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Minutes of the Federal Open Market Committee

December 14–15, 2021

A joint meeting of the Federal Open Market Committee Paulson, and William Wascher, Associate
and the Board of Governors of the Federal Reserve Sys- Economists
tem was held by videoconference on Tuesday, Decem-
ber 14, 2021, at 9:00 a.m. and continued on Wednesday, Lorie K. Logan, Manager, System Open Market
December 15, 2021, at 9:00 a.m.1 Account

Attendance Patricia Zobel, Deputy Manager, System Open Market

Jerome H. Powell, Chair Account
John C. Williams, Vice Chair
Thomas I. Barkin Ann E. Misback, Secretary, Office of the Secretary,
Raphael W. Bostic Board
Michelle W. Bowman
Lael Brainard Matthew J. Eichner,3 Director, Division of Reserve
Richard H. Clarida Bank Operations and Payment Systems, Board;
Mary C. Daly Michael S. Gibson, Director, Division of
Charles L. Evans Supervision and Regulation, Board; Andreas
Randal K. Quarles Lehnert, Director, Division of Financial Stability,
Christopher J. Waller Board

James Bullard, Esther L. George, Naureen Hassan, Sally Davies, Deputy Director, Division of
Loretta J. Mester, and Kenneth C. Montgomery, International Finance, Board; Michael T. Kiley,
Alternate Members of the Committee Deputy Director, Division of Financial Stability,
Board
Patrick Harker and Neel Kashkari, Presidents of the
Federal Reserve Banks of Philadelphia and Jon Faust and Joshua Gallin, Senior Special Advisers to
Minneapolis, respectively the Chair, Division of Board Members, Board

Meredith Black, Interim President of the Federal William F. Bassett, Antulio N. Bomfim, Burcu Duygan-
Reserve Bank of Dallas Bump, Jane E. Ihrig, Kurt F. Lewis, Chiara Scotti,
and Nitish R. Sinha, Special Advisers to the Board,
James A. Clouse, Secretary Division of Board Members, Board
Matthew M. Luecke, Deputy Secretary
Michelle A. Smith, Assistant Secretary Linda Robertson, Assistant to the Board, Division of
Mark E. Van Der Weide, General Counsel Board Members, Board
Michael Held, Deputy General Counsel
Trevor A. Reeve, Economist David López-Salido and Min Wei, Senior Associate
Stacey Tevlin, Economist Directors, Division of Monetary Affairs, Board;
Beth Anne Wilson, Economist John J. Stevens, Senior Associate Director,
Division of Research and Statistics, Board; Paul R.
Shaghil Ahmed, David Altig, Kartik B. Athreya, Brian Wood,4 Senior Associate Director, Division of
M. Doyle,2 Rochelle M. Edge, Sylvain Leduc, Anna International Finance, Board

1 The Federal Open Market Committee is referenced as the 3 Attended through the discussion of policy normalization
“FOMC” and the “Committee” in these minutes; the Board considerations.
of Governors of the Federal Reserve System is referenced as 4 Attended through the discussion of policy normalization

the “Board” in these minutes. considerations and all of Wednesday’s session.

2 Attended Tuesday’s session only.
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Edward Nelson and Annette Vissing-Jørgensen, Senior Joseph W. Gruber and Geoffrey Tootell, Executive
Advisers, Division of Monetary Affairs, Board; Vice Presidents, Federal Reserve Banks of Kansas
Jeremy B. Rudd, Senior Adviser, Division of City and Boston, respectively
Research and Statistics, Board
David Andolfatto, Anne Baum, Todd E. Clark, Marc
Eric C. Engstrom and Elizabeth K. Kiser, Associate Giannoni, Mark L.J. Wright, and, Nathaniel
Directors, Division of Research and Statistics, Wuerffel,3 Senior Vice Presidents, Federal Reserve
Board; Christopher J. Gust, Associate Director, Banks of St. Louis, New York, Cleveland, Dallas,
Division of Monetary Affairs, Board; Jeffrey D. Minneapolis, and New York, respectively
Walker,3 Associate Director, Division of Reserve
Bank Operations and Payment Systems, Board Roc Armenter, Kathryn B. Chen,3 Jonathan P.
