the Chair, Division of
Bank of Minneapolis Board Members, Board
Erin E. Ferris,2 Principal Economist, Division of Laura Lipscomb, Special Adviser to the Board,
Monetary Affairs, Board Division of Board Members, Board
Andrew Figura, Associate Director, Division of David López-Salido, Senior Associate Director,
Research and Statistics, Board Division of Monetary Affairs, Board
Charles A. Fleischman, Senior Adviser, Division of Joshua S. Louria, Group Manager, Division of
Research and Statistics, Board Monetary Affairs, Board
Glenn Follette, Associate Director, Division of Byron Lutz, Deputy Associate Director, Division of
Research and Statistics, Board Research and Statistics, Board
Jenn Gallagher, Assistant to the Board, Division of Karel Mertens, Interim Director of Research, Federal
Board Members, Board Reserve Bank of Dallas
Michael S. Gibson, Director, Division of Supervision Ann E. Misback, Secretary, Office of the Secretary,
and Regulation, Board Board
Joseph W. Gruber, Executive Vice President, Federal Michelle M. Neal, Head of Markets, Federal Reserve
Reserve Bank of Kansas City Bank of New York
Luca Guerrieri, Associate Director, Division of Edward Nelson,2 Senior Adviser, Division of Monetary
International Finance, Board Affairs, Board
Christopher J. Gust,2 Associate Director, Division of Michael G. Palumbo, Senior Associate Director,
Monetary Affairs, Board Division of Research and Statistics, Board
Valerie S. Hinojosa, Section Chief, Division of Eugenio P. Pinto, Special Adviser to the Board,
Monetary Affairs, Board Division of Board Members, Board
Jasper J. Hoek, Deputy Associate Director, Division of Odelle Quisumbing,2 Assistant to the Secretary, Office
International Finance, Board of the Secretary, Board
Andreas L. Hornstein, Senior Advisor, Federal Reserve Andrea Raffo, Senior Vice President, Federal Reserve
Bank of Richmond Bank of Minneapolis
Jane E. Ihrig, Special Adviser to the Board, Division of Nellisha D. Ramdass, Deputy Director, Division of
Board Members, Board Monetary Affairs, Board
Sebastian Infante, Section Chief, Division of Monetary Jeanne Rentezelas, First Vice President, Federal
Affairs, Board Reserve Bank of Philadelphia
Michael T. Kiley, Deputy Director, Division of Achilles Sangster II, Senior Information Manager,
Financial Stability, Board Division of Monetary Affairs, Board
Kevin L. Kliesen, Research Officer, Federal Reserve Bernd Schlusche, Principal Economist, Division of
Bank of St. Louis Monetary Affairs, Board
Spencer Krane, Senior Vice President, Federal Reserve Andres Schneider, Principal Economist, Division of
Bank of Chicago Monetary Affairs, Board
Andreas Lehnert, Director, Division of Financial Zeynep Senyuz,2 Deputy Associate Director, Division
Stability, Board of Monetary Affairs, Board
Paul Lengermann, Deputy Associate Director, Division Robert J. Tetlow, Senior Adviser, Division of Monetary
of Research and Statistics, Board Affairs, Board
 Minutes of the Meeting of March 19–20, 2024 Page 3
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Clara Vega, Special Adviser to the Board, Division of than previously thought, and Federal Reserve communi-
Board Members, Board cations. The median of modal paths of the federal funds
rate obtained from the Open Market Desk’s Survey of
Jeffrey D. Walker,2 Associate Director, Division of
Primary Dealers and Survey of Market Participants was
Reserve Bank Operations and Payment Systems,
also slightly higher. Responses still indicated substantial
Board
differences among survey participants in their assess-
Min Wei, Senior Associate Director, Division of ments of the total amount of rate cuts likely to occur this
Monetary Affairs, Board year.
Paul R. Wood, Special Adviser to the Board, Division The manager then discussed expectations regarding bal-
of Board Members, Board ance sheet policy. Survey responses reflected judgments
that the Committee’s slowing of balance sheet runoff
Egon Zakrajsek, Executive Vice President, Federal
would begin slightly later than previously expected, with
Reserve Bank of Boston
the majority of survey participants now expecting the
Rebecca Zarutskie, Special Adviser to the Board, slowing to start around midyear. Balance sheet runoff
Division of Board Members, Board was expected to continue for some time thereafter, and
Developments in Financial Markets and Open survey responses suggested a slightly smaller balance
Market Operations sheet size at the end of runoff than respondents had pre-
The manager turned first to a review of developments in viously assessed.
financial markets over the intermeeting period. U.S. fi- The manager noted that broad equity prices had reached
nancial conditions had eased modestly since the January new highs over the intermeeting period. This growth
FOMC meeting, with higher equity prices more than off- was again driven primarily by the strong increases in val-
setting increases in interest rates. Nominal Treasury uations of large-capitalization technology companies,
yields had risen over the intermeeting period. At shorter while broader equity price gains were more measured.
