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Minutes of the Federal Open Market Committee

June 15–16, 2021

A joint meeting of the Federal Open Market Committee Ann E. Misback, Secretary, Office of the Secretary,
and the Board of Governors was held by videoconfer- Board of Governors
ence on Tuesday, June 15, 2021, at 9:00 a.m. and contin-
ued on Wednesday, June 16, 2021, at 9:00 a.m.1 Michael S. Gibson, Director, Division of Supervision
and Regulation, Board of Governors; Andreas
PRESENT: Lehnert, Director, Division of Financial Stability,
Jerome H. Powell, Chair Board of Governors
John C. Williams, Vice Chair
Thomas I. Barkin Daniel M. Covitz, Deputy Director, Division of
Raphael W. Bostic Research and Statistics, Board of Governors; Sally
Michelle W. Bowman Davies, Deputy Director, Division of International
Lael Brainard Finance, Board of Governors
Richard H. Clarida
Mary C. Daly Jon Faust, Senior Special Adviser to the Chair, Division
Charles L. Evans of Board Members, Board of Governors
Randal K. Quarles
Christopher J. Waller Joshua Gallin, Special Adviser to the Chair, Division of
Board Members, Board of Governors
James Bullard, Esther L. George, Naureen Hassan,
Loretta J. Mester, and Eric Rosengren, Alternate William F. Bassett, Antulio N. Bomfim, Wendy E.
Members of the Federal Open Market Committee Dunn, Burcu Duygan-Bump, Jane E. Ihrig, Kurt F.
Lewis, Chiara Scotti, and Nitish R. Sinha, Special
Patrick Harker, Robert S. Kaplan, and Neel Kashkari, Advisers to the Board, Division of Board
Presidents of the Federal Reserve Banks of Members, Board of Governors
Philadelphia, Dallas, and Minneapolis, respectively
Carol C. Bertaut, Senior Associate Director, Division
James A. Clouse, Secretary of International Finance, Board of Governors;
Matthew M. Luecke, Deputy Secretary Marnie Gillis DeBoer and David López-Salido,
Michelle A. Smith, Assistant Secretary Senior Associate Directors, Division of Monetary
Mark E. Van Der Weide, General Counsel Affairs, Board of Governors; Elizabeth Klee,
Michael Held, Deputy General Counsel Senior Associate Director, Division of Financial
Trevor A. Reeve, Economist Stability, Board of Governors; David E. Lebow,
Stacey Tevlin, Economist Senior Associate Director, Division of Research
Beth Anne Wilson, Economist and Statistics, Board of Governors

Shaghil Ahmed, Kartik B. Athreya, Rochelle M. Edge, Brett Berger, 2 Senior Adviser, Division of International
Eric M. Engen, and William Wascher, Associate Finance, Board of Governors; Ellen E. Meade and
Economists Edward Nelson, Senior Advisers, Division of
Monetary Affairs, Board of Governors; Jeremy B.
Lorie K. Logan, Manager, System Open Market Rudd, Senior Adviser, Division of Research and
Account Statistics, Board of Governors

Patricia Zobel, Deputy Manager, System Open Market Andrew Figura, Associate Director, Division of
Account Research and Statistics, Board of Governors;

1The Federal Open Market Committee is referenced as the 2 Attended through the discussion of developments in finan-
“FOMC” and the “Committee” in these minutes. cial markets and open market operations.
Page 2 Federal Open Market Committee
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Christopher J. Gust, Associate Director, Division Randall A. Williams, Lead Information Manager,
of Monetary Affairs, Board of Governors Division of Monetary Affairs, Board of Governors

Stephanie E. Curcuru2 and Andrea Raffo, Deputy Courtney Demartini,2 Lead Financial Institution Policy
Associate Directors, Division of International Analyst, Division of Monetary Affairs, Board of
Finance, Board of Governors; Laura Lipscomb,2 Governors
Deputy Associate Director, Division of Monetary
Affairs, Board of Governors; Steve Spurry,2 Anthony M. Diercks, Senior Economist, Division of
Deputy Associate Director, Division of Monetary Affairs, Board of Governors
Supervision and Regulation, Board of Governors;
Jeffrey D. Walker,2 Deputy Associate Director, Joseph W. Gruber and Ellis W. Tallman, Executive
Division of Reserve Bank Operations and Payment Vice Presidents, Federal Reserve Banks of Kansas
Systems, Board of Governors City and Cleveland, respectively

Jennifer Gallagher, Special Assistant to the Board, Anne Baum, Carlos Garriga, Susan McLaughlin,2 Anna
Division of Board Members, Board of Governors Nordstrom,2 Giovanni Olivei, Paolo A. Pesenti,
Julie Ann Remache,2 Robert G. Valletta, and Mark
Brian J. Bonis, Etienne Gagnon, and Dan Li, Assistant L.J. Wright, Senior Vice Presidents, Federal
Directors, Division of Monetary Affairs, Board of Reserve Banks of New York, St. Louis, New York,
Governors New York, Boston, New York, New York, San
Francisco, and Minneapolis, respectively
Charles Fleischman, Adviser, Division of Research and
Statistics, Board of Governors Roc Armenter, Jennifer S. Crystal,2 Jonas Fisher, and
Matthew Nemeth,2 Vice Presidents, Federal
Penelope A. Beattie, 3 Section Chief, Office of the Reserve Banks of Philadelphia, New York,
Secretary, Board of Governors Chicago, and New York, respectively

Alyssa Arute,2 Manager, Division of Reserve Bank Jason A. Miu,2 Assistant Vice President, Federal
Operations and Payment Systems, Board of Reserve Bank of New York
Governors
Karel Mertens, Senior Economic Policy Advisor,
Sriya Anbil,2 Group Manager, Division of Monetary Federal Reserve Bank of Dallas
Affairs, Board of Governors
Kristopher Gerardi, Financial Economist and Senior
Mark A. Carlson,2 Senior Economic Project Manager, Advisor, Federal Reserve Bank of Atlanta
Division of Monetary Affairs, Board of Governors
Haitham Jendoubi,2 Policy and Markets Analysis
David H. Small, Project Manager, Division of Manager, Federal Reserve Bank of New York
Monetary Affairs, Board of Governors
Discussion of Repurchase Agreement Arrange-
David M. Byrne, Principal Economist, Division of ments
Research and Statistics, Board of Governors; Participants resumed their discussion from the April
Michele Cavallo, Bernd Schlusche, Mary Tian, and 2021 FOMC meeting of considerations related to the es-
Francisco Vazquez-Grande, Principal Economists, tablishment of a domestic standing repurchase agree-
Division of Monetary Affairs, Board of Governors; ment (repo) facility (SRF) and a standing Foreign Inter-
Alberto Queralto, Principal Economist, Division of national Monetary Authorities (FIMA) repo facility.
International Finance, Board of Governors Building on discussion at previous meetings, the staff
presented considerations for how these facilities might
be designed. The design considerations were guided by