McCarthy, and Matthew D. Raskin,3 Vice
Norman J. Morin, Deputy Associate Director, Division Presidents, Federal Reserve Banks of Philadelphia,
of Research and Statistics, Board; Zeynep Senyuz3 New York, New York, and New York, respectively
and Rebecca Zarutskie, Deputy Associate
Directors, Division of Monetary Affairs, Board Robert Lerman3 and Jamie Pfeifer,3 Assistant Vice
Presidents, Federal Reserve Bank of New York
Brian J. Bonis, Etienne Gagnon,3 and Dan Li, Assistant
Directors, Division of Monetary Affairs, Board; Linsey Molloy,3 Quantitative Policy and Analysis
Paul Lengermann, Assistant Director, Division of Manager, Federal Reserve Bank of New York
Research and Statistics, Board
Developments in Financial Markets and Open
Alyssa G. Anderson, Section Chief, Division of Market Operations
Monetary Affairs, Board; Penelope A. Beattie,2 The manager turned first to a discussion of financial
Section Chief, Office of the Secretary, Board market developments over the period. Financial mar-
kets responded to significant new information about the
Camille Bryan, Senior Project Manager, Division of economy and monetary policy, as well as the emergence
Monetary Affairs, Board of the Omicron variant. Overall, domestic financial con-
ditions tightened modestly but remained near historically
David H. Small, Project Manager, Division of accommodative levels. Expectations for an earlier re-
Monetary Affairs, Board duction in Federal Reserve policy accommodation lifted
short-term interest rates and supported the dollar. While
Randall A. Williams, Group Manager, Division of prices of equities that are sensitive to COVID-19 risks
Monetary Affairs, Board declined significantly, the S&P 500 index was little
changed.
Jonathan E. Goldberg,3 Sebastian Infante, and
Over the period, market participants considered poten-
Francisco Vazquez-Grande, Principal Economists,
tial drivers of the notable decline in far-forward sover-
Division of Monetary Affairs, Board
eign yields in the United States and other advanced econ-
omies. News of the Omicron variant reportedly drove
James Hebden3 and James M. Trevino,3 Lead
safe-haven flows into sovereign bonds, pushing term
Technology Analysts, Division of Monetary
premiums lower. The significant co-movement between
Affairs, Board
far-forward yields and the share prices of firms most af-
fected by social distancing was consistent with this inter-
Zina Bushra Saijid,3 Senior Financial Analyst, Division
pretation. In addition to the effects of the pandemic on
of International Finance, Board
risk sentiment, some discussed the potential for COVID
to become endemic, possibly resulting in modestly lower
Isaiah C. Ahn, Information Management Analyst,
potential growth over time and a lower long-run neutral
Division of Monetary Affairs, Board
level of the federal funds rate.
Becky C. Bareford, First Vice President, Federal Regarding the outlook for U.S. monetary policy, expec-
Reserve Bank of Richmond tations for a reduction in policy accommodation shifted
forward notably. Respondents to the Open Market
 Minutes of the Meeting of December 14–15, 2021 Page 3
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Desk’s surveys of primary dealers and market partici- In discussing recently established backstop facilities, the
pants broadly projected that the Committee would manager noted continued progress towards expanding
quicken the pace of reduction in the Federal Reserve’s access to the standing repurchase agreement (repo) fa-
net purchases of Treasury securities and agency cility (SRF) to depository institutions; a number of insti-
mortgage-backed securities (MBS), and the median re- tutions were currently in the process of becoming SRF
spondent projected net asset purchases to end in March counterparties. The Federal Reserve also continued to
2022. The median respondent’s projected timing for the onboard new counterparties for the Foreign and Inter-
first increase in the target range for the federal funds rate national Monetary Authorities Repo Facility, and cus-
also moved earlier from the first quarter of 2023 to June tomers to the facility now represented the majority of
2022. foreign and international monetary authorities’ custody
holdings of Treasury securities at the Federal Reserve
Although the Desk surveys and interest rate futures in-
Bank of New York. The temporary dollar liquidity swap
dicated expectations for earlier increases in the target
lines established in March 2020 were set to expire on
range than at the time of the November meeting, expec-
December 31; the Committee’s foreign currency di-
tations for the federal funds rate at longer horizons did
rective would be updated at the January meeting to re-
not appear to have risen. In addition, the average of
flect the expiration of those lines.
probability distributions for the federal funds rate re-
ported in the Desk surveys suggested considerable un- Finally, the manager provided an update on the transi-
certainty about the path of the federal funds rate, as sur- tion away from LIBOR (London interbank offered rate).
vey respondents placed significant odds on a range of Overall, considerable progress had been made in the
outcomes. With the likely timing of the beginning of the transition away from LIBOR to the Secured Overnight
removal of policy accommodation considered closer, Financing Rate (SOFR) in cash and derivatives markets.
market participants began to discuss how balance sheet However, a few key areas of work remained.
policy might feature in the Committee’s plan for reduc-
By unanimous vote, the Committee ratified the Desk’s
ing accommodation when warranted, although expecta-
domestic transactions over the intermeeting period.
tions for the timing of the first decline in the balance
There were no intervention operations in foreign curren-
sheet were diffuse.
cies for the System’s account during the intermeeting pe-
The manager turned next to a discussion of foreign de- riod.