maturities, most of the increase was attributable to a rise Recent bank equity price behavior reflected renewed
in inflation compensation, prompted by indications that market attention on the challenges faced by the regional
the decline in inflation was proceeding somewhat more banking sector, particularly that sector’s exposures to
slowly than markets in recent months had been expect- commercial real estate (CRE). In global financial mar-
ing. In contrast, at longer maturities, much of the in- kets, the expected policy rate path in most advanced for-
crease in Treasury yields was due to a rise in real rates, eign economies (AFEs) shifted up over the intermeeting
reflecting solid labor market readings and stronger-than- period. At the end of the intermeeting period, the Bank
expected data on economic activity. of Japan (BOJ) announced that it would discontinue its
The manager turned next to policy rate expectations. An policies of a negative short-term interest rate and yield
estimate of the expected federal funds rate path derived curve control; this decision was largely expected by in-
from futures prices shifted up significantly over the in- vestors, and the BOJ’s announcement had a limited ef-
termeeting period. The modal federal funds rate path fect on global financial markets.
implied by options prices had also risen, but by substan- Conditions in U.S. money markets had been stable over
tially less than the futures-implied path. The move up in the intermeeting period, with less upward pressure on
the futures-implied path reflected in part some shift in repurchase agreement (repo) rates than in recent inter-
expectations toward policy rate cuts beginning later in meeting periods. The usage of the overnight reverse re-
the year, and cumulating to a smaller rate reduction in purchase agreement (ON RRP) facility had continued to
2024, than previously assessed. Investors also appeared decline, albeit at a somewhat slower pace than that seen
to have considerably lowered the perceived probability over the second half of 2023. Staff projections sug-
of more substantial rate cuts than in their baseline ex- gested that total ON RRP balances might stabilize in
pectations. This lowering was evident in significantly coming months at either zero or a low level. This as-
more concentrated probability distributions for the fed- sessment was also supported by information acquired in
eral funds rate over coming quarters. The changes in Desk outreach efforts.
policy rate expectations over the intermeeting period oc-
curred in the wake of stronger economic data, percep- The manager provided an update on indicators of re-
serve conditions. Over the past few years, rate control
tions that disinflation might be proceeding more slowly
had been effective, with the effective federal funds rate
being firmly within the Committee’s target range. The
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staff assessed that, over the intermeeting period, the fed- each of the expected phases of the transition to an ample
eral funds rate continued to be insensitive to day-to-day level of reserves.
changes in the supply of reserves. This outcome, to-
Participants observed that balance sheet runoff was pro-
gether with various other indicators of reserve condi-
ceeding smoothly. Nevertheless, taking into account the
tions, supported the conclusion that reserves remained
experience around the end of the 2017–19 balance sheet
abundant. The manager noted that there was neverthe-
runoff episode, participants broadly assessed it would be
less significant uncertainty about the demand for re-
appropriate to take a cautious approach to further run-
serves and that, under the current pace of runoff of the
off. The vast majority of participants thus judged it
Federal Reserve’s securities portfolio, stabilization in to-
would be prudent to begin slowing the pace of runoff
tal ON RRP balances would, all else equal, cause re-
fairly soon. Most of these participants noted that, de-
serves to start declining at a rapid rate.
spite significant balance sheet reduction, reserve bal-
By unanimous vote, the Committee ratified the Desk’s ances had remained elevated because the decline in usage
domestic transactions over the intermeeting period. of the ON RRP facility had shifted Federal Reserve lia-
There were no intervention operations in foreign curren- bilities toward reserves. However, with the extent of fu-
cies for the System’s account during the intermeeting pe- ture declines in ON RRP take-up becoming more lim-
riod. ited, further balance sheet runoff will likely translate
more directly into declines in reserve balances, poten-
Considerations for Slowing the Pace of Balance
tially at a rapid pace. In light of the uncertainty regarding
Sheet Reduction
the level of reserves consistent with operating in an am-
Participants began a discussion related to slowing the
ple-reserves regime, slowing the pace of balance sheet
pace of balance sheet runoff consistent with the Com-
runoff sooner rather than later would help facilitate a
mittee’s Plans for Reducing the Size of the Federal Re-
smooth transition from abundant to ample reserve bal-
serve’s Balance Sheet announced in May 2022. Those
ances. Slower runoff would give the Committee more
plans indicated that in order to ensure a smooth transi-
time to assess market conditions as the balance sheet
tion, the Committee intends to slow and then stop the
continues to shrink. It would allow banks, and short-
decline in the size of the balance sheet when reserve bal-
term funding markets more generally, additional time to
ances are somewhat above the level it judges to be con-
adjust to the lower level of reserves, thus reducing the
sistent with ample reserves. Since balance sheet runoff
probability that money markets experience undue stress
began in June 2022, the Federal Reserve’s total securities
that could require an early end to runoff. Therefore, the
holdings had declined roughly $1.5 trillion. In light of
decision to slow the pace of runoff does not mean that
the ongoing sizable decline in the balance sheet, and the
the balance sheet will ultimately shrink by less than it
prospect of a more rapid decline in reserve balances, par-
would otherwise. Rather, a slower pace of runoff would
ticipants agreed that their discussions at this meeting
facilitate ongoing declines in securities holdings con-
would help inform the Committee’s future decisions re-
sistent with reaching ample reserves. A few participants,
garding how and when to slow the pace of runoff. No
however, indicated that they preferred to continue with
decisions about adjusting the pace of balance sheet run-
the current pace of balance sheet runoff until market in-
off were made at the meeting.