3Attended through the discussion of economic developments

and the outlook.
 Minutes of the Meeting of June 15–16, 2021 Page 3
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participants’ general desire to have these facilities play a presented by the staff for such a facility. Several partic-
backstop role in fostering effective implementation of ipants noted the importance of setting the minimum bid
monetary policy and supporting smooth functioning of rate high enough so that the facility was positioned as a
markets. In April, participants highlighted the im- backstop, while some pointed out the importance of not
portance of designing these facilities in a way that would setting the rate so high that usage of the facility could be
leave ample room for private market activity while min- stigmatized or that the facility would not sufficiently
imizing the potential for stigma, promote equitable ac- contain pressures that could spill over into the federal
cess to an appropriately broad set of counterparties, and funds market. Several participants noted that setting an
be governed by the FOMC. With these principles and SRF rate at the top of the target range for the federal
goals in mind, the staff presented potential terms for funds rate would be consistent with addressing pressures
each facility. that could spill over to the federal funds market. Others
remarked that setting the SRF rate at the same level as
The staff presentation on the potential design of a do-
the primary credit rate for borrowing at the discount
mestic SRF included establishing the minimum bid rate
window would promote equitable access to Federal Re-
at 25 basis points—the top of the target range for the
serve liquidity across banks and counterparties for
federal funds rate. The staff briefing suggested counter-
OMOs. Several participants commented that it may also
parties for the facility would include primary dealers and
be appropriate to adjust the SRF rate over time based on
would be extended over time to include banks that ex-
accumulated experience and economic or financial de-
pressed interest in participation. The staff presentation
velopments. Several participants suggested that, in order
noted that such a facility could be limited to only U.S.
to ensure an SRF continues to be effective, it may be
Treasury securities or could accept all securities currently
appropriate to study the costs and benefits of additional
accepted in open market operations (OMOs), which in-
adjustments over time, such as moving to a cleared set-
clude Treasury securities, agency securities, and agency
tlement structure. Most participants noted the benefits
mortgage-backed securities (MBS). The briefing noted
of allowing banks to be counterparties to a domestic
that, on the one hand, restricting eligible collateral for a
SRF, including more directly addressing liquidity pres-
domestic SRF to U.S. Treasury securities could mitigate
sures for participants in the federal funds market and
concerns that an SRF could encourage counterparties to
promoting equitable access to liquidity across domestic
take on greater liquidity risk. On the other hand, accept-
counterparties. Many participants judged that it would
ing agency securities and agency MBS in an SRF would
be appropriate to accept the same set of securities that is
be consistent with the structure of current repo opera-
currently accepted for OMOs. Some participants indi-
tions and could help address a greater range of potential
cated that accepting these securities in the domestic
repo market pressures from spilling over into the federal
SRF’s operations should increase the effectiveness of the
funds market.
facility in limiting upward pressures in repo markets that
The proposed design for a standing FIMA repo facility could spill over into the federal funds market. Some
was similar in structure to the existing temporary FIMA other participants noted that limiting acceptable securi-
repo facility. Under the draft terms, the range of eligible ties for SRF operations to U.S. Treasury securities could
counterparties for the FIMA repo facility would con- have benefits, including consistency with the regulatory
tinue to include foreign official institutions, largely com- distinction between U.S. Treasury securities and other
prising central banks, subject to individual approval. types of securities, potentially limiting the Federal Re-
The eligible collateral would continue to be limited to serve’s footprint in financial markets, and maintaining
U.S. Treasury securities. The draft terms envisioned that consistency with the structure of the proposed FIMA
the rate for the FIMA repo facility would be set equal to repo facility and the overnight reverse repo (ON RRP)
the top of the target range for the federal funds rate, a facility. Several participants cautioned that establishing
rate equal to the minimum bid rate in the draft terms for a backstop SRF would not diminish the importance of
the domestic SRF. providing a sufficiently ample supply of reserves on an
ongoing basis or the need to improve the structural re-
In their discussion of considerations related to the de-
siliency of the U.S. Treasury market. A couple of partic-
sign of a domestic SRF, a substantial majority restated
ipants reiterated their concerns about converting current
their view, conveyed at the April 2021 meeting, that the
ongoing daily repo operations to a standing facility and
potential benefits of such a facility outweighed the po-
suggested ways to calibrate the terms of the facility to
tential costs. Participants broadly supported the terms
mitigate these concerns, including setting a relatively
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high minimum bid rate or limiting securities eligible for in mid-May at the highest level in more than a decade,
SRF operations to only U.S. Treasury securities. but the increase was driven almost entirely by higher in-
flation compensation at short horizons. Indeed, one-
In their discussion of considerations related to the de-
year-forward inflation compensation at horizons beyond
sign of a standing FIMA repo facility, a substantial ma-
a year was relatively stable.
jority supported the broad structure discussed in the
staff presentation. Many participants generally saw ben- Measures of expectations for Federal Reserve policy
efits in keeping the rate at the same level as that in the were little changed over the period. The median re-
potential domestic SRF in light of the similar nature of spondent to the Desk’s surveys of primary dealers and
the transactions and high quality of the collateral. A market participants continued to expect the pace of Fed-
number of participants remarked that the rate at the eral Reserve asset purchases to begin to decline in the
FIMA repo facility could be set at a higher level than at first quarter of 2022, although most respondents also
the domestic SRF or could be set at a level comparable saw a reasonable chance that this decline could occur
to that in the Federal Reserve’s dollar liquidity swap one quarter earlier or later. The median respondent ex-
lines. A couple of participants commented on the po- pected purchases to end in the fourth quarter of 2022.
tential reputational risks of establishing a standing FIMA The Desk’s survey measures of the expected path of the
repo facility, including those associated with providing target federal funds rate were also fairly steady, and the
liquidity on a standing basis to a wider set of central median respondent continued to expect the first target
banks and finance ministries than through existing swap rate increase to occur in the third quarter of 2023.
lines. These participants reiterated the importance of Nearly all Desk survey respondents anticipated that the
maintaining well-defined criteria for participation in the Summary of Economic Projections would show the me-
facility and suggested that the FOMC should receive reg- dian Committee participant projecting either no increase
ular reports on the operations and counterparties ap- in the target range or one ¼ percentage point increase
proved for a standing FIMA repo facility. by the end of 2023.
Participants agreed that they would continue their dis- The manager noted that downward pressure on money
cussion of design parameters for both a domestic SRF market rates continued over the period. Banks contin-
and a standing FIMA repo facility. The Chair asked the ued to limit growth in their balance sheets by allowing
staff to work on a specific proposal that reflected the wholesale liabilities to mature and encouraging custom-
views expressed by participants at this meeting. ers to shift some nonoperational deposits to money mar-
ket funds. Moreover, the supply of Treasury bills, a pri-
Developments in Financial Markets and Open
mary investment for government money market mutual
Market Operations
funds, fell further. Against this backdrop, the Secured
The manager turned first to a discussion of financial
Overnight Financing Rate (SOFR) printed at 1 basis
market developments over the intermeeting period. On
point each day in the intermeeting period, while the ef-
net, U.S. financial conditions eased further, led by a de-
fective federal funds rate (EFFR) decreased 1 basis
cline in Treasury yields. Lower term premiums appeared
point, to 6 basis points.
to be a significant component of the declines, as re-
flected by lower implied volatility on longer-term inter- Amid heightened demand and reduced supply for short-
est rates. Equities rose slightly, the broad dollar weak- term investments, the ON RRP continued to maintain a
ened, and credit spreads were little changed at histori- floor on overnight rates. Growth in the ON RRP and
cally tight levels. other nonreserve liabilities helped expand the base of
Federal Reserve liabilities supporting asset purchases,
Over the period, market participants focused on data
damping the increase in reserves and easing pressure on
showing lower employment growth and higher inflation
bank balance sheets.
readings than had been expected. The median 2021 core
personal consumption expenditures (PCE) inflation Over the next intermeeting period, the manager antici-
forecast from the Open Market Desk’s Survey of Pri- pated that further increases in reserves and reductions in
mary Dealers jumped nearly 1 percentage point from the bill supply could put additional downward pressure on
previous survey. However, median forecasts for 2022 overnight rates. A modest technical adjustment to ad-
and 2023 each rose less than 0.1 percent, suggesting ex- ministered rates could be warranted to maintain the
pectations for inflationary pressures to subside. Infla- EFFR well within the target range and support smooth
tion compensation as measured by five-year breakeven functioning of short-term funding markets. Such an ad-
rates on Treasury Inflation-Protected Securities peaked justment would be expected to raise the federal funds
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rate and to lift other overnight rates modestly. Most re- April and May. Consumer price inflation through
spondents to the Desk’s surveys expected an adminis- April—as measured by the 12-month percentage change
tered rate adjustment this summer. The manager noted in the PCE price index—had picked up notably, largely
that balances at the ON RRP facility would likely con- reflecting transitory factors.
tinue to grow over coming months. The staff would
Total nonfarm payroll employment increased solidly
continue to monitor developments, and the manager
over April and May, though at a slower monthly pace
noted that, at some point, it could become appropriate
than over February and March. As of May, total payroll
to consider raising the counterparty limits for the ON
employment had retraced two-thirds of the job losses
RRP.
seen at the onset of the pandemic, although employment
The manager provided an update on progress toward in the leisure and hospitality sector and in the education
winding down a number of emergency facilities estab- sector (including both public and private education) had
lished under section 13(3) of the Federal Reserve Act. bounced back by less. Over April and May, the unem-
While market participants took note of the Federal Re- ployment rate edged down and stood at 5.8 percent in
serve Board’s announcement on winding down the Sec- May. The unemployment rates for African Americans,
ondary Market Corporate Credit Facility (SMCCF) hold- Asians, and Hispanics also moved down, although the
ings, it elicited little price response. The commencement rates for African Americans and Hispanics remained
of exchange-traded funds sales proceeded smoothly. All well above the national average. Both the labor force
of the SMCCF assets are expected to be sold by the end participation rate and the employment-to-population ra-
of this year. tio moved up slightly, and both measures had recovered
only partially from their lows during the pandemic. Ini-
Finally, the manager noted a proposal to request the
tial claims for regular state unemployment insurance
Chair’s approval for an extension to the temporary U.S.
benefits had moved down further since mid-April and
dollar liquidity swap arrangements to December 31,
were at the lowest level since the beginning of the pan-
2021. The extension would benefit the U.S. economy by
demic, though they remained high relative to their pre-
helping forestall potential pressures in offshore dollar
pandemic level. Weekly estimates of private-sector pay-
funding markets that could spill over to U.S. financial
rolls constructed by Federal Reserve Board staff using
conditions while much of the global economy remains
data provided by the payroll processor ADP, which were
on an uncertain recovery path from the pandemic.
available through May, suggested that the pace of private
Should the Committee decide to make the FIMA repo
employment gains had stepped up late in that month.
facility standing, an extension would also provide suffi-
cient time for those temporary swap line central banks The pace of increases in several measures of labor com-
that are not currently enrolled in the FIMA repo facility pensation had moved up in recent months. Average
to do so and to become fully operational. hourly earnings for all employees jumped at a sizable
monthly rate in April and May, even though the large job
Secretary’s note: The Chair subsequently pro-
gains in the leisure and hospitality sector—where wages
vided approval to the Desk, following the pro-
tend to be lower than in other sectors—likely held down
cedures in the Authorization for Foreign Cur-
the increases in average hourly earnings in these months.
rency Operations, to extend the expiration of
A staff measure of the 12-month change in the median
the temporary U.S. dollar liquidity swap lines
wage derived from the ADP data had stepped up signif-
through December 31, 2021.
icantly in April relative to March. The employment cost
By unanimous vote, the Committee ratified the Desk’s index of total hourly compensation in the private sector
domestic transactions over the intermeeting period. increased at an annual rate of 4 percent in the three
There were no intervention operations in foreign curren- months ending in March, a notably faster pace than over
cies for the System’s account during the intermeeting pe- the previous three months.
riod. Recent 12-month change measures of inflation, using ei-
Staff Review of the Economic Situation ther PCE prices or the consumer price index (CPI), were
The information available at the time of the June 15–16 boosted significantly by the base effects of the drop in
meeting suggested that U.S. real gross domestic product prices from the spring of 2020 rolling out of the calcula-
(GDP) was expanding in the second quarter at a pace tion. In addition, a surge in demand as the economy re-
that was faster than in the first quarter of the year. More- opened further, combined with production bottlenecks
over, labor market conditions had improved further in and supply constraints, contributed to the large recent