velopments. Foreign policy-sensitive rates were rela-
Discussion of Policy Normalization Considerations
tively steady over the intermeeting period, as several cen-
Participants began a discussion of a range of topics as-
tral banks in advanced foreign economies (AFEs) sig-
sociated with the eventual normalization of the stance of
naled somewhat cautious approaches to the removal of
monetary policy. The topics included the lessons
policy accommodation. Market participants continued
learned from the Committee’s previous experience with
to focus on risks related to economic and financial de-
policy normalization, alternative approaches for remov-
velopments in China, though near-term concerns had
ing policy accommodation, the timing and sequencing of
moderated some following steps by Chinese authorities
policy normalization actions, and the appropriate size
to ease policy.
and composition of the Federal Reserve’s balance sheet
Turning to Desk operations and money markets, the in the longer run. They agreed that their discussion at
manager noted that the Desk had reduced net purchases this meeting would be helpful background for the Com-
of Treasury securities and agency MBS in accordance mittee’s future decisions regarding policy normalization.
with the directive issued at the November meeting. No decisions regarding the Committee’s approach were
Overall, the transition to a slower pace of purchases had made at the meeting.
gone smoothly. In money markets, news that a path had
The participants’ discussion was preceded by staff
emerged to a resolution of the debt ceiling impasse led
presentations. The staff reviewed the previous normali-
yields on Treasury bills maturing in December and Jan-
zation episode, including how the Committee com-
uary to decline. Following the resolution, the Treasury
menced normalization by raising the target range for the
was expected to increase bill issuance to restore the
federal funds rate and then reducing the Federal Re-
Treasury General Account to more normal levels. Mar-
serve’s asset holdings in a gradual and predictable man-
ket participants generally were not anticipating signifi-
ner, as well as the timing of these steps. The staff then
cant strains in money market conditions over year end.
discussed some of the channels through which policy
rate and balance sheet actions affect financial conditions
Page 4 Federal Open Market Committee
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and alternative ways these tools could be deployed to re- product (GDP), than it was at the end of the third large-
duce policy accommodation in support of the Commit- scale asset purchase program in late 2014. Participants
tee’s macroeconomic goals. The staff presentation in- noted that the current weighted average maturity of the
cluded assessments of the implications for the yield Federal Reserve’s Treasury holdings was shorter than at
curve of alternative settings of the two tools, the relative the beginning of the previous normalization episode.
uncertainty of the effects of each tool, and the challenges Some observed that, as a result, depending on the size of
associated with conducting and communicating policy any caps put on the pace of runoff, the balance sheet
with multiple tools. Finally, the staff reviewed the expe- could potentially shrink faster than last time if the Com-
rience of foreign central banks with policy normaliza- mittee followed its previous approach in phasing out the
tion. reinvestment of maturing Treasury securities and princi-
pal payments on agency MBS. However, several partic-
Participants judged that several aspects of the previous
ipants raised concerns about vulnerabilities in the Treas-
approach remained applicable in the current environ-
ury market and how those vulnerabilities could affect the
ment. In particular, they noted that the principles and
appropriate pace of balance sheet normalization. A cou-
plans underlying policy normalization were communi-
ple of participants noted that the SRF could help to mit-
cated in advance of any decisions or actions, which en-
igate such concerns. Participants also judged the Federal
hanced the public’s understanding and thus the effec-
Reserve to be better positioned for normalization than
tiveness of monetary policy during that period. At the
in the past, as the ample-reserves framework and the
same time, participants remarked that the previous ex-
Federal Reserve’s current interest rate control tools, in-
perience highlighted the benefits of maintaining the flex-
cluding interest on reserve balances and the overnight
ibility to adjust the details of the approach to normaliza-
reverse repurchase agreement (ON RRP) facility, are in
tion in response to economic and financial develop-
place and working well. Some participants judged that a
ments. Participants generally emphasized that, as in the
significant amount of balance sheet shrinkage could be
previous normalization episode and as expressed in the
appropriate over the normalization process, especially in
Committee’s Statement on Longer-Run Goals and Mon-
light of abundant liquidity in money markets and ele-
etary Policy Strategy, changes in the target range for the
vated usage of the ON RRP facility.
federal funds rate should be the Committee’s primary
means for adjusting the stance of monetary policy in Participants had an initial discussion about the appropri-
support of its maximum-employment and price-stability ate conditions and timing for starting balance sheet run-
objectives. This preference reflected the view that there off relative to raising the federal funds rate from the
is less uncertainty about the effects of changes in the fed- ELB. They also discussed how this relative timing might
eral funds rate on the economy than about the effects of differ from the previous experience, in which balance
changes in the Federal Reserve’s balance sheet. Moreo- sheet runoff commenced almost two years after policy
ver, participants stated that the federal funds rate is a rate liftoff when the normalization of the federal funds
more familiar tool to the general public and therefore is rate was judged to be well under way. Almost all partic-
advantageous for communication purposes. A few par- ipants agreed that it would likely be appropriate to initi-
ticipants also noted that when the federal funds rate is ate balance sheet runoff at some point after the first in-
away from the effective lower bound (ELB), the Com- crease in the target range for the federal funds rate.
