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Page 1

Minutes of the Federal Open Market Committee

April 30–May 1, 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
Alyssa Arute, 2 Manager, Division of Reserve Bank
on Tuesday, April 30, 2024, at 10:00 a.m. and continued
Operations and Payment Systems, Board
on Wednesday, May 1, 2024, at 9:00 a.m. 1
Ayelen Banegas, Principal Economist, Division of
Attendance
Monetary Affairs, Board
Jerome H. Powell, Chair
John C. Williams, Vice Chair Becky C. Bareford, First Vice President, Federal
Thomas I. Barkin Reserve Bank of Richmond
Michael S. Barr
Penelope A. Beattie,3 Section Chief, Office of the
Raphael W. Bostic
Secretary, Board
Michelle W. Bowman
Lisa D. Cook Carol C. Bertaut, Senior Adviser, Division of
Mary C. Daly International Finance, Board
Philip N. Jefferson David Bowman, Senior Associate Director, Division of
Adriana D. Kugler Monetary Affairs, Board
Loretta J. Mester
Christopher J. Waller Marco Cipriani, Research Department Head, Federal
Reserve Bank of New York
Susan M. Collins, Austan D. Goolsbee, Alberto G.
Musalem, Jeffrey R. Schmid, and Sushmita Shukla, Todd E. Clark, Senior Vice President, Federal Reserve
Alternate Members of the Committee Bank of Cleveland
Patrick Harker, Neel Kashkari, and Lorie K. Logan, Juan C. Climent, Special Adviser to the Board, Division
Presidents of the Federal Reserve Banks of of Board Members, Board
Philadelphia, Minneapolis, and Dallas, respectively Daniel M. Covitz, Deputy Director, Division of
Joshua Gallin, Secretary Research and Statistics, Board
Matthew M. Luecke, Deputy Secretary Stephanie E. Curcuru, Deputy Director, Division of
Brian J. Bonis, Assistant Secretary International Finance, Board
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel Ryan Decker, Special Adviser to the Board, Division of
Richard Ostrander, Deputy General Counsel Board Members, Board
Trevor A. Reeve, Economist Wendy E. Dunn, Adviser, Division of Research and
Stacey Tevlin, Economist Statistics, Board
Beth Anne Wilson, Economist
Rochelle M. Edge, Deputy Director, Division of
Shaghil Ahmed, James A. Clouse, Brian M. Doyle, Monetary Affairs, Board
William Wascher, and Alexander L. Wolman,
Associate Economists Eric C. Engstrom, Associate Director, Division of
Monetary Affairs, Board
Roberto Perli, Manager, System Open Market Account
Charles A. Fleischman, Senior Adviser, Division of
Julie Ann Remache, Deputy Manager, System Open Research and Statistics, Board
Market Account

1 The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-
“FOMC” and the “Committee” in these minutes; the Board cial markets and open market operations.
of Governors of the Federal Reserve System is referenced as 3 Attended through the discussion of the economic and finan-

the “Board” in these minutes. cial situation.

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Page 2 Federal Open Market Committee

Jenn Gallagher, Assistant to the Board, Division of Makoto Nakajima, Vice President, Federal Reserve
Board Members, Board Bank of Philadelphia
Peter M. Garavuso, Lead Information Manager, Michelle M. Neal, Head of Markets, Federal Reserve
Division of Monetary Affairs, Board Bank of New York
Carlos Garriga, Senior Vice President, Federal Reserve Anna Paulson, Executive Vice President, Federal
Bank of St. Louis Reserve Bank of Chicago
Michael S. Gibson, Director, Division of Supervision Eugenio P. Pinto, Special Adviser to the Board,
and Regulation, Board Division of Board Members, Board
Joseph W. Gruber, Executive Vice President, Federal Odelle Quisumbing,3 Assistant to the Secretary, Office
Reserve Bank of Kansas City of the Secretary, Board
Valerie S. Hinojosa, Section Chief, Division of Andrea Raffo, Senior Vice President, Federal Reserve
Monetary Affairs, Board Bank of Minneapolis
Jane E. Ihrig, Special Adviser to the Board, Division of Samuel Schulhofer-Wohl, Senior Vice President,
Board Members, Board Federal Reserve Bank of Dallas
Benjamin K. Johannsen, Assistant Director, Division Zeynep Senyuz, Deputy Associate Director, Division
of Monetary Affairs, Board of Monetary Affairs, Board
Michael T. Kiley, Deputy Director, Division of Mark Spiegel, Senior Policy Advisor, Federal Reserve
Financial Stability, Board Bank of San Francisco
Don H. Kim,2 Senior Adviser, Division of Monetary John J. Stevens, Senior Associate Director, Division of
Affairs, Board Research and Statistics, Board
Andreas Lehnert, Director, Division of Financial Balint Szoke, 4 Senior Economist, Division of Monetary
Stability, Board Affairs, Board
Kurt F. Lewis, Special Adviser to the Chair, Division of Yannick Timmer, Senior Economist, Division of
Board Members, Board Monetary Affairs, Board
Dan Li, Assistant Director, Division of Monetary Clara Vega, Special Adviser to the Board, Division of
Affairs, Board Board Members, Board
Laura Lipscomb, Special Adviser to the Board, Annette Vissing-Jørgensen, Senior Adviser, Division of
Division of Board Members, Board Monetary Affairs, Board
David López-Salido, Senior Associate Director, Jeffrey D. Walker,2 Associate Director, Division of
Division of Monetary Affairs, Board Reserve Bank Operations and Payment Systems,
Board
Joshua S. Louria, Group Manager, Division of
Monetary Affairs, Board Jonathan Willis, Vice President, Federal Reserve Bank
of Atlanta
Benjamin W. McDonough, Deputy Secretary and
Ombudsman, Office of the Secretary, Board Paul R. Wood, Special Adviser to the Board, Division
of Board Members, Board
Ann E. Misback, Secretary, Office of the Secretary,
Board Egon Zakrajsek, Executive Vice President, Federal
Reserve Bank of Boston
Raven Molloy, Deputy Associate Director, Division of
Research and Statistics, Board Rebecca Zarutskie, Special Adviser to the Board,
Division of Board Members, Board
Norman J. Morin, Associate Director, Division of
Research and Statistics, Board