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monthly price increases. Total PCE price inflation was weak in the current quarter, likely reflecting continued
3.6 percent over the 12 months ending in April. Core hesitation by businesses to commit to building projects
PCE price inflation, which excludes changes in con- with lengthy times to completion and uncertain future
sumer energy prices and many consumer food prices, returns.
was 3.1 percent over the 12 months ending in April. In
Manufacturing output expanded solidly, on balance,
contrast, the trimmed mean measure of 12-month PCE
over April and May. Output in the motor vehicle and
inflation constructed by the Federal Reserve Bank of
parts sector rose, on net, although semiconductor short-
Dallas was 1.8 percent in April. In May, the 12-month
ages were still weighing on vehicle production. Factory
change in the CPI was 5 percent, while core CPI infla-
output outside of the motor vehicle sector increased sol-
tion was 3.8 percent over the same period. In the second
idly, and production in the mining sector, which includes
quarter, the staff’s common inflation expectations index,
crude oil and natural gas extraction, also increased over
which combines information from many indicators of
April and May.
inflation expectations and inflation compensation, had
returned to the level that prevailed in 2014, a time when Total real government purchases looked to be about flat,
inflation was modest. on balance, in the second quarter. Data through May
indicated that real federal defense spending was rising
Real PCE increased substantially in March and then was
only slightly, and nondefense spending was expected to
little changed from that high level in April. The compo-
drop following a first-quarter surge in pandemic-related
nents of the nominal retail sales data that are used to es-
expenditures. State and local government purchases
timate PCE edged down in May, but the sales data for
looked to be increasing significantly, as the payrolls of
the previous two months were revised up markedly,
these governments expanded solidly over April and May.
pointing to stronger real PCE growth than had been in-
Nominal state and local construction spending, how-
itially estimated. Combined with reduced social distanc-
ever, edged down in April. With the strong economic
ing and more widespread vaccinations, key factors that
recovery leading to an improved outlook for state and
influence consumer spending—including increasing job
local tax revenues, and the additional federal support for
gains, the upward trend in real disposable income, high
these governments included in the American Rescue
levels of household net worth, and low interest rates—
Plan, state and local purchases appeared likely to in-
pointed to strong real PCE growth over the rest of the
crease notably over the rest of the year.
year.
The nominal U.S. international trade deficit widened to
Housing demand continued to be robust, with construc-
a record size in March and then reversed that widening
tion of single-family homes and home sales remaining
in April. Real goods exports in March surpassed their
well above their pre-pandemic levels and house prices
January 2020 levels for the first time and then continued
rising appreciably further. The incoming data for this
to grow in April, with particular strength in exports of
sector indicated that residential investment spending was
capital goods. Real goods imports surged to record-high
being temporarily held back in the second quarter by ma-
levels in March and then stepped back modestly in April.
terials shortages and limited stocks of homes for sale. Bottlenecks in the global semiconductor industry, which
Available indicators suggested that equipment and intan- had weighed on exports and imports of automotive
gibles investment—particularly in high-tech catego- products this year, continued to do so through April.
ries—was increasing solidly in the second quarter. Ris- Exports and imports of services remained depressed rel-
ing orders for nondefense capital goods excluding air- ative to pre-pandemic levels, as international travel in-
craft were running well above the increases in shipments creased only slightly from February.
of those goods through April, which pointed to addi-
Recent data pointed to a pickup in foreign economic ac-
tional gains in business equipment spending in coming
tivity in the second quarter. Demand improved as
months. Moreover, business investment in the drilling
social-distancing restrictions were lifted in the United
and mining sector appeared to be increasing further, as
Kingdom and the euro area following the rollout of vac-
crude oil and natural gas rigs in operation—an indicator
cines. With the economic reopening under way, pur-
of drilling investment—continued to rise through early
chasing managers indexes (PMIs) in both the manufac-
June, with oil prices moving higher. However, nominal
turing and services sectors were strong in Europe in
nonresidential construction spending declined further in
April and May. In the emerging market economies
April, and investment in nonresidential structures out-
(EMEs), manufacturing PMIs and exports were gener-
side of the drilling and mining sector looked to remain
 Minutes of the Meeting of June 15–16, 2021 Page 7
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ally robust. However, many EMEs continued to strug- for high-credit-rated bonds and moderately narrower for
gle to contain the virus amid a slow pace of vaccinations, lower-credit-rated bonds.
particularly in South America and parts of Asia. Con-
Short-term funding markets continued to function
sumer price inflation continued to rise in many foreign
smoothly over the intermeeting period. Short-term and
economies, primarily driven by rebounding energy
overnight rates remained near historical lows, with over-
prices and the fading effects of steep price declines seen
night rates dipping slightly. The EFFR was nearly con-
early last year. Price increases were concentrated in rel-
stant throughout the period at 6 basis points, while the
atively few items, suggesting that underlying inflationary
SOFR remained at 1 basis point. With rates low and net
pressures remained subdued amid considerable eco-
Treasury bill supply contracting, government money
nomic slack.
market funds, which at the same time were attracting no-
Staff Review of the Financial Situation table inflows, had limited investment options at
Overall financial conditions eased during the intermeet- nonnegative rates. As a result, ON RRP take-up by
ing period as market participants appeared to remain these funds surged, pushing total ON RRP participation
confident that the economic recovery was broadly on to record levels in late May and June.
track, that inflation over the medium term would stay
International financial market participants were focused
contained, and that monetary policy would remain ac-
on news about inflation and monetary policy communi-
commodative. Domestic equity prices edged up, and
cations. In Europe, stronger-than-expected readings for
corporate bond spreads narrowed a little. Yields on
both inflation and economic activity, as well as increased
nominal Treasury securities declined modestly since the
optimism about vaccinations, contributed to a rise in
previous FOMC meeting. Measures of inflation com-
market-based measures of inflation expectations. On
pensation at shorter horizons moved down somewhat,
net, European longer-term government bond yields
on net, while measures of longer-term inflation compen-
were little changed even as U.S. yields declined, and the
sation were little changed. A straight read of overnight
broad dollar index decreased modestly. In emerging
index swap (OIS) quotes suggested that the expected
markets, credit spreads narrowed a bit, and capital flows
path for the federal funds rate moved lower over the in-
into EME funds continued at a moderate pace. Equity
termeeting period and that the expected policy rate
indexes increased somewhat in both emerging and ad-
would remain below 25 basis points until the first quarter
vanced foreign economies.
of 2023. Short-term funding markets functioned
smoothly amid record participation in the ON RRP fa- Financing conditions for nonfinancial firms through
cility. Financing conditions for businesses and house- capital markets remained highly accommodative, as re-
holds remained accommodative, particularly for large flected in historically low corporate bond and leveraged
firms and households with high credit ratings. loan yields as well as high price-to-earnings ratios in the
equity markets. Gross issuance of corporate bonds and
The Treasury yield curve flattened a bit, on net, with
leveraged loans was solid. Equity raised through tradi-
2-year yields about unchanged while 5-, 10-, and 30-year
tional initial public offerings was robust in April but sof-
yields declined somewhat. Inflation compensation de-
tened to more moderate levels in May and through mid-
clined a bit at shorter horizons but held steady at longer
June, while the pace of seasoned equity offerings was
horizons. Market expectations for the federal funds rate
modest over the intermeeting period. Meanwhile, equity
path over the medium term, as implied by OIS quotes
issuance through special purpose acquisition companies
unadjusted for term premiums, declined moderately. slowed markedly. Commercial and industrial (C&I)
Broad stock price indexes increased slightly over the in- loans outstanding at banks fell through mid-May, with
termeeting period, with stocks in cyclically sensitive sec- forgiveness of Paycheck Protection Program (PPP)
tors generally outperforming. One-month option- loans continuing to drive balances down and more than
implied volatility on the S&P 500—the VIX—reached offsetting volumes of new loan originations. Tepid de-
its lowest level since February 2020 and remained a bit mand for loans appears to have been a factor in the de-
below the middle of its historical distribution. Spreads cline in loans outstanding. For instance, despite healthy
of yields on corporate bonds over those on comparable- growth in C&I commitments at large banks over the first
maturity Treasury securities narrowed a little for all quarter, there was no corresponding change in the utili-
credit ratings. Meanwhile, yields on municipal bonds zation rates of credit lines.
reached historical lows, with spreads roughly unchanged
The credit quality of large nonfinancial corporations re-
mained largely stable over the intermeeting period. The
Page 8 Federal Open Market Committee
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volume of credit rating upgrades for nonfinancial bonds pace in April, driven by rapid growth in auto loan bal-
and leveraged loans outpaced downgrades somewhat in ances. Credit card balances on banks’ books rose in
the April-to-early-June period. There were no reported May, reversing an April decline. For subprime borrow-
corporate defaults in April, and defaults were low in ers, conditions in the credit card market appeared to
May. Delinquency rates on bank C&I loans also re- have eased somewhat further from the tight conditions
mained low in the first quarter. Market indicators of fu- seen after the onset of the pandemic. Conditions in the
ture default expectations were little changed and re- asset-backed securities market continued to be support-
mained low relative to their historical range. ive of lending during the intermeeting period.
In the municipal bond market, financing conditions re- Staff Economic Outlook
mained accommodative over the intermeeting period. The U.S. economic projection prepared by the staff for
Issuance of municipal bonds was solid in recent months, the June FOMC meeting was stronger than the April
and indicators of the credit quality of municipal debt forecast. Real GDP growth was projected to increase
showed some signs of improvement, with the volume of substantially this year, with a correspondingly rapid de-
bond upgrades outpacing the volume of bond down- cline in the unemployment rate. Further reductions in
grades. social distancing and favorable financial conditions were
expected to support output growth, even though the ef-
Financing conditions for small businesses were little
fects of fiscal stimulus on economic growth were start-
changed, with supply of small business loans remaining
ing to unwind. With the boost to growth from contin-
tight and demand still subdued outside of the PPP.
ued reductions in social distancing assumed to fade after
While small business loan originations rose in April, sur-
2021 and the further unwinding of fiscal stimulus, GDP
passing pre-pandemic levels, loans made under the PPP
growth was expected to step down in 2022 and 2023.
likely accounted for a significant portion of that growth.
Nevertheless, with monetary policy assumed to remain
Loan performance and other indicators of the financial
highly accommodative, the staff continued to anticipate
health of small businesses improved in recent months.
that real GDP growth would outpace that of potential
However, in certain sectors, such as accommodation and
over most of this period, leading to a decline in the un-
food services, small businesses remained stressed.
employment rate to historically low levels.
For commercial real estate (CRE) financed through cap-
The staff’s near-term outlook for inflation was revised
ital markets, financing conditions remained mostly ac-
up markedly, but the staff continued to expect the rise
commodative over the intermeeting period. Issuance of
in inflation this year to be transitory. The 12-month
commercial mortgage-backed securities (CMBS) was
change in total and core PCE prices had moved well
solid in recent months except in the retail and hotel sec-
above 2 percent in April, and incoming CPI data sug-
tors. Spreads of agency CMBS narrowed to below pre-
gested that PCE price inflation would remain high in
pandemic levels. Meanwhile, spreads on non-agency
May. The recent 12-month measures of inflation were
triple-A CMBS were little changed at accommodative
being boosted significantly by the base effects of the
levels, while non-agency triple-B spreads remained ele-
drop in prices from the spring of 2020 rolling out of the
vated. CRE loan growth at banks continued to be weak
calculation. In addition, the surge in demand as the
through mid-May, likely reflecting weak demand as well
economy reopened further, combined with production
as tight underwriting standards.
bottlenecks and supply constraints, contributed to the
In the residential mortgage market, financing conditions large recent monthly price increases. The staff expected
were little changed over the intermeeting period and re- the 12-month change in PCE prices to gradually move
mained accommodative for stronger borrowers who met down in coming months, reflecting, importantly, the
standard conforming loan criteria. Credit continued to fading of base effects along with smaller expected
appear tight for borrowers with lower credit scores. monthly price increases, but PCE price inflation was
Mortgage rates for most borrowers were little changed, forecast to still be well above 2 percent at the end of this
on net, and remained near historical lows. Home-pur- year. Over the next year, the transitory price increases
chase and refinance mortgage activity continued at a caused by bottlenecks and supply constraints were ex-
strong pace through early June. The share of mortgages pected to largely reverse, and the growth in demand was
in forbearance declined in May. forecast to ease. As a result, inflation was projected to
slow to slightly below 2 percent in 2022 before moving
Financing conditions for consumer credit remained gen-
back up to a bit above 2 percent in 2023, supported by
erally accommodative. Consumer loans grew at a robust
high levels of resource utilization.
 Minutes of the Meeting of June 15–16, 2021 Page 9
_____________________________________________________________________________________________