mittee could more nimbly change interest rate policy However, participants judged that the appropriate tim-
than balance sheet policy in response to economic con- ing of balance sheet runoff would likely be closer to that
ditions. of policy rate liftoff than in the Committee’s previous
experience. They noted that current conditions included
Participants also discussed some key differences be-
a stronger economic outlook, higher inflation, and a
tween current economic conditions and those that pre-
larger balance sheet and thus could warrant a potentially
vailed during the previous episode and remarked that the
faster pace of policy rate normalization. They empha-
Committee would have to take these differences into ac-
sized that the decision to initiate runoff would be data
count in removing policy accommodation. Most nota-
dependent.
bly, participants remarked that the current economic
outlook was much stronger, with higher inflation and a Some participants commented that removing policy ac-
tighter labor market than at the beginning of the previ- commodation by relying more on balance sheet reduc-
ous normalization episode. They also observed that the tion and less on increases in the policy rate could help
Federal Reserve’s balance sheet was much larger, both in limit yield curve flattening during policy normalization.
dollar terms and relative to nominal gross domestic
 Minutes of the Meeting of December 14–15, 2021 Page 5
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A few of these participants raised concerns that a rela- longer run. To achieve such a composition, some par-
tively flat yield curve could adversely affect interest mar- ticipants favored reinvesting principal from agency MBS
gins for some financial intermediaries, which may raise into Treasury securities relatively soon or letting agency
financial stability risks. However, a couple of other par- MBS run off the balance sheet faster than Treasury se-
ticipants referenced staff analysis and previous experi- curities.
ence in noting that many factors can affect longer-dated
Participants welcomed additional analysis from the staff
yields, making it difficult to judge how a different policy
on issues related to normalization and agreed that con-
mix would affect the shape of the yield curve.
tinuing their deliberations at upcoming meetings would
Many participants judged that the appropriate pace of be useful.
balance sheet runoff would likely be faster than it was
Staff Review of the Economic Situation
during the previous normalization episode. Many par-
The information available at the time of the Decem-
ticipants also judged that monthly caps on the runoff of
ber 14–15 meeting suggested that U.S. real GDP growth
securities could help ensure that the pace of runoff
was picking up in the fourth quarter after having slowed
would be measured and predictable, particularly given
in the third quarter. Labor market conditions continued
the shorter weighted average maturity of the Federal Re-
to improve in October and November, and measures of
serve’s Treasury security holdings.
compensation had risen sharply so far this year. Con-
Participants discussed considerations regarding the sumer price inflation through October—as measured by
longer-run size of the balance sheet consistent with the the 12-month percentage change in the price index for
efficient and effective implementation of monetary pol- personal consumption expenditures (PCE)—remained
icy in an ample-reserves regime. Participants noted that elevated.
the current size of the balance sheet is elevated and
Total nonfarm payroll employment rose solidly, on av-
would likely remain so for some time after the process
erage, in October and November, but the average gain
of normalizing the balance sheet was under way. Several
was below that seen in recent quarters. The unemploy-
participants noted that the level of reserves that would
ment rate declined from 4.8 percent in September to
ultimately be needed to implement monetary policy ef-
4.2 percent in November; the unemployment rates for
fectively is uncertain, because the underlying demand for
African Americans and Hispanics also declined substan-
reserves by banks is time varying. In light of this uncer-
tially over this period, but both rates remained well
tainty and the Committee’s previous experience, a cou-
above the national average. The labor force participa-
ple of participants expressed a preference to allow for a
tion rate and the employment-to-population ratio both
substantial buffer level of reserves to support interest
moved up in November. Private-sector job openings, as
rate control. Participants noted that it would be im-
measured by the Job Openings and Labor Turnover Sur-
portant to carefully monitor developments in money
vey, remained well above pre-pandemic levels; quits
markets as the level of reserves fell to help inform the
rates also stayed elevated despite edging down in Octo-
Committee’s eventual assessment of the appropriate
ber. The four-week moving average of initial claims for
level for the balance sheet in the longer run. Some par-
regular state unemployment insurance moved lower
ticipants expressed the view that the SRF would help en-
through early December and was at a level similar to that
sure interest rate control as the size of the balance sheet
seen before the pandemic. Recent weekly estimates of
approached its longer-run level; several participants
private-sector payrolls constructed by the Board’s staff
noted that the SRF could facilitate a faster runoff of the
using data provided by the payroll processor ADP
balance sheet than might otherwise be the case; several
pointed to a further increase in private employment
participants raised the possibility that the establishment
through early December. Average hourly earnings rose
of the SRF could reduce the demand for reserves in the
4.8 percent over the 12 months ending in November,
longer run, suggesting that the longer-run balance sheet
with sizable wage gains observed across most sectors.
could be smaller than otherwise.