4 Attended Tuesday’s session only.

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Minutes of the Meeting of April 30–May 1, 2024 Page 3

Developments in Financial Markets and Open slowdown in the pace of runoff was not likely to trans-
Market Operations late to a higher terminal size of the portfolio.
The manager turned first to a review of developments in
The manager then turned to money markets and Desk
financial markets. Domestic data releases over the inter-
operations. Unsecured overnight rates were stable over
meeting period pointed to inflation being more persis-
the intermeeting period. In secured funding markets,
tent than previously expected and to a generally resilient
rates on overnight repurchase agreements firmed some-
economy. Policy expectations shifted materially in re-
what over the March quarter-end reporting date, in line
sponse. The policy rate path derived from futures prices
with recent history. Market participants generally re-
implied fewer than two 25 basis point rate cuts by year-
ported that the return of somewhat higher rates around
end. The modal path based on options prices was quite
reporting dates had not been associated with any issues
flat, suggesting at most one such rate cut in 2024. The
in market functioning. Despite the ongoing balance
median of the modal paths of the federal funds rate ob-
sheet runoff, take-up at the overnight reverse repurchase
tained from the Open Market Desk’s Survey of Primary
agreement (ON RRP) facility was largely steady over the
Dealers and Survey of Market Participants also indicated
period, likely reflecting fewer attractive private-market
fewer cuts this year than previously thought. Respond-
alternatives for money market funds (MMFs) amid a re-
ents’ baseline expectations for the timing of the first rate
cent reduction in Treasury bills outstanding as well as a
cut—which had been concentrated around June in the
decrease in MMFs’ weighted average maturities.
March surveys—shifted out significantly and became
ON RRP usage was also likely supported by typical
more diffuse.
month-end dynamics. The staff and respondents to the
Treasury yields rose materially over the intermeeting pe- Desk’s Survey of Primary Dealers expected ON RRP
riod. At shorter maturities, the increase appeared to take-up to decline in coming months.
largely reflect higher inflation compensation, while at
The manager provided an update on reserve conditions.
longer maturities, it was attributable mostly to a higher
Over the intermeeting period, the federal funds market
expected path for the real policy rate and higher real risk
continued to be insensitive to day-to-day changes in the
premiums. Model estimates suggested that inflation ex-
supply of reserves and suggested that reserves remained
pectations rose some, but mostly at shorter horizons.
abundant. The manager discussed various other indica-
Longer-term inflation expectations appeared to remain
tors that supported the same conclusion.
well anchored. Broad equity prices fell over the period,
as higher interest rates weighed on valuations, while re- The Committee voted unanimously to renew the recip-
cent earnings reports, which were generally solid, pro- rocal currency arrangements with the Bank of Canada
vided some support. The dollar strengthened as several and the Bank of Mexico; these arrangements are associ-
foreign central banks were expected to start easing policy ated with the Federal Reserve’s participation in the
before the Federal Reserve. Overall, higher yields and North American Framework Agreement of 1994. In ad-
lower equity prices, together with the stronger dollar, re- dition, the Committee voted unanimously to renew the
sulted in a tightening of financial conditions over the pe- dollar and foreign currency liquidity swap arrangements
riod. with the Bank of Canada, the Bank of England, the Bank
of Japan, the European Central Bank, and the Swiss Na-
The manager then discussed expectations regarding bal-
tional Bank. The votes to renew the Federal Reserve’s
ance sheet policy. Respondents to the Desk surveys ex-
participation in these standing arrangements occur an-
pected a slowing in the pace of balance sheet reduction
nually at the April or May FOMC meeting.
to begin soon; the median respondent projected that the
slowdown would start in June, one month earlier than in By unanimous vote, the Committee ratified the Desk’s
the March surveys. The average probability distribution domestic transactions over the intermeeting period.
of the size of the System Open Market Account There were no intervention operations in foreign curren-
(SOMA) portfolio at the end of runoff had become a bit cies for the System’s account during the intermeeting pe-
more concentrated, and its probability-weighted mean riod.
was slightly lower than in the March surveys. Overall,
Staff Review of the Economic Situation
the survey results suggested that respondents’ expecta-
The information available at the time of the April 30–
tions for a slowdown of balance sheet runoff had been
May 1 meeting indicated that growth in U.S. real gross
decoupled from expectations about the timing and ex-
domestic product (GDP) stepped down in the first quar-
tent of rate cuts, and that respondents understood that a
ter of 2024 from the robust pace seen over the second
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Page 4 Federal Open Market Committee