dicators begin to show signs that reserves are approach-
The participants’ discussion was preceded by staff ing an ample level. All participants emphasized the im-
presentations. The staff reviewed the 2017–19 balance portance of communicating that a decision to slow the
sheet runoff episode and the lessons learned from that pace of runoff would have no implications for the stance
experience, including the importance of monitoring of monetary policy, as it would mean implementing one
money market conditions in light of the uncertainty sur- of the transitional steps previously announced in the
rounding the level of reserves consistent with operating Committee’s balance sheet plans.
in an ample-reserves regime. The staff presented a set
In their discussions regarding how to adjust the pace of
of simulations in which the current monthly pace of se-
runoff, participants generally favored reducing the
curities runoff was reduced to illustrate how the choice
monthly pace of runoff by roughly half from the recent
of when to start slowing the pace of runoff could affect
overall pace. With redemptions of agency debt and
the paths for the balance sheet and reserve balances.
agency mortgage-backed securities (MBS) expected to
The simulations showed how various options for when
continue to run well below the current monthly cap, par-
to slow the pace of runoff could affect the duration of
ticipants saw little need to adjust this cap, which also
would be consistent with the Committee’s intention to
 Minutes of the Meeting of March 19–20, 2024 Page 5
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hold primarily Treasury securities in the longer run. Ac- same in February as it was at the end of last year, and it
cordingly, participants generally preferred to maintain remained well below its level a year ago. The Wage
the existing cap on agency MBS and adjust the redemp- Growth Tracker constructed by the Federal Reserve
tion cap on U.S. Treasury securities to slow the pace of Bank of Atlanta was lower over the past two months
balance sheet runoff. than readings last year.
Participants also shared their initial perspectives on Consumer price inflation continued to decline, but re-
longer-term aspects of balance sheet policy beyond the cent progress was uneven. Total PCE prices increased
more immediate issues concerning slowing the pace of 2.5 percent over the 12 months ending in January, while
runoff. Although they saw the current level of reserves core PCE price inflation—which excludes changes in
as abundant, participants emphasized the underlying un- energy prices and many consumer food prices—was
certainty about the level of reserves consistent with op- 2.9 percent over the same period. Both of those
erating in an ample-reserves regime. They noted various 12-month measures continued to trend down, although
price and quantity metrics that they saw as important the month-over-month readings for January had moved
real-time indicators of conditions in short-term funding up. The trimmed mean measure of 12-month PCE price
markets that could provide signals that reserves are ap- inflation constructed by the Federal Reserve Bank of
proaching a level somewhat above ample. Some partic- Dallas was 3.2 percent in January, lower than its level a
ipants also mentioned the importance of both the dis- year earlier. Over the 12 months ending in February, the
count window and the standing repo facility as liquidity consumer price index (CPI) increased 3.2 percent and
backstops as reserves decline. Many participants com- core CPI rose 3.8 percent; both 12-month measures
mented on aspects of the composition of the Federal Re- were below their year-ago levels even though the recent
serve’s securities holdings, including the appropriate month-over-month CPI readings had firmed a bit. Re-
longer-run maturity composition of the System Open cent survey measures of consumers’ inflation expecta-
Market Account portfolio and options to achieve in the tions at both shorter- and longer-term horizons were
longer run a portfolio that consists primarily of Treasury broadly in line with the levels seen in the decade before
securities. the pandemic.