Inflation readings remained high, and various indicators
Participants also discussed the composition of the Fed-
suggested that inflationary pressures had broadened in
eral Reserve’s asset holdings. Consistent with the previ-
recent months. Total PCE price inflation was 5.0 per-
ous normalization principles, some participants ex-
cent over the 12 months ending in October, and core
pressed a preference for the Federal Reserve’s asset
PCE price inflation, which excludes changes in con-
holdings to consist primarily of Treasury securities in the
sumer energy prices and many consumer food prices,
was 4.1 percent over the same period. The trimmed
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mean measure of 12-month PCE inflation constructed Total real government purchases appeared to be rising
by the Federal Reserve Bank of Dallas was 2.6 percent moderately again in the fourth quarter. Federal defense
in October, an increase of 0.6 percentage point relative spending rose, on net, in October and November rela-
to two months earlier. In November, the 12-month tive to the third quarter. However, growth in state and
change in the consumer price index (CPI) was 6.8 per- local government purchases appeared to be moderating,
cent, while core CPI inflation was 4.9 percent over the as payrolls decreased in October and November, and
same period. Survey-based measures of medium- and nominal state and local construction expenditures in Oc-
longer-run inflation expectations—including those from tober were only a little above their third-quarter level.
the University of Michigan Surveys of Consumers, the
After reaching a record level in September, the U.S. in-
Federal Reserve Bank of New York’s Survey of Con-
ternational trade deficit narrowed in October, reflecting
sumer Expectations, and the Survey of Professional
a large rebound in exports. The export rebound was
Forecasters—leveled off after having risen over the past
broad based, with sizable increases in real exports of in-
year.
dustrial supplies, capital goods, agricultural products,
Real PCE growth appeared to be picking up in the and consumer goods. Exports of automotive products
fourth quarter despite an upturn in COVID-19 cases, also picked up after having been low in recent months.
the waning effect of previous fiscal stimulus measures, Real imports were little changed in October, with in-
lingering supply bottlenecks, and recent increases in con- creases in imports of automotive products and con-
sumer prices. In particular, real expenditures on retail sumer goods offset by a decline in industrial supplies.
goods rose solidly again in October, and outlays for ser- Shipping congestion and other bottlenecks continued to
vices strengthened. In November, however, the com- restrain overall trade in goods. Exports and imports of
ponents of the nominal retail sales data used to estimate services edged up in October but remained low relative
PCE stepped down, possibly reflecting some holiday to pre-pandemic levels, largely because international
sales having been pulled forward to October. Light mo- travel was still depressed.
tor vehicle sales in October and November were below
Incoming data were consistent with a pickup in foreign
their third-quarter average (though they were up, on net,
economic growth in the current quarter, driven mainly
relative to September), as extremely low dealer invento-
by the reopening of Asian economies following lock-
ries continued to constrain sales. Housing demand re-
downs earlier in the year to contain a resurgence of
mained strong, but indicators of housing-sector activity,
COVID-19 cases. Strong gains in intra-Asian trade and
including housing starts and home sales, were generally
solid readings of purchasing managers indexes also pro-
little changed in October. Shortages of construction ma-
vided some early signs that production bottlenecks in the
terials appeared to have hampered building completions,
region were easing. In contrast, the introduction of new
and there was limited availability of lots ready for con-
public health restrictions in Europe in response to a new
struction.
wave of COVID-19 infections appeared to have re-
Growth in business fixed investment appeared to be ris- strained economic activity in some European econo-
ing at a slow pace again in the fourth quarter, as supply mies. More recently, the detection and rapid spread of
bottlenecks continued to weigh on business equipment the Omicron variant prompted new international travel
spending, and the limited availability of construction ma- restrictions in many foreign economies. Inflation
terials was still holding back spending on nonresidential abroad continued to rise, mostly driven by further in-
structures. creases in retail energy and food prices. In addition, cost
pressures from persistent bottlenecks in supply and
Manufacturing output increased in October, and availa-
transportation were reflected in record-high input and
ble indicators of production were consistent with an-
output price components of the purchasing managers in-
other gain in November. Motor vehicle output moved
dexes.
up in October from its low level in September, as most
assembly plants previously shuttered by semiconductor Staff Review of the Financial Situation
chip shortages had reopened. Outside of motor vehi- Over the intermeeting period, rising inflation and
cles, manufacturing production also rose in October, FOMC communications appeared to have put substan-
partly reflecting the continued recovery from the effects tial upward pressure on shorter-dated Treasury yields.