half of 2023. Labor market conditions remained strong. Foreign GDP growth is estimated to have picked up in
Consumer price inflation—as measured by the the first quarter from its subdued pace in the previous
12-month change in the price index for personal con- quarter. In Europe, economic activity resumed expand-
sumption expenditures (PCE)—slowed significantly ing following modest contractions in several economies
over the past year but had moved up slightly in recent amid monetary policy restraint and the repercussions of
months and remained above 2 percent. the 2022 energy shock. Growth stepped up in China,
led by strong exports, but property-sector indicators re-
Labor demand and supply continued to move into better
mained weak. Elsewhere in emerging Asia, exports re-
balance, though the speed of this realignment appeared
bounded further from last year’s lows, lifted by robust
to have slowed in recent months. Total nonfarm payroll
global demand for high-tech goods.
employment increased at a faster average monthly pace
in the first quarter of 2024 than in the fourth quarter of Headline inflation eased modestly further in the ad-
2023. The unemployment rate ticked down to 3.8 per- vanced foreign economies (AFEs) in the first quarter,
cent in March, while the labor force participation rate but inched up in the emerging market economies in part
and the employment-to-population ratio both moved up because of food price pressure caused by adverse
0.2 percentage point. The unemployment rate for Afri- weather in some countries. Most major AFE central
can Americans increased, and the rate for Hispanics banks kept their policy rates unchanged over the inter-
moved down; both rates were higher than those for meeting period, and some reiterated that policy rate cuts
Asians and for Whites. The 12-month changes in the could be appropriate at coming meetings.
employment cost index (ECI) and average hourly earn-
Staff Review of the Financial Situation
ings for all employees both declined in March relative to
Over the intermeeting period, the market-implied path
a year earlier, but the 3-month change in the ECI
for the federal funds rate through 2024 increased mark-
stepped up noticeably from the average pace that pre-
edly, and federal funds futures rates suggested that mar-
vailed over the second half of 2023.
ket participants were placing lower odds on significant
Regarding consumer price inflation, total PCE prices in- policy easing in 2024 than they did just before the March
creased 2.7 percent over the 12 months ending in March, FOMC meeting. Consistent with the rise in the implied
while core PCE price inflation—which excludes changes policy path, nominal Treasury yields at all maturities also
in energy prices and many consumer food prices—was rose substantially as investors appeared to reassess the
2.8 percent over the same period. Both inflation persistence of inflation and the implications for mone-
measures were considerably lower than their year-earlier tary policy. Market-based measures of interest rate un-
levels but had surprised to the upside. Although some certainty remained elevated by historical standards.
measures of short-term inflation expectations had
Broad stock price indexes declined moderately, on net,
moved up, longer-term expectations were little changed
over the intermeeting period. Yield spreads on invest-
and stood at levels consistent with those that prevailed
ment-grade corporate bonds were about unchanged, and
before the pandemic.
those on speculative-grade corporate bonds increased
According to the advance estimate, real GDP rose mod- moderately. The one-month option-implied volatility on
estly in the first quarter. However, private domestic final the S&P 500 increased significantly over the period, ap-
purchases (PDFP)—which comprises PCE and private parently reflecting rising geopolitical tensions, but re-
fixed investment and which often provides a better sig- mained at moderate levels by historical standards.
nal than GDP of underlying economic momentum—
Over the intermeeting period, incoming foreign eco-
posted an increase that was similar to the solid gains seen
nomic data and central bank communications were
over the second half of 2023.
largely consistent with market participants’ expectations
Real exports of goods and services grew at a tepid pace that most AFE central banks will lower policy rates at
overall in the first quarter, with gains in exports of foods, coming meetings. Nonetheless, AFE sovereign bond
consumer goods, and capital goods being mostly offset yields rose, primarily reflecting spillovers from higher
by declines in exports of industrial supplies. By contrast, U.S. yields. Wider U.S.–AFE yield differentials and, to
real imports rose at a brisk pace, boosted in part by a a lesser extent, heightened geopolitical tensions in the
large increase in imports of capital goods. All told, net Middle East contributed to a moderate increase in the
exports made a significant negative contribution to broad dollar index. Though geopolitical tensions
U.S. GDP growth in the first quarter. weighed on risk sentiment at times, prices of foreign
risky assets were little changed on balance.
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Minutes of the Meeting of April 30–May 1, 2024 Page 5

