By: Natalie Scott-Gray, Senior Metals Demand Analyst, EMEA and Asia region
Key Highlights from January FOMC Meeting
FOMC Statement
• Noted substantial decline in unemployment with solid job gains
• Supply and demand imbalances (plus reopening of economy) behind inflation
• Virus still key to the path of the economy
• It will “soon” be appropriate to raise the target range for federal funds (tapering to end in early March)
Press Conference
• Fed will adapt policy to evolving economic environment
• Economy showed “great strength and resilience in the face of ongoing pandemic” (alluding to a return of robust growth once Omicron cases drop off)
• “Over time there are good reasons to expect some further improvements in labour participation and employment”
• Fed attentive to risks that persistent real wage growth (in excess of productivity) could place on inflation
Q&A Answers
• No clear answer on front-loading of hikes
• Most FOMC members agree that labour market conditions are consistent with maximum employment in the sense that is consistent with price stability
• ” Significant reductions” in the balance sheet will be dealt with primarily by changes in the target rate, while the balance sheet should decline in a predictable manner, through the adjustment of re-investment
• When asked “how much passive run off equates to a quarter-point hike”? Advanced notice will be forthcoming (for actions towards balance sheet run off), with the programme running in the ‘background.’
JANUARY FOMC DOT-PLOT
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