The staff continued to see the uncertainty surrounding Participants generally noted that the path of the econ-
the economic outlook as elevated, although increasingly omy would depend significantly on the course of the vi-
widespread vaccinations, along with ongoing policy sup- rus. Progress on vaccinations would likely continue to
port, were viewed as helping to diminish some of these reduce the effects of the public health crisis on the econ-
uncertainties. Nevertheless, the staff judged that the omy, but risks to the economic outlook remained.
risks around their strong baseline projection for eco-
Participants observed that economic activity was ex-
nomic activity were still tilted somewhat to the down-
panding at a historically rapid pace, led by robust gains
side, as adverse alternative courses of the pandemic—
in consumer spending. A vast majority of participants
including the possibility of the spread of more-conta-
revised up their projections for real GDP growth this
gious, more-vaccine-resistant COVID-19 variants—
year compared with the projections they had submitted
seemed more likely than outcomes that would be more
in March, citing stronger consumer demand and im-
favorable than in the baseline forecast. The staff contin-
provements in vaccination rates as the primary reasons
ued to view the risks around the inflation projection as
for these upgrades. That said, participants generally saw
roughly balanced. On the upside, bottlenecks, supply
supply disruptions and labor shortages as constraining
disruptions, and historically high rates of resource utili-
the expansion of economic activity this year. Partici-
zation were seen as potential sources of greater-than-
pants’ projections of real GDP growth in 2022 and 2023
expected inflationary pressures, particularly if there were
were generally little changed.
a significant rise in inflation expectations that altered in-
flation dynamics. On the downside, if the effects of sup- In their discussion of the household sector, participants
ply constraints proved to be transitory, as expected, then remarked that indicators of consumer spending had con-
the inflation record from the past 25 years suggested the tinued to surge and expected that further gains in spend-
possibility that low underlying trend inflation and a flat ing would contribute significantly to the economic re-
Phillips curve could cause inflation to revert to relatively covery. Many participants commented that accommo-
low levels despite a strengthening economy. dative financial conditions, the release of pent-up de-
mand, progress on widespread vaccination, the ongoing
Participants’ Views on Current Economic Condi-
reduction of social-distancing measures, and fiscal stim-
tions and the Economic Outlook
ulus were important factors supporting spending. Some
In conjunction with this FOMC meeting, participants
participants also noted that consumer spending would
submitted their projections of the most likely outcomes
likely continue to be bolstered by the ongoing effects
for real GDP growth, the unemployment rate, and infla-
from these factors as well as by households’ elevated
tion for each year from 2021 through 2023 and over the
level of accumulated savings and generally healthy bal-
longer run, based on their individual assessments of ap-
ance sheets. A majority of participants observed that
propriate monetary policy, including the path of the fed-
housing market activity remained strong.
eral funds rate. The longer-run projections represented
each participant’s assessment of the rate to which each With respect to the business sector, most participants
variable would be expected to converge, over time, un- noted that activity in the service industries most ad-
der appropriate monetary policy and in the absence of versely affected by the pandemic, such as in the leisure
further shocks to the economy. A Summary of Eco- and hospitality sector, was rebounding as the economy
nomic Projections was released to the public following reopened. A number of participants noted that business
the conclusion of the meeting. equipment investment was rising at a strong pace, but
growth in manufacturing activity was being restrained by
In their discussion of current conditions, participants
production bottlenecks and supply constraints. In addi-
noted that progress on vaccinations had reduced the
tion, participants reported hearing from contacts in a
spread of COVID-19 in the United States. Amid this
broad range of industries that shortages of materials and
progress and strong policy support, indicators of eco-
labor as well as supply chain challenges were limiting the
nomic activity and employment had strengthened. The
ability of firms to keep up with demand. Some business
sectors most adversely affected by the pandemic re-
contacts indicated that they were responding to input
mained weak but had shown improvement. Inflation
shortages and bottlenecks by canceling shifts, raising
had risen, largely reflecting transitory factors. Overall
compensation to attract and retain workers, raising
financial conditions remained accommodative, in part
prices, or focusing on cutting costs and increasing
reflecting policy measures to support the economy and
productivity, particularly through automation.
the flow of credit to U.S. households and businesses.
Page 10 Federal Open Market Committee
_____________________________________________________________________________________________