Staff Review of the Economic Situation Recent indicators suggested that real GDP was increas-
The information available at the time of the March 19– ing at a solid pace in the first quarter, although more
20 meeting suggested that U.S. real gross domestic prod- slowly than its robust fourth-quarter rate. Incoming data
uct (GDP) was expanding at a solid rate in the first quar- pointed to some slowing in PCE growth, as expenditures
ter, although slower than its robust fourth-quarter pace. declined in January and the components of the retail
Labor market conditions remained strong in recent sales data used to estimate PCE were soft in February.
months. Consumer price inflation—as measured by the January’s readings on orders and shipments of nonde-
12-month change in the price index for personal con- fense capital goods excluding aircraft and on nonresi-
sumption expenditures (PCE)—continued to trend dential construction spending suggested some decelera-
down, though it remained above 2 percent. tion in business fixed investment. In contrast, starts and
permits for single-family homes in January and February
Labor demand and supply appeared to continue to move
pointed to a modest pickup in residential investment
into better balance, although recent indicators were
growth. Real exports of goods stepped down in January
mixed. Total nonfarm payroll employment increased at
relative to December following rapid growth last quar-
a faster average monthly pace over January and February
ter. By contrast, real goods imports picked up in Janu-
than in the fourth quarter. In contrast, the unemploy-
ary, as higher imports of capital goods and automotive
ment rate edged up to 3.9 percent in February, while the
products more than offset lower imports of consumer
labor force participation rate and the employment-to-
goods. Overall, the nominal U.S. international trade def-
population ratio were essentially unchanged. The unem-
icit widened in January, as goods and services imports
ployment rate for African Americans increased, and the
expanded more than exports, which increased only
rate for Hispanics was unchanged; both rates were
slightly.
higher than those for Asians and for Whites. The pri-
vate-sector job openings rate and the quits rate were little In contrast to strong U.S. GDP growth in the fourth
changed in January, and both rates were far below their quarter, economic growth in foreign economies was
year-earlier levels. The 12-month change in average generally weak amid tight monetary policy, the erosion
hourly earnings for all employees was essentially the in real household incomes from high inflation, and the
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ongoing repercussions of the 2022 energy shock in Eu- index were little changed on net. At its meeting on
rope. More recently, purchasing managers indexes in March 19, the BOJ exited negative interest rate policy
Europe through February and other indicators provided and increased its overnight policy rate from negative
tentative signs of some firming in the region’s economic 0.1 percent to a range of 0 to 0.1 percent. This policy
activity. In China, economic data for January and Feb- rate hike was the first by the BOJ in 17 years. The BOJ
ruary were somewhat mixed. Although exports, invest- also ended its yield curve control policy but indicated
ment, and industrial production were strong, household that it would continue bond purchases. The changes
demand remained depressed amid China’s ongoing were widely expected, and market reactions were limited.
property-sector slump. On the other hand, some econ-
Conditions in U.S. short-term funding markets remained
omies in emerging Asia performed well, in part reflecting
stable over the intermeeting period. Usage of the
strong demand for leading-edge semiconductors.
ON RRP facility continued to decline. However, the de-
Foreign headline inflation picked up early in the year as cline in average take-up was less than in the two previous
the downward pressure from previous energy price de- periods, suggesting that the rate of decline could be
clines waned and some emerging market economies slowing. The continuing decline in ON RRP take-up
(EMEs) experienced renewed food price pressures due primarily reflected money market funds’ (MMFs) ongo-
to adverse weather. Most major foreign central banks ing reallocation of assets to Treasury bills amid contin-
kept their policy rates unchanged over the intermeeting ued bill issuance and relatively attractive bill yields.
period and emphasized the need for greater confidence
Banks’ total deposit levels edged up further in January
that inflation was falling back to target before easing pol-
and February, likely reflecting, in part, rising nominal in-
icy.
come and somewhat more competitive deposit rates.
Staff Review of the Financial Situation MMFs continued to provide relatively attractive yields to
Over the intermeeting period, the market-implied path investors and experienced modest inflows since the Jan-
for the federal funds rate through 2024 increased mark- uary FOMC meeting.
edly, reversing the declines that had occurred since late
In domestic credit markets, over the intermeeting pe-
last year. Consistent with the increase in the implied pol-
riod, borrowing costs remained elevated. Rates on loans
icy rate path, intermediate- and longer-term Treasury
to households generally rose in recent months, including
yields moved up over the period, with larger increases
those for 30-year conforming residential mortgages. In-
concentrated at shorter maturities. Most of the increase
terest rates on credit card offers increased through De-
in short-term Treasury yields was attributed to a rise in
cember, while rates on new auto loans remained elevated
near-term inflation compensation. Market-based
through late February, near their recent highs. Yields
measures of near-term interest rate uncertainty for
moved higher on a variety of fixed-income securities, in-
shorter-term yields remained elevated by historical
cluding commercial mortgage-backed securities
standards, in part reflecting investors’ continued uncer-
(CMBS), investment- and speculative-grade corporate
tainty about the path of policy rates.
bonds, and residential MBS. Yields on leveraged loans,
Despite the rise in interest rates, broad stock price in- which are generally linked to the Secured Overnight Fi-
dexes increased notably amid upbeat corporate earnings nancing Rate, declined somewhat in line with the nar-
reports, particularly for the largest firms. Yield spreads rowing of credit spreads. In addition, interest rates on
on investment-grade corporate bonds were little small business loans ticked down in January but re-
changed, and those on speculative-grade bonds nar- mained elevated.
rowed slightly. The one-month option-implied volatility
Credit continued to be available to most businesses,
on the S&P 500 index increased slightly over the period
households, and municipalities. Large nonfinancial cor-
but remained low by historical standards.
porations continued to find credit generally accessible.