Conditions in U.S. short-term funding markets remained in the SLOOS that they tightened lending standards on
stable over the intermeeting period, with typical dynam- auto loans in the first quarter.
ics observed surrounding quarter-end. Usage of the
Although credit quality for household loans remained
ON RRP facility leveled off during the first few weeks
solid, on balance, delinquency rates for credit cards and
of the period, primarily reflecting MMFs slowing their
auto loans in the fourth quarter remained notably above
re-allocation into Treasury bills.
their levels just before the pandemic. For residential
In domestic credit markets, borrowing costs generally mortgages, delinquency rates across loan types were
rose somewhat over the intermeeting period from al- largely unchanged in February. The credit quality of
ready elevated levels. Rates on 30-year conforming res- nonfinancial firms borrowing in the corporate bond and
idential mortgages increased and remained near recent leveraged loan markets remained stable overall. The av-
high levels. In contrast, interest rates on new credit card erage delinquency rate for loans in CMBS pools ticked
offers edged down in February. Interest rates on small down in March but remained at elevated levels. Mean-
business loans increased in March and remained at ele- while, the share of nonperforming CRE loans at
vated levels. Meanwhile, price terms for commercial and banks—defined as loans past due 90 days or in nonac-
industrial (C&I) loans were little changed, on net, in the crual status—rose further through March, especially for
first quarter of 2024 after several quarters of tightening. loans secured by office buildings.
Yields rose on a broad array of fixed-income securities,
The staff provided an update on its assessment of the
including commercial mortgage-backed securities
stability of the U.S. financial system. On balance, the
(CMBS), investment- and speculative-grade corporate
staff continued to characterize the system’s financial vul-
bonds, and residential mortgage-backed securities.
nerabilities as notable but raised the assessment of vul-
Financing through capital markets and nonbank lenders nerabilities in asset valuations to elevated, as valuations
was readily accessible for public corporations and large across a range of markets appeared high relative to risk-
and middle-market private corporations, and credit adjusted cash flows. House prices remained elevated rel-
availability for leveraged loan borrowers appeared to im- ative to fundamentals such as rents and Treasury yields,
prove further over the intermeeting period. For small though the fraction of mortgage borrowers with small
firms, the volume of loan originations ticked up in Feb- equity positions remained low. CRE prices continued to
ruary despite the tightening of credit standards. Mean- decline, especially in the multifamily and office sectors,
while, C&I loan balances declined in the first quarter, in and vacancy rates in these sectors remained elevated.
line with the cumulative tightening in standards over the Vulnerabilities associated with business and household
past two years. In the April Senior Loan Officer Opin- debt were characterized as moderate. Nonfinancial busi-
ion Survey on Bank Lending Practices (SLOOS), large ness leverage was high, but the ability of firms to service
banks kept standards and most lending terms for their debt remained solid, partly due to robust earnings.
C&I loans unchanged, on net, while smaller banks con-
Leverage in the financial sector was characterized as no-
tinued to tighten standards and terms on net.
table. Regulatory capital ratios in the banking sector re-
Banks reported tightening standards further in the April mained high. However, the fair value of bank assets was
SLOOS for all loan categories of commercial real estate estimated to have fallen further in the first quarter, re-
(CRE) loans. The growth of bank CRE loan balances flecting the substantial duration risk on bank balance
slowed notably over the past year, reflecting the tighten- sheets. For the nonbank sector, the prevalence of the
ing of credit standards over this period, though growth basis trade by hedge funds appeared to have declined
of CRE loan balances picked up modestly in the first from its peak but remained elevated by historical stand-
quarter. ards.
Credit remained available for most consumers, despite Funding risks were also characterized as notable. Assets
some signs of recent tightening. For residential real es- in prime MMFs and other cash management vehicles
tate borrowers, conforming and government-backed continued to grow steadily. The staff assessed that the
loans remained generally available. Credit card balances financial stability risks associated with the fast-growing
continued to grow at a robust pace, though a significant private credit sector were limited so far because of the
net share of SLOOS respondents indicated that lending modest leverage used by private debt funds and business
standards for credit cards tightened further in the first development companies and the limited maturity mis-
quarter. Growth in auto lending moderated in January match present in their funding vehicles. However, the
and February, and a modest net share of banks reported staff also noted the growing connections between
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Page 6 Federal Open Market Committee