Participants commented on the continued improvement from levels depressed by the pandemic. Looking ahead,
in labor market conditions in recent months. Job gains participants generally expected inflation to ease as the
in April and May averaged more than 400,000, and the effect of these transitory factors dissipated, but several
unemployment rate edged down, on net, to 5.8 percent participants remarked that they anticipated that supply
over the period. Many participants pointed to the ele- chain limitations and input shortages would put upward
vated number of job openings and high rates of job pressure on prices into next year. Several participants
switching as further evidence of the improvement in la- noted that, during the early months of the reopening,
bor market conditions. Many participants remarked, uncertainty remained too high to accurately assess how
however, that the economy was still far from achieving long inflation pressures will be sustained. Some partici-
the Committee’s broad-based and inclusive maximum- pants commented that recent readings of inflation
employment goal, and some participants indicated that measures that exclude volatile components, such as
recent job gains, while strong, were weaker than they had trimmed mean measures, had been relatively stable at or
expected. A number of participants noted that the labor just below 2 percent. In their comments on longer-term
market recovery continued to be uneven across demo- inflation expectations, a number of participants noted
graphic and income groups and across sectors. that, despite increases earlier this year, measures of
longer-term inflation expectations had remained in
Participants noted that their District contacts had re-
ranges that were broadly consistent with the Commit-
ported having trouble hiring workers to meet demand,
tee’s longer-run inflation goal. Others noted that it was
likely reflecting factors such as early retirements, con-
this year’s increases that had brought these measures to
cerns about the virus, childcare responsibilities, and ex-
levels that were broadly consistent with the Committee’s
panded unemployment insurance benefits. Some partic-
longer-run inflation goal.
ipants remarked that these factors were making people
either less able or less inclined to work in the current Participants noted that overall financial conditions re-
environment. Citing recent wage data and reports from mained highly accommodative, in part reflecting the
business contacts, many participants judged that labor stance of monetary policy, which continued to deliver
shortages were putting upward pressure on wages or appropriate support to the economy. Several partici-
leading employers to provide additional financial incen- pants highlighted, however, that low interest rates were
tives to attract and retain workers, particularly in lower- contributing to elevated house prices and that valuation
wage occupations. Participants expected labor market pressures in housing markets might pose financial stabil-
conditions to continue to improve, with labor shortages ity risks.
expected to ease throughout the summer and into the
In discussing the uncertainty and risks associated with
fall as progress on vaccinations continues, social distanc-
the economic outlook, participants commented that the
ing unwinds further, more schools reopen, and ex-
process of reopening the economy was unprecedented
panded unemployment insurance benefits expire.
and likely to be uneven across sectors. Some partici-
In their discussions on inflation, participants stated that pants judged that supply chain disruptions and labor
they had expected inflation to move above 2 percent in shortages complicated the task of assessing progress to-
the near term, in part as the drop in prices from early in ward the Committee’s goals and that the speed at which
the pandemic fell out of the calculation and past in- these factors would dissipate was uncertain. Accord-
creases in oil prices passed through to consumer energy ingly, participants judged that uncertainty around their
prices. However, participants remarked that the actual economic projections was elevated. Although they gen-
rise in inflation was larger than anticipated, with the erally saw the risks to the outlook for economic activity
12-month change in the PCE price index reaching as broadly balanced, a substantial majority of partici-
3.6 percent in April. Participants attributed the upside pants judged that the risks to their inflation projections
surprise to more widespread supply constraints in prod- were tilted to the upside because of concerns that supply
uct and labor markets than they had anticipated and to a disruptions and labor shortages might linger for longer
larger-than-expected surge in consumer demand as the and might have larger or more persistent effects on
economy reopened. They noted that many of their Dis- prices and wages than they currently assumed. Several
trict contacts had reported that higher input costs were participants expressed concern that longer-term infla-
putting upward pressure on prices. Most participants tion expectations might rise to inappropriate levels if el-
observed that the largest contributors to the rise in meas- evated inflation readings persisted. Several other partic-
ured inflation were sectors affected by supply bottle- ipants cautioned that downside risks to inflation re-
necks or sectors where price levels were rebounding
 Minutes of the Meeting of June 15–16, 2021 Page 11
_____________________________________________________________________________________________