Changes in foreign financial asset prices over the inter- Capital market financing was robust during the inter-
meeting period were largely driven by spillovers from meeting period, while commercial and industrial loan
U.S. financial markets. Risk appetite generally improved, balances expanded modestly. For small firms, loan orig-
leading to increases in foreign equity indexes and a nar- inations were stable despite the tightening of credit
rowing of EME credit spreads. Short-term yields in the standards.
AFEs were also boosted by less-accommodative-than-
expected communications by European Central Bank
officials. Longer-term AFE yields and the broad dollar
 Minutes of the Meeting of March 19–20, 2024 Page 7
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Credit in the residential mortgage market remained gen- Staff Economic Outlook
erally available, although mortgage originations re- The economic projection prepared by the staff for the
mained subdued. Consumer credit remained easily avail- March meeting was stronger than the January forecast.
able as credit card balances expanded robustly in January The upward revision in the forecast primarily reflected
and February, and credit card limits continued to in- the staff’s incorporation of a higher projected path for
crease broadly. Growth in auto lending at finance com- population due to a boost from immigration. The lagged
panies was muted in January following robust growth effects of earlier monetary policy actions, through their
last year. continued contribution to tight financial and credit con-
ditions, were still expected to hold output growth in
CRE borrowers continued to find credit readily accessi-
2024 below the staff’s estimate of potential growth. As
ble over the period. CRE loans at banks picked up mod-
those policy effects waned, output was expected to rise
erately in January and February, driven by growth in
in line with potential in 2025 and 2026. The unemploy-
multifamily and residential loans. Non-agency CMBS is-
ment rate was forecast to remain roughly flat over the
suance volume was moderate, on average, in January and
next several years.
February.
Total and core PCE price inflation were both projected
Credit quality for large firms and home mortgage bor-
to edge down in 2024, ending the year around 2½ per-
rowers remained solid but generally deteriorated further
cent, as demand and supply in product and labor mar-
in sectors such as CRE and credit cards. The trailing six-
kets continued to move into better balance. By 2026,
month default rates on corporate borrowers’ bonds and
total and core PCE price inflation were expected to be
loans remained low in February. In contrast, credit rat-
close to 2 percent.
ing downgrades outpaced upgrades for leveraged loans
and corporate bonds in January and February. Credit The staff viewed uncertainty around the baseline projec-
quality of small businesses deteriorated further in recent tion as close to the average over the past 20 years, as
months. uncertainty was judged to have diminished substantially
over the past year. Risks around the inflation forecast
Mortgage delinquency rates for conventional and De-
were seen as tilted slightly to the upside, as supply-side
partment of Veterans Affairs loans were largely un-
disruptions—from developments domestically or
changed in December and January, but delinquency rates
abroad—or unexpectedly persistent inflation dynamics
on Federal Housing Administration loans picked up
could materialize. The risks around the forecast for eco-
slightly. Credit card delinquency rates increased a bit
nomic activity were viewed as skewed a little to the
further in the fourth quarter and stood above levels seen
downside, as any substantial setback in reducing infla-
just before the pandemic. The upward trend in the auto
tion might lead to a tightening of financial conditions
delinquency rate appeared to have stopped in the second
that would slow the pace of economic activity by more
half of last year, with the delinquency rate in the fourth
than the staff anticipated in their baseline forecast.
quarter remaining a little above its pre-pandemic aver-
age. Participants’ Views on Current Conditions and the
Economic Outlook
Delinquency rates for nonfarm nonresidential loans at
In conjunction with this FOMC meeting, participants
banks increased at the end of 2023 to a level last seen in
submitted their projections of the most likely outcomes
late 2014. The delinquency rate for office properties in
for real GDP growth, the unemployment rate, and infla-
CMBS pools continued to increase in January and Feb-
tion for each year from 2024 through 2026 and over the
ruary. Delinquency rates would have been higher had
longer run. The projections were based on their individ-
many borrowers with loans maturing last year not re-
ual assessments of appropriate monetary policy, includ-
ceived extensions. CMBS delinquency rates for most
ing the path of the federal funds rate. The longer-run
other property types were stable at normal-to-low levels,
projections represented each participant’s assessment of
partly because many of these borrowers were also able
the rate to which each variable would be expected to
to extend their loans when they reached maturity last
converge, over time, under appropriate monetary policy
year. The deterioration in CRE credit quality sparked
and in the absence of further shocks to the economy. A
investor concerns about the health of a few small U.S.