private credit and the banking sector, the growth of past year. A few participants remarked that unusually
some forms of private credit, and the fact that the private large seasonal patterns could have contributed to Janu-
credit market has yet to experience a severe credit down- ary’s large increase in PCE inflation, and several partici-
turn. pants noted that some components that typically display
volatile price changes had boosted recent readings.
Staff Economic Outlook
However, some participants emphasized that the recent
The economic forecast prepared by the staff for the
increases in inflation had been relatively broad based and
April–May meeting was similar to the March projection.
therefore should not be overly discounted.
The economy was expected to maintain its high rate of
resource utilization over the next few years, with pro- Participants generally commented that they remained
jected output growth roughly similar to the staff’s esti- highly attentive to inflation risks. They also remained
mate of potential growth. The unemployment rate was concerned that elevated inflation continued to harm the
expected to edge down slightly over 2024 as labor mar- purchasing power of households, especially those least
ket functioning improved further, and to remain roughly able to meet the higher costs of essentials like food,
steady thereafter. housing, and transportation.
Total and core PCE price inflation were both projected Participants noted that they continued to expect that in-
to move lower this year relative to last year, though the flation would return to 2 percent over the medium term.
expected pace of disinflation was slower than in the However, recent data had not increased their confidence
March projection, as incoming data pointed to more per- in progress toward 2 percent and, accordingly, had sug-
sistence in inflation in coming months. Inflation was gested that the disinflation process would likely take
expected to decline further beyond this year as demand longer than previously thought. Participants discussed
and supply in product and labor markets continued to several factors that, in conjunction with appropriately re-
move into better balance; by 2026, total and core PCE strictive monetary policy, could support the return of in-
price inflation were expected to be close to 2 percent. flation to the Committee’s goal over time. One was a
further reduction in housing services price inflation as
The staff continued to view the uncertainty around the
lower readings for rent growth on new leases continued
baseline projection as close to the average over the past
to pass through to this category of inflation. However,
20 years. Risks to the inflation forecast were seen as
many participants commented that the pass-through
tilted to the upside, reflecting the possibility that supply-
would likely take place only gradually or noted that a re-
side disruptions or unexpectedly persistent inflation dy-
acceleration of market rents could reduce the effect.
namics could materialize. The risks around the forecast
Several participants stated that core nonhousing services
for economic activity were seen as skewed to the down-
price inflation could resume its decline as wage growth
side on the grounds that more-persistent inflation could
slows further with labor demand and supply moving into
result in tighter financial conditions than in the staff’s
better balance, aided by higher labor force participation
baseline projection; in addition, deteriorating household
and strong immigration flows. In addition, many partic-
financial positions, especially for lower-income house-
ipants commented that ongoing increases in productivity
holds, might prove to be a larger drag on activity than
growth would support disinflation if sustained, though
the staff anticipated.
the outlook for productivity growth was regarded as un-
Participants’ Views on Current Conditions and the certain. Several participants said that business contacts
Economic Outlook in their Districts reported increased difficulty in raising
Participants observed that while inflation had eased over their output prices, while a few participants reported a
the past year, in recent months there had been a lack of continued ability of firms in their Districts to pass on
further progress toward the Committee’s 2 percent ob- higher costs to consumers. Although some measures of
jective. The recent monthly data had showed significant short-term inflation expectations from surveys of con-
increases in components of both goods and services sumers had increased in recent months, medium- and
price inflation. In particular, inflation for core services longer-term measures of expected inflation had re-
excluding housing had moved up in the first quarter mained well anchored, which was seen as crucial for
compared with the fourth quarter of last year, and prices meeting the Committee’s inflation goal on a sustained
of core goods posted their first three-month increase in basis. While supply chain improvements had supported
several months. In addition, housing services inflation disinflation for goods prices over the previous year, par-
had slowed less than had been anticipated based on the ticipants commented that an expected more gradual
smaller increases in measures of market rents over the pace of such improvements could slow progress on
_____________________________________________________________________________________________
Minutes of the Meeting of April 30–May 1, 2024 Page 7