mained because temporary price pressures might un- “substantial further progress” was generally seen as not
wind faster than currently anticipated and because the having yet been met, though participants expected pro-
forces that held down inflation and inflation expecta- gress to continue. Various participants mentioned that
tions during the previous economic expansion had not they expected the conditions for beginning to reduce the
gone away or might reinforce the effect of the unwind- pace of asset purchases to be met somewhat earlier than
ing of temporary price pressures. they had anticipated at previous meetings in light of in-
coming data. Some participants saw the incoming data
In their consideration of the stance of monetary policy,
as providing a less clear signal about the underlying eco-
participants reaffirmed the Federal Reserve’s commit-
nomic momentum and judged that the Committee
ment to using its full range of tools to support the U.S.
would have information in coming months to make a
economy during this challenging time, thereby promot-
better assessment of the path of the labor market and
ing the Committee’s statutory goals of maximum em-
inflation. As a result, several of these participants em-
ployment and price stability. Participants generally
phasized that the Committee should be patient in as-
agreed that the economic recovery was incomplete and
sessing progress toward its goals and in announcing
that risks to the economic outlook remained. Although
changes to its plans for asset purchases. Participants
inflation had risen more than anticipated, the increase
generally judged that, as a matter of prudent planning, it
was seen as largely reflecting temporary factors, and par-
was important to be well positioned to reduce the pace
ticipants expected inflation to decline toward the Com-
of asset purchases, if appropriate, in response to unex-
mittee’s 2 percent longer-run objective.
pected economic developments, including faster-than-
Participants judged that the current stance of monetary anticipated progress toward the Committee’s goals or
policy and policy guidance remained appropriate to pro- the emergence of risks that could impede the attainment
mote maximum employment as well as to achieve infla- of the Committee’s goals.
tion that averages 2 percent over time and longer-term
Various participants offered their views on the Commit-
inflation expectations that are well anchored at 2 per-
tee’s agency MBS purchases. Several participants saw
cent. Participants also reiterated that the existing out-
benefits to reducing the pace of these purchases more
come-based guidance implied that the paths of the fed-
quickly or earlier than Treasury purchases in light of val-
eral funds rate and the balance sheet would depend on
uation pressures in housing markets. Several other par-
actual progress toward reaching the Committee’s maxi-
ticipants, however, commented that reducing the pace
mum-employment and inflation goals. In light of the
of Treasury and MBS purchases commensurately was
incoming data and the implications for their economic
preferable because this approach would be well aligned
outlooks, a few participants mentioned that they ex-
with the Committee’s previous communications or be-
pected the economic conditions set out in the Commit-
cause purchases of Treasury securities and MBS both
tee’s forward guidance for the federal funds rate to be
provide accommodation through their influence on
met somewhat earlier than they had projected in March.
broader financial conditions. In coming meetings, par-
Several participants emphasized, however, that uncer-
ticipants agreed to continue assessing the economy’s
tainty around the economic outlook was elevated and
progress toward the Committee’s goals and to begin to
that it was too early to draw firm conclusions about the
discuss their plans for adjusting the path and composi-
paths of the labor market and inflation. In their view,
tion of asset purchases. In addition, participants reiter-
this heightened uncertainty regarding the evolution of
ated their intention to provide notice well in advance of
the economy also implied significant uncertainty about
an announcement to reduce the pace of purchases.
the appropriate path of the federal funds rate. Some par-
ticipants noted that communications about the appro- With regard to the implementation of monetary policy,
priate path of policy would be a focus of market partici- participants had observed downward pressure on money
pants in the current environment and commented that it market rates over the intermeeting period and viewed
would be important to emphasize that the Committee’s the possibility of further downward pressure on these
reaction function or commitment to its monetary policy rates in the near term as likely. Consequently, they noted
framework had not changed. that an adjustment to the Federal Reserve’s administered
rates would help keep the federal funds rate well within
Participants discussed the Federal Reserve’s asset pur-
the target range and support smooth market functioning
chases and progress toward the Committee’s goals since
of short-term funding markets. Participants agreed that
last December when the Committee adopted its guid-
ance for asset purchases. The Committee’s standard of
Page 12 Federal Open Market Committee
_____________________________________________________________________________________________