of Hurricane Ida on the output of the petrochemical, re- Even so, longer-dated Treasury yields declined, on net,
fining, and plastic resins industries. in part reflecting renewed concerns among market par-
 Minutes of the Meeting of December 14–15, 2021 Page 7
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ticipants about the course of the pandemic and associ- Foreign asset prices fluctuated over the intermeeting pe-
ated safe-haven flows. Pandemic-related fears as well as riod in response to central bank communications, head-
concerns about inflation and tighter monetary policy ap- lines regarding COVID-related restrictions in some
parently weighed on risky asset prices despite continued countries, and the spread of the Omicron variant. On
robust economic data. In domestic markets, broad eq- net, AFE sovereign yields declined, major foreign equity
uity price indexes were little changed, equity market vol- indexes generally edged down, and the broad dollar in-
atility increased markedly, and spreads on corporate dex increased modestly. Emerging market economy
bonds widened moderately. In AFEs, sovereign yields (EME) sovereign spreads widened, and capital flows
declined, and major equity indexes edged down. Short- into EME-dedicated funds turned slightly negative in the
term funding markets were stable, while participation in second half of November, partly in response to concerns
the ON RRP facility increased further. Overall, financ- about the Omicron variant. A credit agency declared
ing conditions for businesses and households remained two heavily indebted Chinese property developers to be
accommodative except for small businesses and in “restricted default,” hurting asset prices in China’s real
nonprime borrowers. estate sector, but spillovers to broader financial markets
were limited.
Market participants’ views on the expected path for the
federal funds rate—as implied by a straight read of over- In domestic credit markets, financing conditions for
night index swap quotes—suggested that they had pulled nonfinancial corporations remained accommodative.
forward expected rate increases more into 2022 and Gross corporate bond issuance by both investment- and
2023 compared with the timing they anticipated at the speculative-grade borrowers was solid, and gross lever-
time of the previous FOMC meeting. The potential for aged loan issuance was robust. Equity raised through
a less accommodative policy stance over the next few traditional initial public offerings also was strong, but eq-
years contributed to a notable rise in two- and five-year uity issuance through special purpose acquisition com-
Treasury yields. panies remained much weaker than earlier this year. In
November, commercial and industrial (C&I) loans on
On net, inflation compensation had declined moderately
banks’ books grew for the first time since the beginning
since the November FOMC meeting, as heightened con-
of the year. The share of Paycheck Protection Program
cerns about the inflation outlook appeared to be out-
loans in C&I loan balances at banks continued to fall in
weighed by increases in the perceived prospects for
the third quarter amid ongoing forgiveness of those
tighter monetary policy and by fears about the course of
loans.
the pandemic. Renewed concerns about the course of
the pandemic also contributed to a decline in the 10-year The credit quality of large nonfinancial corporations re-
Treasury yield, on net, over the intermeeting period de- mained solid amid strong earnings growth. S&P 500
spite stronger-than-anticipated data on economic activ- firms’ earnings reports for the third quarter again ex-
ity and surprisingly high inflation. ceeded analyst expectations. In November, the volume
of upgrades outpaced that of downgrades for both in-
Broad equity indexes were little changed, on net, since
vestment- and speculative-grade nonfinancial corporate
the previous FOMC meeting, as strong economic data
bonds. Trailing default rates on corporate bonds and
appeared to offset concerns regarding monetary policy,
leveraged loans declined to close to historical lows in
inflation, and the pandemic. Spreads of both invest-
October and November, and market indicators of future
ment- and speculative-grade corporate bonds widened
default expectations remained benign.
moderately, and spreads of municipal bonds were little
changed. In the municipal bond market, issuance was robust in
October and November, and financing conditions re-
Short-term funding markets were stable over the inter-
mained accommodative, supported by low yields. The
meeting period. Throughout the period, the effective
credit quality of municipal debt continued to be stable,
federal funds rate remained at 8 basis points apart from
as the number of bond upgrades outpaced downgrades,
a brief decrease on the November month-end, and the
and defaults were relatively low.
SOFR remained at 5 basis points. Participation in ON
RRP operations increased slightly to an average of Survey-based indicators suggested that credit supply
$1.5 trillion. conditions for small firms remained stable but tighter
than before the pandemic. Small business loan origina-
tions ticked down in October, likely reflecting weak loan
Page 8 Federal Open Market Committee
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demand as suggested by survey-based and market indi- expected to step down to 2.1 percent in 2022 and to re-
cators. Broad measures of small businesses’ financial main there in 2023 and 2024. Projected inflation over
health improved slightly. Short- and long-term delin- this period was a little higher than in the previous pro-
quency rates on loans to small businesses remained jection, as supply bottlenecks were assumed to resolve
roughly in line with their pre-pandemic levels. more gradually and as the salience of this year’s higher
inflation readings was assumed to raise the underlying
Financing conditions in commercial real estate (CRE)
trend in inflation relative to the previous forecast.
markets remained accommodative. CRE loan balances
Longer-run inflation was still assumed to remain an-
on banks’ books continued to expand at a solid pace in
chored at 2 percent.