inflation. Several participants commented that growth economic activity by boosting labor supply and contrib-
of aggregate demand would likely have to slow from its uting to aggregate demand. Participants noted the im-
strong pace in recent quarters for inflation to move sus- portant influence of productivity growth for the eco-
tainably toward the Committee’s goal. nomic outlook. Some participants suggested that the re-
cent increase in productivity growth might not persist
Participants assessed that demand and supply in the la-
because it reflected one-time adjustments to the level of
bor market, on net, were continuing to come into better
productivity or reflected continued elevated volatility in
balance, though at a slower rate. Nevertheless, they saw
the data over the past several years. A few participants
conditions as having generally remained tight amid re-
commented that higher productivity growth might be
cent strong payroll growth and a still-low unemployment
sustained by the incorporation of technologies such as
rate. Participants cited a variety of indicators that sug-
artificial intelligence into existing business operations or
gested some easing in labor market tightness, including
by high rates of new business formation in the technol-
declining job vacancies, a lower quits rate, and a reduced
ogy sector.
ratio of job openings to unemployed workers. Some
participants indicated that business contacts had re- In their discussion of the outlook for the household sec-
ported less difficulty in hiring or retaining workers, al- tor, participants observed that consumer spending re-
though contacts in several Districts continued to report mained firm in the first quarter, supported by low unem-
tight labor conditions, especially in the health care and ployment and solid income growth. A number of par-
construction sectors. Many participants commented ticipants judged that consumption growth was likely to
that the better balance between labor demand and sup- moderate this year, as growth in labor income was ex-
ply had contributed to an easing of nominal wage pres- pected to slow and the financial positions of many
sures. Even so, a number of participants noted that some households were expected to weaken. Many participants
measures of labor cost growth, including the ECI, had noted signs that the finances of low- and moderate-in-
not eased in recent months, and a couple of participants come households were increasingly coming under pres-
remarked that negotiated compensation agreements had sure, which these participants saw as a downside risk to
added to wage pressures in their Districts. Many partic- the outlook for consumption. They pointed to increased
ipants noted that, during the past year, labor supply had usage of credit cards and buy-now-pay-later services, as
been boosted by increased labor force participation rates well as increased delinquency rates for some types of
as well as by immigration. Participants further com- consumer loans. In addition, elevated housing costs
mented that recent estimates of greater immigration in were adding to financial strains for lower-income house-
the past few years and an overall increase in labor supply holds. A couple of participants noted that financial con-
could help explain the strength in employment gains ditions appeared favorable for wealthier households,
even as the unemployment rate had remained roughly which account for a large portion of aggregate consump-
flat and wage pressures had eased. tion, with hefty wealth gains resulting from recent equity
and house price increases.
Participants noted that recent indicators suggested that
economic activity had continued to expand at a solid Business contacts in many Districts reported a steady or
pace. Real GDP growth in the first quarter had moder- stable pace of economic activity, while contacts in a cou-
ated relative to the second half of last year, but ple of Districts conveyed increased optimism about the
PDFP growth maintained a strong pace. High interest outlook. A few participants noted that government
rates appeared to weigh on consumer durables purchases spending was supporting business expansion in their
in the first quarter, and growth of business fixed invest- Districts. Consistent with a solid outlook for businesses,
ment remained modest. Despite the high interest rates, a couple of participants noted that their contacts had re-
residential investment grew more strongly in the first ported increased investment in technology or in business
quarter than its modest pace in the second half of last process improvements that were enhancing productive
year. capacity. Regarding the agricultural sector, a couple of
participants noted that lower commodity prices were
Although recent PDFP data suggested continued strong
weighing on farm incomes.
economic momentum, participants generally did not in-
terpret the data as indicating a further acceleration of ac- Participants discussed the risks and uncertainties around
tivity and expected that GDP growth would slow from the economic outlook. They generally noted their un-
last year’s strong pace. A number of participants com- certainty about the persistence of inflation and agreed
mented that high rates of immigration could support that recent data had not increased their confidence that
_____________________________________________________________________________________________
Page 8 Federal Open Market Committee

inflation was moving sustainably toward 2 percent. assessed that maintaining the current target range for the
Some participants pointed to geopolitical events or other federal funds rate at this meeting was supported by in-
factors resulting in more severe supply bottlenecks or termeeting data indicating continued solid economic
higher shipping costs, which could put upward pressure growth and a lack of further progress toward the Com-
on prices and weigh on economic growth. The possibil- mittee’s 2 percent inflation objective in recent months.
ity that geopolitical events could generate commodity
Participants also discussed the process of reducing the
price increases was also seen as an upside risk to infla-
Federal Reserve’s securities holdings. Participants
tion. A number of participants noted uncertainty regard-
judged that balance sheet reduction had proceeded
ing the degree of restrictiveness of current financial con-
smoothly. Almost all participants expressed support for
ditions and the associated risk that such conditions were
the decision to begin to slow the pace of decline of the
insufficiently restrictive on aggregate demand and infla-
Federal Reserve’s securities holdings in June by reducing
tion. Several participants commented that increased ef-
the monthly redemption cap on Treasury securities from
ficiencies and technological innovations could raise
$60 billion to $25 billion, maintaining the monthly re-
productivity growth on a sustained basis, which might
demption cap on agency debt and agency mort-
allow the economy to grow faster without raising infla-
tion. Participants also noted downside risks to economic gage‑backed securities (MBS) at $35 billion, and rein-
activity, including slowing economic growth in China, a vesting any principal payments in excess of the $35 bil-
deterioration in conditions in domestic CRE markets, or lion cap into Treasury securities. A few participants in-
a sharp tightening in financial conditions. dicated that they could have supported a continuation of
the current pace of balance sheet runoff at this time or a
In their discussion of financial stability, participants who slightly higher redemption cap on Treasury securities
commented noted vulnerabilities to the financial system than was decided upon. Various participants empha-
that they assessed warranted monitoring. Participants sized that the decision to slow the pace of runoff does
discussed a range of risks emanating from the banking not have implications for the stance of monetary policy.
sector, including unrealized losses on assets resulting Several participants also emphasized that slowing the
from the rise in longer-term yields, high CRE exposure, pace of balance sheet runoff did not mean that the bal-
significant reliance by some banks on uninsured depos- ance sheet would ultimately shrink by less than it would
its, cyber threats, or increased financial interconnections otherwise. Some participants commented that slowing
among banks. Several participants commented on the the pace of balance sheet runoff would help facilitate a
rapid growth of private credit markets, noting that such smooth transition from abundant to ample reserve bal-
developments should be monitored because the sector ances by reducing the likelihood that money markets ex-
was becoming more interconnected with other parts of perience undue stress that could require an early end to
the financial system and that some associated risks may runoff. Participants generally assessed that it would be
not yet be apparent. A few participants also commented important to continue to monitor indicators of reserve
on the importance of measures aimed at increasing resil- conditions as balance sheet runoff continued. In addi-
ience in the Treasury market, such as central clearing, or tion, a few participants commented that the existing re-
on potential vulnerabilities posed by leveraged investors demption cap on agency debt and agency MBS was un-
in the Treasury market. A couple of participants com- likely to bind at any point over the coming years, but the
mented that the Federal Reserve should continue to im- decision to reinvest any principal payments above that
prove the operational efficiency of the discount window. cap into Treasury securities was consistent with the
Participants generally noted that high interest rates could Committee’s longer-run intention to hold a portfolio
contribute to vulnerabilities in the financial system. In that consists primarily of Treasury securities. A couple
that context, a number of participants emphasized that of participants commented that it would be useful to
monetary policy should be guided by the outlook for em- begin discussions regarding the appropriate longer-run
ployment and inflation and that other tools should be maturity composition of the SOMA portfolio.
the primary means to address financial stability risks.
In discussing the policy outlook, participants remarked
In their consideration of monetary policy at this meeting, that the future path of the policy rate would depend on
all participants judged that, in light of current economic incoming data, the evolving outlook, and the balance of
conditions and their implications for the outlook for em- risks. Many participants commented that the public ap-
ployment and inflation, as well as the balance of risks, it peared to have a good understanding of the Committee’s
was appropriate to maintain the target range for the fed- data-dependent approach in formulating monetary pol-
eral funds rate at 5¼ to 5½ percent. Participants icy and its commitment to achieving its dual-mandate
_____________________________________________________________________________________________
Minutes of the Meeting of April 30–May 1, 2024 Page 9