this technical adjustment had no bearing on the appro- would help foster smooth market functioning and ac-
priate path for the federal funds rate or the stance of commodative financial conditions, thereby supporting
monetary policy. the flow of credit to households and businesses.
Committee Policy Action Members agreed that, in assessing the appropriate stance
In their discussion of monetary policy for this meeting, of monetary policy, they would continue to monitor the
members agreed that progress on vaccinations had re- implications of incoming information for the economic
duced the spread of COVID-19 in the United States. outlook and that they would be prepared to adjust the
They noted that amid progress and strong policy sup- stance of monetary policy as appropriate in the event
port, indicators of economic activity and employment that risks emerged that could impede the attainment of
had strengthened. Although the sectors most adversely the Committee’s goals. Members also concurred that, in
affected by the pandemic remained weak, they had assessing the appropriate stance of monetary policy, they
shown improvement. Inflation had risen, largely reflect- would take into account a wide range of information, in-
ing transitory factors. Overall financial conditions re- cluding readings on public health, labor market condi-
mained accommodative, in part reflecting policy tions, inflation pressures and inflation expectations, and
measures to support the economy and the flow of credit financial and international developments.
to U.S. households and businesses. Members also
Members judged that the economic outlook had contin-
agreed that the path of the economy would depend sig-
ued to improve and that the most negative effects of the
nificantly on the course of the virus. Progress on vac-
pandemic on the economy most likely had occurred. As
cinations would likely continue to reduce the effects of
a result, they agreed to remove references in the FOMC
the public health crisis on the economy, but risks to the
statement that noted that the virus was “causing tremen-
economic outlook remained.
dous human and economic hardship” and that “the on-
Members agreed that the Federal Reserve was commit- going public health crisis continues to weigh on the
ted to using its full range of tools to support the U.S. economy.” Instead, they agreed to say that progress on
economy in this challenging time, thereby promoting its vaccinations had reduced the spread of COVID-19 and
maximum-employment and price-stability goals. All would likely continue to reduce the negative economic
members reaffirmed that, in accordance with the Com- effects of the public health crisis.
mittee’s goals to achieve maximum employment and in-
At the conclusion of the discussion, the Committee
flation at the rate of 2 percent over the longer run and
voted to authorize and direct the Federal Reserve Bank
with inflation having run persistently below this longer-
of New York, until instructed otherwise, to execute
run goal, they would aim to achieve inflation moderately
transactions in the SOMA in accordance with the fol-
above 2 percent for some time so that inflation averages
lowing domestic policy directive, for release at 2:00 p.m.:
2 percent over time and longer-term inflation expecta-
tions remain well anchored at 2 percent. Members ex- “Effective June 17, 2021, the Federal Open
pected to maintain an accommodative stance of mone- Market Committee directs the Desk to:
tary policy until those outcomes were achieved.
• Undertake open market operations as nec-
All members agreed to keep the target range for the fed- essary to maintain the federal funds rate in
eral funds rate at 0 to ¼ percent, and they expected that a target range of 0 to ¼ percent.
it would be appropriate to maintain this target range un-
til labor market conditions had reached levels consistent • Increase the System Open Market Ac-
with the Committee’s assessments of maximum employ- count holdings of Treasury securities by
ment and inflation had risen to 2 percent and was on $80 billion per month and of agency mort-
gage-backed securities (MBS) by $40 bil-
track to moderately exceed 2 percent for some time. In
addition, members agreed that it would be appropriate lion per month.
for the Federal Reserve to continue to increase its hold- • Increase holdings of Treasury securities
ings of Treasury securities by at least $80 billion per and agency MBS by additional amounts
month and agency MBS by at least $40 billion per month and purchase agency commercial
until substantial further progress had been made toward mortgage-backed securities (CMBS) as
the Committee’s maximum-employment and price-sta- needed to sustain smooth functioning of
bility goals. They judged that these asset purchases markets for these securities.
 Minutes of the Meeting of June 15–16, 2021 Page 13
_____________________________________________________________________________________________