October and November. Issuance of commercial mort-
gage-backed securities (CMBS) continued to be strong, The staff’s forecast for economic activity remained
supported by spreads of agency and non-agency CMBS strong but was weaker, on net, than in the November
that were generally at or below pre-pandemic levels. De- projection. Although aggregate demand appeared to be
linquency rates on mortgages in CMBS pools continued rising sharply in the fourth quarter, the emerging surge
to fall but remained elevated for loans backed by hotel in COVID-19 caseloads and hospitalizations was ex-
and retail properties. pected to weigh on economic activity in the winter
months. In addition, supply bottlenecks were expected
In the residential mortgage market, financing conditions
to resolve more gradually than previously assumed. All
stayed accommodative, particularly for borrowers who
told, real GDP was expected to post a sizable gain over
met standard conforming loan criteria. Conditions con-
2021 as a whole and to rise a bit less rapidly in 2022, with
tinued to ease for lower-score borrowers but remained
the pace of growth supported by the continued reopen-
somewhat tighter than before the pandemic. Mortgage
ing of the economy and the resolution of supply con-
originations for home purchases and refinances were ro-
straints in most sectors. With the boost from these fac-
bust through November amid historically low mortgage
tors fading, real GDP growth was projected to step
rates. The fraction of mortgage borrowers missing pay-
down noticeably in 2023. Given the higher forecast for
ments continued to decline through October.
inflation, the staff assumed monetary policy would be
Financing conditions for consumer credit remained ac- less accommodative in coming years and therefore re-
commodative for most borrowers, especially those with vised down the medium-term forecast for GDP some-
higher credit scores. Conditions for nonprime consum- what. Even so, the level of real GDP was expected to
ers in the credit card market continued to ease from the remain well above potential throughout the projection
tight levels seen earlier in the pandemic. Growth of period, and labor market conditions were projected to
credit card balances picked up in September and Octo- remain very tight.
ber, and bank credit data indicated a further increase in
The staff continued to judge that the risks to the baseline
November. Growth of auto loans outstanding slowed
projection for economic activity were skewed to the
through October because of tepid auto sales. Use of
downside and that the risks around the inflation projec-
forbearance programs for credit card and auto loans re-
tion were skewed to the upside. In particular, the possi-
mained at low levels in September and October.
bility that COVID-19 cases could continue to rise
Staff Economic Outlook steeply, especially if the Omicron variant proves to be
The projection for U.S. consumer price inflation pre- vaccine resistant, was seen as an important source of
pared by the staff for the December FOMC meeting was downside risk to activity, while the possibility of more
higher than in the November projection. The near-term severe and persistent supply issues was viewed as an ad-
outlook was revised up, reflecting faster-than-expected ditional downside risk to activity and as an upside risk to
increases both for a broad array of consumer prices and inflation.
for wages. Supply chain bottlenecks were seen as con-
Participants’ Views on Current Economic
tinuing to put upward pressure on prices. As a result,
Conditions and the Economic Outlook
the 12-month change in PCE prices was projected to
In conjunction with this FOMC meeting, participants
move up further relative to October’s pace and to end
submitted their projections of the most likely outcomes
the year around 5 percent. Over the following two years,
for real GDP growth, the unemployment rate, and infla-
the boost to consumer prices caused by supply issues
tion for each year from 2021 through 2024 and over the
was expected to partly reverse, and energy prices were
longer run based on their individual assessments of ap-
projected to decline. PCE price inflation was therefore
 Minutes of the Meeting of December 14–15, 2021 Page 9
_____________________________________________________________________________________________

propriate monetary policy, including the path of the fed- household sector, and the high level of savings accumu-
eral funds rate. The longer-run projections represented lated through the course of the pandemic.
each participant’s assessment of the rate to which each
Participants noted that supply chain bottlenecks and la-
variable would be expected to converge, over time, un-
bor shortages continued to limit businesses’ ability to
der appropriate monetary policy and in the absence of
meet strong demand. They judged that these challenges
further shocks to the economy. A Summary of Eco-
would likely last longer and be more widespread than
nomic Projections was released to the public following
previously thought. Participants generally expected
the conclusion of the meeting.
global supply chain bottlenecks to persist well into next
In their discussion of current economic conditions, par- year at least. While several participants pointed to signs
ticipants noted that, with progress on vaccinations and of incremental improvement in supply chains, a few oth-
strong policy support, indicators of economic activity ers remarked that business contacts were experiencing
and employment had continued to strengthen. The sec- deteriorating supply conditions that could be exacer-
tors most adversely affected by the pandemic had im- bated by the emergence of new variants of the virus. A
proved in recent months but continued to be affected by couple of participants reported that some contacts were
COVID-19. Job gains had been solid in recent months, implementing permanent changes in their business mod-
and the unemployment rate had declined substantially. els to help weather current and future disruptions, in-
Supply and demand imbalances related to the pandemic cluding holding larger inventories or building domestic
and the reopening of the economy had continued to manufacturing capacity. Many business contacts contin-
contribute to elevated levels of inflation. Overall finan- ued to experience difficulty hiring workers across all skill
cial conditions remained accommodative, in part reflect- levels, noting the lack of qualified candidates as well.