goals of maximum employment and price stability. Var- over the longer run, members agreed to maintain the tar-
ious participants also emphasized the importance of get range for the federal funds rate at 5¼ to 5½ percent.
continuing to communicate this message. Participants Members concurred that, in considering any adjustments
noted disappointing readings on inflation over the first to the target range for the federal funds rate, they would
quarter and indicators pointing to strong economic mo- carefully assess incoming data, the evolving outlook, and
mentum, and assessed that it would take longer than pre- the balance of risks. Members agreed that they did not
viously anticipated for them to gain greater confidence expect that it would be appropriate to reduce the target
that inflation was moving sustainably toward 2 percent. range until they have gained greater confidence that in-
flation is moving sustainably toward 2 percent. In addi-
In discussing risk-management considerations that
tion, members agreed to continue to reduce the Federal
could bear on the policy outlook, participants generally
Reserve’s holdings of Treasury securities and agency
assessed that risks to the achievement of the Commit-
debt and agency MBS. Members decided that, beginning
tee’s employment and inflation goals had moved toward
in June, the Committee would slow the pace of decline
better balance over the past year. Participants remained
of its securities holdings by reducing the monthly re-
highly attentive to inflation risks and noted the uncer-
demption cap on Treasury securities from $60 billion to
tainty associated with the economic outlook. Although
$25 billion. In addition, members decided that the Com-
monetary policy was seen as restrictive, many partici-
mittee would maintain the monthly redemption cap on
pants commented on their uncertainty about the degree
agency debt and agency MBS at $35 billion and, begin-
of restrictiveness. These participants saw this uncer-
ning in June, would reinvest any principal payments in
tainty as coming from the possibility that high interest
excess of this cap into Treasury securities. All members
rates may be having smaller effects than in the past, that
affirmed their strong commitment to returning inflation
longer-run equilibrium interest rates may be higher than
to the Committee’s 2 percent objective.
previously thought, or that the level of potential output
may be lower than estimated. Participants assessed, Members agreed that, in assessing the appropriate stance
however, that monetary policy remained well positioned of monetary policy, they would continue to monitor the
to respond to evolving economic conditions and risks to implications of incoming information for the economic
the outlook. Participants discussed maintaining the cur- outlook. They would be prepared to adjust the stance of
rent restrictive policy stance for longer should inflation monetary policy as appropriate if risks emerged that
not show signs of moving sustainably toward 2 percent could impede the attainment of the Committee’s goals.
or reducing policy restraint in the event of an unexpected Members also agreed that their assessments would take
weakening in labor market conditions. Various partici- into account a wide range of information, including
pants mentioned a willingness to tighten policy further readings on labor market conditions, inflation pressures
should risks to inflation materialize in a way that such an and inflation expectations, and financial and interna-
action became appropriate. tional developments.
Committee Policy Actions At the conclusion of the discussion, the Committee
In their discussions of monetary policy for this meeting, voted to direct the Federal Reserve Bank of New York,
members agreed that economic activity continued to ex- until instructed otherwise, to execute transactions in the
pand at a solid pace. Job gains remained strong, and the SOMA in accordance with the following domestic policy
unemployment rate remained low. Inflation eased over directive, for release at 2:00 p.m.:
the past year but remained elevated. Members also con-
“Effective May 2, 2024, the Federal Open Mar-
curred that, in recent months, there was a lack of further
ket Committee directs the Desk to:
progress toward the Committee’s 2 percent inflation ob-
jective and agreed to acknowledge this development in • Undertake open market operations as nec-
the postmeeting statement. Members judged that the essary to maintain the federal funds rate in
risks to achieving the Committee’s employment and in- a target range of 5¼ to 5½ percent.
flation goals had moved toward better balance over the
past year. Members viewed the economic outlook as un- • Conduct standing overnight repurchase
certain and agreed that they remained highly attentive to agreement operations with a minimum bid
inflation risks. rate of 5.5 percent and with an aggregate
operation limit of $500 billion.
In support of the Committee’s goals to achieve maxi-
mum employment and inflation at the rate of 2 percent • Conduct standing overnight reverse repur-
chase agreement operations at an offering
_____________________________________________________________________________________________
Page 10 Federal Open Market Committee