Summary of Economic Projections was released to the
and foreign banks over the intermeeting period.
public following the conclusion of the meeting.
In their discussion of inflation, participants observed
that significant progress had been made over the past
Page 8 Federal Open Market Committee
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year toward the Committee’s 2 percent inflation objec- homebuilding amid still-elevated financing costs for de-
tive even though the two most recent monthly readings velopers, despite strong housing demand and a limited
on core and headline inflation had been firmer than ex- supply of affordable housing. Some participants noted
pected. Some participants noted that the recent in- that increased immigration, which had likely been boost-
creases in inflation had been relatively broad based and ing the growth of personal consumption spending, may
therefore should not be discounted as merely statistical also have been adding to the demand for housing. Many
aberrations. However, a few participants noted that re- participants pointed to indicators such as higher credit
sidual seasonality could have affected the inflation read- card balances, greater use of buy-now-pay-later pro-
ings at the start of the year. Participants generally com- grams, or rising delinquency rates on some types of con-
mented that they remained highly attentive to inflation sumer loans as evidence that the finances of some lower-
risks but that they had also anticipated that there would and moderate-income households might be coming un-
be some unevenness in monthly inflation readings as in- der pressure; these developments were seen by these
flation returned to target. participants as a downside risk to the outlook for con-
sumption spending.
In their outlook for inflation, participants noted that
they continued to expect that inflation would return to Reports from business contacts in some industries and
2 percent over the medium term. They remained con- Districts conveyed increased optimism about the out-
cerned that elevated inflation continued to harm house- look, while contacts in a couple of other Districts re-
holds, especially those least able to meet the higher costs ported only a steady or stable pace of economic activity.
of essentials like food, housing, and transportation. A Restrictive credit conditions were cited by a few partici-
few participants remarked that they expected core non- pants as restraining sectors such as equipment invest-
housing services inflation to decline as the labor market ment and residential investment. However, several par-
continued to move into better balance and wage growth ticipants noted that their contacts had reported increased
moderated further. Participants discussed the still- investment in technology or in business process im-
elevated rate of housing services inflation and com- provements that were enhancing productive capacity
mented on the uncertainty regarding when and by how and helping businesses ameliorate the effects of a tight
much lower readings for rent growth on new leases labor market. Manufacturing activity was characterized
would pass through to this category of inflation. Several as stable. A couple of participants noted that high input
participants noted that the disinflationary pressure for costs and lower expected commodity prices were weigh-
core goods that had resulted from the receding of supply ing on farm incomes.
chain bottlenecks was likely to moderate. Other factors
Participants assessed that demand and supply in the la-
related to aggregate supply, such as increases in the labor
bor market were continuing to come into better balance,
force or better productivity growth, were viewed by sev-
although conditions generally remained tight. Partici-
eral participants as likely to support continued disinfla-
pants noted strong recent payroll growth, while the un-
tion. Some participants reported that business contacts
employment rate remained low. Participants cited a va-
had indicated that they were less able to pass on price
riety of indicators that suggested some easing in labor
increases or that consumers were becoming more sensi-
market conditions, including declining job vacancies, a
tive to price changes. Some participants observed that
lower quits rate, and a reduced ratio of job openings to
longer-term inflation expectations appeared to remain
unemployed workers. Some participants indicated that
well anchored, as reflected in a broad range of surveys
business contacts had reported less difficulty in hiring or
of households, businesses, and forecasters, as well as
retaining workers. Several participants noted that the
measures from financial markets.
better balance between labor supply and demand had
Participants expected that economic growth would slow contributed to an easing of nominal wage pressures.