• Conduct repurchase agreement operations The Committee seeks to achieve maximum em-
to support effective policy implementation ployment and inflation at the rate of 2 percent
and the smooth functioning of short-term over the longer run. With inflation having run
U.S. dollar funding markets. persistently below this longer-run goal, the
Committee will aim to achieve inflation moder-
• Conduct overnight reverse repurchase ately above 2 percent for some time so that in-
agreement operations at an offering rate of flation averages 2 percent over time and
0.05 percent and with a per-counterparty longer‑term inflation expectations remain well
limit of $80 billion per day; the per-
anchored at 2 percent. The Committee expects
counterparty limit can be temporarily in-
to maintain an accommodative stance of mone-
creased at the discretion of the Chair.
tary policy until these outcomes are achieved.
• Roll over at auction all principal payments The Committee decided to keep the target range
from the Federal Reserve’s holdings of for the federal funds rate at 0 to ¼ percent and
Treasury securities and reinvest all princi- expects it will be appropriate to maintain this
pal payments from the Federal Reserve’s target range until labor market conditions have
holdings of agency debt and agency MBS reached levels consistent with the Committee’s
in agency MBS. assessments of maximum employment and in-
flation has risen to 2 percent and is on track to
• Allow modest deviations from stated moderately exceed 2 percent for some time. In
amounts for purchases and reinvestments, addition, the Federal Reserve will continue to
if needed for operational reasons. increase its holdings of Treasury securities by at
• Engage in dollar roll and coupon swap least $80 billion per month and of agency mort-
transactions as necessary to facilitate settle- gage‑backed securities by at least $40 billion per
ment of the Federal Reserve’s agency MBS month until substantial further progress has
transactions.” been made toward the Committee’s maximum
employment and price stability goals. These as-
The vote also encompassed approval of the statement set purchases help foster smooth market func-
below for release at 2:00 p.m.: tioning and accommodative financial condi-
“The Federal Reserve is committed to using its tions, thereby supporting the flow of credit to
full range of tools to support the U.S. economy households and businesses.
in this challenging time, thereby promoting its In assessing the appropriate stance of monetary
maximum employment and price stability goals. policy, the Committee will continue to monitor
Progress on vaccinations has reduced the the implications of incoming information for
spread of COVID-19 in the United States. the economic outlook. The Committee would
Amid this progress and strong policy support, be prepared to adjust the stance of monetary
indicators of economic activity and employ- policy as appropriate if risks emerge that could
ment have strengthened. The sectors most ad- impede the attainment of the Committee’s
versely affected by the pandemic remain weak goals. The Committee’s assessments will take
but have shown improvement. Inflation has into account a wide range of information, in-
risen, largely reflecting transitory factors. Over- cluding readings on public health, labor market
all financial conditions remain accommodative, conditions, inflation pressures and inflation ex-
in part reflecting policy measures to support the pectations, and financial and international de-
economy and the flow of credit to U.S. house- velopments.”
holds and businesses. Voting for this action: Jerome H. Powell, John C.
The path of the economy will depend signifi- Williams, Thomas I. Barkin, Raphael W. Bostic, Michelle
cantly on the course of the virus. Progress on W. Bowman, Lael Brainard, Richard H. Clarida, Mary C.
vaccinations will likely continue to reduce the Daly, Charles L. Evans, Randal K. Quarles, and
effects of the public health crisis on the econ- Christopher J. Waller.
omy, but risks to the economic outlook remain.
Voting against this action: None.
Page 14 Federal Open Market Committee
_____________________________________________________________________________________________

Consistent with the Committee’s decision to leave the

target range for the federal funds rate unchanged, the
Board of Governors voted unanimously to raise the in-
terest rates on required and excess reserve balances to
0.15 percent. Setting the interest rate paid on required
and excess reserve balances 15 basis points above the
bottom of the target range for the federal funds rate is
intended to foster trading in the federal funds market at
rates well within the Federal Open Market Committee’s
target range and to support the smooth functioning of
short-term funding markets. The Board of Governors
also voted unanimously to approve establishment of the
primary credit rate at the existing level of 0.25 percent,
effective June 17, 2021.
It was agreed that the next meeting of the Committee
would be held on Tuesday–Wednesday, July 27–
28, 2021. The meeting adjourned at 10:40 a.m. on
June 16, 2021.
Notation Vote
By notation vote completed on May 18, 2021, the Com-
mittee unanimously approved the minutes of the Com-
mittee meeting held on April 27–28, 2021.

_______________________
James A. Clouse
Secretary