rate of 5.3 percent and with a per-counter- the risks to achieving its employment and infla-
party limit of $160 billion per day. tion goals have moved toward better balance
over the past year. The economic outlook is un-
• Roll over at auction the amount of principal certain, and the Committee remains highly at-
payments from the Federal Reserve’s hold- tentive to inflation risks.
ings of Treasury securities maturing in May
that exceeds a cap of $60 billion per month. In support of its goals, the Committee decided
Beginning on June 1, roll over at auction to maintain the target range for the federal
the amount of principal payments from the funds rate at 5¼ to 5½ percent. In considering
Federal Reserve’s holdings of Treasury se- any adjustments to the target range for the fed-
curities maturing in each calendar month eral funds rate, the Committee will carefully as-
that exceeds a cap of $25 billion per month. sess incoming data, the evolving outlook, and
Redeem Treasury coupon securities up to the balance of risks. The Committee does not
these monthly caps and Treasury bills to the expect it will be appropriate to reduce the target
extent that coupon principal payments are range until it has gained greater confidence that
less than the monthly caps. inflation is moving sustainably toward 2 per-
cent. In addition, the Committee will continue
• Reinvest into agency mortgage-backed se- reducing its holdings of Treasury securities and
curities (MBS) the amount of principal pay- agency debt and agency mortgage‑backed secu-
ments from the Federal Reserve’s holdings rities. Beginning in June, the Committee will
of agency debt and agency MBS received in slow the pace of decline of its securities hold-
May that exceeds a cap of $35 billion per ings by reducing the monthly redemption cap
month. Beginning on June 1, reinvest the on Treasury securities from $60 billion to
amount of principal payments from the $25 billion. The Committee will maintain the
Federal Reserve’s holdings of agency debt monthly redemption cap on agency debt and
and agency MBS received in each calendar agency mortgage‑backed securities at $35 bil-
month that exceeds a cap of $35 billion per lion and will reinvest any principal payments in
month into Treasury securities to roughly excess of this cap into Treasury securities. The
match the maturity composition of Treas- Committee is strongly committed to returning
ury securities outstanding. inflation to its 2 percent objective.
• Allow modest deviations from stated In assessing the appropriate stance of monetary
amounts for reinvestments, if needed for policy, the Committee will continue to monitor
operational reasons. the implications of incoming information for
• Engage in dollar roll and coupon swap the economic outlook. The Committee would
transactions as necessary to facilitate settle- be prepared to adjust the stance of monetary
ment of the Federal Reserve’s agency MBS policy as appropriate if risks emerge that could
transactions.” impede the attainment of the Committee’s
goals. The Committee’s assessments will take
The vote also encompassed approval of the statement into account a wide range of information, in-
below for release at 2:00 p.m.: cluding readings on labor market conditions, in-
“Recent indicators suggest that economic activ- flation pressures and inflation expectations, and
ity has continued to expand at a solid pace. Job financial and international developments.”
gains have remained strong, and the unemploy- Voting for this action: Jerome H. Powell, John C.
ment rate has remained low. Inflation has eased Williams, Thomas I. Barkin, Michael S. Barr, Raphael W.
over the past year but remains elevated. In re- Bostic, Michelle W. Bowman, Lisa D. Cook, Mary C.
cent months, there has been a lack of further Daly, Philip N. Jefferson, Adriana D. Kugler, Loretta J.
progress toward the Committee’s 2 percent in- Mester, and Christopher J. Waller.
flation objective.
Voting against this action: None.
The Committee seeks to achieve maximum em-
ployment and inflation at the rate of 2 percent Consistent with the Committee’s decision to leave the
over the longer run. The Committee judges that target range for the federal funds rate unchanged, the
_____________________________________________________________________________________________
Minutes of the Meeting of April 30–May 1, 2024 Page 11

Board of Governors of the Federal Reserve System Notation Vote

voted unanimously to maintain the interest rate paid on By notation vote completed on April 9, 2024, the Com-
reserve balances at 5.4 percent, effective May 2, 2024. mittee unanimously approved the minutes of the Com-
The Board of Governors of the Federal Reserve System mittee meeting held on March 19–20, 2024.
voted unanimously to approve the establishment of the
primary credit rate at the existing level of 5.5 percent, ef-
fective May 2, 2024.
It was agreed that the next meeting of the Committee _______________________
would be held on Tuesday–Wednesday, June 11–12,
Joshua Gallin
2024. The meeting adjourned at 10:05 a.m. on
Secretary
May 1, 2024.