from last year’s strong pace. With regard to the house- Nevertheless, some participants observed that portions
hold sector, participants noted that consumption spend- of the labor market, such as the health-care sector and
ing generally remained solid, although many commented in less urban areas, remained very tight. Most partici-
that recent readings on retail sales had been soft. Several pants noted that, during the past year, labor supply had
participants pointed to the strong labor market, ongoing been boosted by increased labor force participation as
wage gains, and a generally healthy household-sector bal- well as by immigration. Participants further commented
ance sheet as likely to continue to support consumption. that recent estimates of greater immigration in the past
Participants noted mixed reports about the pace of few years and an overall increase in labor supply could
help explain the strength in employment gains even as
 Minutes of the Meeting of March 19–20, 2024 Page 9
_____________________________________________________________________________________________

the unemployment rate had remained roughly flat and cycle, and almost all participants judged that it would be
wage pressures had eased. appropriate to move policy to a less restrictive stance at
some point this year if the economy evolved broadly as
Participants discussed the uncertainties around the eco-
they expected. In support of this view, they noted that
nomic outlook. Participants generally noted their uncer-
the disinflation process was continuing along a path that
tainty about the persistence of high inflation and ex-
was generally expected to be somewhat uneven. They
pressed the view that recent data had not increased their
also pointed to the Committee’s policy actions together
confidence that inflation was moving sustainably down
with the ongoing improvements in supply conditions as
to 2 percent. Some participants pointed to geopolitical
factors working to move supply and demand into better
risks that might result in more severe supply bottlenecks
balance. Participants noted indicators pointing to strong
or higher shipping costs that could put upward pressure
economic momentum and disappointing readings on in-
on prices, and observed that those developments could
flation in recent months and commented that they did
also weigh on economic growth. The possibility that ge-
not expect it would be appropriate to reduce the target
opolitical events or surges in domestic demand could
range for the federal funds rate until they had gained
generate increased energy prices was also seen as an up-
greater confidence that inflation was moving sustainably
side risk to inflation. Some participants noted the un-
toward 2 percent. Participants remarked that in consid-
certainties regarding the restrictiveness of financial con-
ering any adjustments to the target range for the federal
ditions and the associated risk that conditions were or
funds rate at future meetings, they would carefully assess
could become less restrictive than desired, which could
incoming data, the evolving outlook, and the balance of
add momentum to aggregate demand and put upward
risks. Participants noted the importance of continuing
pressure on inflation. Several participants commented
to communicate clearly the Committee’s data-dependent
that increased efficiencies and technological innovations
approach in formulating monetary policy and the strong
had the potential to raise productivity growth, which
commitment to achieve its dual-mandate objectives of
might allow the economy to grow faster without raising
maximum employment and price stability.
inflation. Participants also noted downside risks to eco-
nomic activity, including slowing economic growth in In discussing risk-management considerations that
China, a deterioration in conditions in domestic CRE could bear on the policy outlook, participants generally
markets, a potential reemergence of stresses in the bank- judged that risks to the achievement of the Committee’s
ing sector, or the possibility that a pickup in layoffs could employment and inflation goals were moving into better
result in a relatively rapid rise in unemployment. Many balance. They remarked that it was important to weigh
participants pointed to the difficulty in assessing how re- the risks of maintaining a restrictive stance for too long,
cent immigration trends would influence the evolution which could unduly weaken economic activity and em-
of labor supply, aggregate demand, and overall eco- ployment, against the risks of easing policy too quickly,
nomic activity. which could stall or even reverse progress in returning
inflation to the Committee’s 2 percent inflation objec-
In their consideration of monetary policy at this meeting,
tive. Regarding the latter risk, participants emphasized
all participants judged that, in light of current economic
the importance of carefully assessing incoming data to
conditions, the outlook for economic activity and infla-
judge whether inflation is moving down sustainably to
tion, and the balance of risks, it was appropriate to main-
2 percent. Participants noted various sources of uncer-
tain the target range for the federal funds rate at 5¼ to
tainty associated with their outlooks for economic activ-
5½ percent. Participants also agreed that it was appro-
ity, the labor market, and inflation, with some partici-
priate to continue the process of reducing the Federal
pants additionally mentioning uncertainty about the ex-
Reserve’s securities holdings, as described in the previ-
tent to which past monetary policy actions or the current
ously announced Plans for Reducing the Size of the Fed-
stance of policy would weigh further on aggregate de-
eral Reserve’s Balance Sheet. Participants commented
mand. Participants agreed, however, that monetary pol-
that maintaining the current target range for the federal
icy remained well positioned to respond to evolving eco-
funds rate at this meeting would support the Commit-
nomic conditions and risks to the outlook, including the
tee’s progress to return inflation to the 2 percent objec-
possibility of maintaining the current restrictive policy
tive and keep longer-term inflation expectations well an-
stance for longer should the disinflation process slow, or
chored.
reducing policy restraint in the event of an unexpected
In discussing the policy outlook, participants judged that weakening in labor market conditions.
the policy rate was likely at its peak for this tightening
Page 10 Federal Open Market Committee
_____________________________________________________________________________________________

Committee Policy Actions  Conduct standing overnight repurchase

In their discussions of monetary policy for this meeting, agreement operations with a minimum bid
members agreed that economic activity had been ex- rate of 5.5 percent and with an aggregate
panding at a solid pace. Job gains had remained strong, operation limit of $500 billion.
and the unemployment rate had remained low. Inflation
 Conduct standing overnight reverse repur-
had eased over the past year but remained elevated.
