For release 2:00 p.m. EDT March 16, 2022 Indicators of economic activity and employment continued to strengthen. Job creations have been strong in recent months and the unemployment rate has fallen considerably. Inflation remains elevated, reflecting pandemic-related supply and demand imbalances, rising energy prices and broader price pressures. Russia’s invasion of Ukraine is causing enormous human and economic hardship. The implications for the US economy are highly uncertain, but in the short term the invasion and related events are likely to create additional upward pressure on inflation and weigh on economic activity. The Committee seeks to achieve a maximum employment and inflation rate of 2% in the long term. With an appropriate firming of the monetary policy stance, the Committee expects inflation to return to its 2% target and the labor market to remain strong. In support of these objectives, the Committee has decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that continued increases in the target range will be appropriate. In addition, the Committee plans to begin reducing its holdings of Treasuries and agency debt and agency mortgage-backed securities at an upcoming meeting. In assessing the appropriate monetary policy stance, the Committee will continue to monitor the implications of new information on the economic outlook. The Committee would be ready to adjust the monetary policy stance, if necessary, if risks appear that could hinder the achievement of its objectives. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and inflation expectations, as well as financial and international developments. (more) For release 2:00 p.m. EDT March 16, 2022 -2- The votes for monetary policy action were Jerome H. Powell, Chairman; John C. Williams, Vice President; Michelle W. Bowman; Lael Brainard; Esther L. George; Patrick Harcker; Loretta J. Mester; and Christopher J. Waller. James Bullard voted against this action, preferring at this meeting to raise the target range for the federal funds rate by 0.5 percentage points to 1/2 to 3/4%. Patrick Harker voted as an alternate member at this meeting. -0- For release 2:00 p.m. EDT March 16, 2022 Decisions Regarding Monetary Policy Implementation The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its March 16, 2022 statement: • The Board of Governors of the Federal Reserve System voted unanimously to increase the rate of interest paid on reserve balances to 0.4%, effective March 17, 2022. • As part of its policy decision, the Federal Open Market Committee voted to authorize and direct the Open Market Bureau at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the account system open market operations in accordance with the following domestic policy directive: “Effective March 17, 2022, the Federal Open Market Committee directs the office to: o Engage in open market operations as necessary to maintain the federal funds rate ux within a target range of 1/4 to 1/2%. o Conduct overnight repurchase transactions with a minimum bid rate of 0.5% and an aggregate transaction limit of $500 billion; the aggregate operating limit may be temporarily increased at the discretion of the President. o Conduct overnight reverse repurchase transactions at an offer rate of 0.3% and with a limit per counterparty of $160 billion per day; the limit per counterparty may be temporarily increased at the discretion of the President. o Roll over at auction all principal payments of Federal Reserve holdings of Treasury securities and reinvest all principal payments of Federal Reserve holdings of agency debt and mortgage-backed securities (MBS) from agency in agency MBS. o Allow modest deviations from the amounts shown for reinvestments, if necessary for operational reasons. o Engage in dollar rollovers and coupon swaps as necessary to facilitate the settlement of Federal Reserve agency MBS transactions.” • In a related action, the Federal Reserve Board of Governors voted unanimously to approve an increase in the primary credit rate to 0.5%, effective March 17, 2022. In taking this action, the Board approved requests for establishment of this rate submitted by boards of Directors of the Federal Reserve Banks of Boston, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City and San Francisco.(more) For release 2 p.m. EDT March 16, 2022 -2- These information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding the details of the Federal Reserve’s operational tools and approach used to implement monetary policy. the Bank of New York