Members judged that the risks to achieving the Commit- chase agreement operations at an offering
tee’s employment and inflation goals were moving into rate of 5.3 percent and with a per-counter-
better balance. Members viewed the economic outlook party limit of $160 billion per day.
as uncertain and agreed that they remained highly atten-  Roll over at auction the amount of principal
tive to inflation risks. payments from the Federal Reserve’s hold-
In support of the Committee’s goals to achieve maxi- ings of Treasury securities maturing in each
mum employment and inflation at the rate of 2 percent calendar month that exceeds a cap of
over the longer run, members agreed to maintain the tar- $60 billion per month. Redeem Treasury
get range for the federal funds rate at 5¼ to 5½ percent. coupon securities up to this monthly cap
Members concurred that, in considering any adjustments and Treasury bills to the extent that coupon
to the target range for the federal funds rate, they would principal payments are less than the
carefully assess incoming data, the evolving outlook, and monthly cap.
the balance of risks. Members agreed that they did not  Reinvest into agency mortgage-backed se-
expect that it would be appropriate to reduce the target curities (MBS) the amount of principal pay-
range until they have gained greater confidence that in- ments from the Federal Reserve’s holdings
flation is moving sustainably toward 2 percent. In addi- of agency debt and agency MBS received in
tion, members agreed to continue to reduce the Federal each calendar month that exceeds a cap of
Reserve’s holdings of Treasury securities and agency $35 billion per month.
debt and agency MBS, as described in its previously an-
nounced plans. All members affirmed their strong com-  Allow modest deviations from stated
mitment to returning inflation to the Committee’s 2 per- amounts for reinvestments, if needed for
cent objective. operational reasons.

Members agreed that, in assessing the appropriate stance  Engage in dollar roll and coupon swap
of monetary policy, they would continue to monitor the transactions as necessary to facilitate settle-
implications of incoming information for the economic ment of the Federal Reserve’s agency MBS
outlook. They would be prepared to adjust the stance of transactions.”
monetary policy as appropriate if risks emerge that could The vote also encompassed approval of the statement
impede the attainment of the Committee’s goals. Mem- below for release at 2:00 p.m.:
bers also agreed that their assessments would take into
account a wide range of information, including readings “Recent indicators suggest that economic activ-
on labor market conditions, inflation pressures and in- ity has been expanding at a solid pace. Job gains
flation expectations, and financial and international de- have remained strong, and the unemployment
velopments. rate has remained low. Inflation has eased over
the past year but remains elevated.
At the conclusion of the discussion, the Committee
voted to direct the Federal Reserve Bank of New York, The Committee seeks to achieve maximum em-
until instructed otherwise, to execute transactions in the ployment and inflation at the rate of 2 percent
SOMA in accordance with the following domestic policy over the longer run. The Committee judges that
directive, for release at 2:00 p.m.: the risks to achieving its employment and infla-
tion goals are moving into better balance. The
“Effective March 21, 2024, the Federal Open economic outlook is uncertain, and the Com-
Market Committee directs the Desk to: mittee remains highly attentive to inflation risks.
 Undertake open market operations as nec- In support of its goals, the Committee decided
essary to maintain the federal funds rate in to maintain the target range for the federal
a target range of 5¼ to 5½ percent. funds rate at 5¼ to 5½ percent. In considering
 Minutes of the Meeting of March 19–20, 2024 Page 11
_____________________________________________________________________________________________

any adjustments to the target range for the fed- Consistent with the Committee’s decision to leave the
eral funds rate, the Committee will carefully as- target range for the federal funds rate unchanged, the
sess incoming data, the evolving outlook, and Board of Governors of the Federal Reserve System
the balance of risks. The Committee does not voted unanimously to maintain the interest rate paid on
expect it will be appropriate to reduce the target reserve balances at 5.4 percent, effective March 21, 2024.
range until it has gained greater confidence that The Board of Governors of the Federal Reserve System
inflation is moving sustainably toward 2 per- voted unanimously to approve the establishment of the
cent. In addition, the Committee will continue primary credit rate at the existing level of 5.5 percent, ef-
reducing its holdings of Treasury securities and fective March 21, 2024.
agency debt and agency mortgage-backed secu-
It was agreed that the next meeting of the Committee
rities, as described in its previously announced
would be held on Tuesday–Wednesday, April 30–
plans. The Committee is strongly committed to
May 1, 2024. The meeting adjourned at 9:55 a.m. on
returning inflation to its 2 percent objective.
March 20, 2024.
In assessing the appropriate stance of monetary
Notation Vote
policy, the Committee will continue to monitor
By notation vote completed on February 20, 2024, the
the implications of incoming information for
Committee unanimously approved the minutes of the
the economic outlook. The Committee would
Committee meeting held on January 30–31, 2024.
be prepared to adjust the stance of monetary
policy as appropriate if risks emerge that could
impede the attainment of the Committee’s
goals. The Committee’s assessments will take
into account a wide range of information, in- _______________________
cluding readings on labor market conditions, in- Joshua Gallin
flation pressures and inflation expectations, and Secretary
financial and international developments.”
Voting for this action: Jerome H. Powell, John C.
Williams, Thomas I. Barkin, Michael S. Barr, Raphael W.
Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C.
Daly, Philip N. Jefferson, Adriana D. Kugler, Loretta J.
Mester, and Christopher J. Waller.
Voting against this action: None.