ing policy measures to support the economy and the Some participants noted that businesses were offering
flow of credit to U.S. households and businesses. Par- higher wages, larger bonuses, or more flexible work ar-
ticipants commented that the path of the economy con- rangements to compete for workers.
tinued to depend on the course of the virus. An easing
Participants judged that labor markets continued to
of supply constraints was expected to support continued
strengthen, with the unemployment rate falling rapidly
gains in economic activity and employment as well as a
and payrolls growing at a solid pace. A few participants
reduction in inflation. Risks to the economic outlook
noted the recent decline in the unemployment rates of
remained, including from new variants of the virus.
African Americans and Hispanics and the narrowing of
Participants observed that growth of economic activity the racial and ethnic gap in the prime-age employment-
appeared to have been strong in the fourth quarter after to-population ratio as suggesting a more inclusive labor
having slowed in the third quarter, and they generally ex- market recovery. Some participants discussed the mod-
pected robust growth to continue in 2022. A few partic- est increase in the labor force participation rate in No-
ipants cited healthy household balance sheets, the need vember. A number of participants judged that a sub-
for businesses to rebuild inventory, and accommodative stantial improvement in labor force participation would
financial conditions as factors supporting continued ro- take longer than previously expected. A few others as-
bust growth. A couple of participants commented that sessed that any further improvement in labor force par-
business conditions appeared to be improving broadly, ticipation would be quite modest. Participants cited a
including in sectors providing in-person services, such as number of pandemic and economic factors likely de-
the retail, restaurant, and hotel sectors. Many partici- pressing labor force participation, such as increased
pants noted that the emergence of the Omicron variant caregiving needs amid a shortage of workers in the care-
made the economic outlook more uncertain; several re- giving industry, remaining concerns about the virus, and
marked that they did not yet see the new variant as fun- healthy balance sheets for households, including for
damentally altering the path of economic recovery in the those who retired early. A couple of participants cited
United States. factors that could support higher labor force participa-
tion over the next few years, including waning fiscal
In their discussion of the household sector, participants
stimulus; depleted savings, particularly for lower-income
generally noted that demand for consumer goods had
households; and the historical tendency for labor force
remained strong, likely supported by accommodative fis-
participation to lag improvement in the labor market.
cal and monetary policies, increased household income
as more people found jobs, increasing net worth of the Participants pointed to a number of signs that the U.S.
labor market was very tight, including near-record rates
Page 10 Federal Open Market Committee
_____________________________________________________________________________________________

of quits and job vacancies, as well as a notable pickup in could potentially affect the anchoring of inflation expec-
wage growth. In line with the recent data showing a rise tations. A few participants, however, noted that long-
in the employment cost index, many participants re- term inflation expectations remained well anchored, cit-
ported District business contacts either planning or hav- ing stable readings of market-based inflation compensa-
ing implemented larger wage increases to retain current tion measures or the generally low level of longer-term
employees or attract new workers. Participants generally bond yields.
noted that they were monitoring the incoming data for
Participants observed that uncertainty about the eco-
signs of inflationary pressures associated with the in-
nomic outlook remained high. Most agreed that risks to
creasingly tight labor market. Acknowledging that the
inflation were weighted to the upside. Several partici-
maximum level of employment consistent with price sta-
pants pointed to the possibility that structural factors
bility may evolve over time, many participants saw the
that kept inflation low in the previous decade, such as
U.S. economy making rapid progress toward the Com-
technological changes, demographics, and the proximity
mittee’s maximum-employment goal. Several partici-
of the ELB in an environment of low equilibrium inter-
pants viewed labor market conditions as already largely
est rates, may reemerge when the effects of the pan-
consistent with maximum employment.
demic abate. A couple of others noted the risk that per-
Participants remarked that inflation readings had been sistent real wage growth in excess of productivity growth
higher and were more persistent and widespread than could trigger inflationary wage–price dynamics. Partici-
previously anticipated. Some participants noted that pants generally continued to stress uncertainties associ-
trimmed mean measures of inflation had reached dec- ated with the labor market—in particular, the evolution
ade-high levels and that the percentage of product cate- of labor force participation—and with the length of time
gories with substantial price increases continued to required to resolve the supply chain situation. Many par-
climb. While participants generally continued to antici- ticipants noted that the pandemic, particularly new vari-
pate that inflation would decline significantly over the ants of the virus, continued to pose downside risks to
course of 2022 as supply constraints eased, almost all economic activity and upside risks to inflation.
stated that they had revised up their forecasts of inflation
In their consideration of the stance of monetary policy,
for 2022 notably, and many did so for 2023 as well. In
participants reaffirmed the Federal Reserve’s commit-
discussing their revisions to the inflation outlook, partic-
ment to using its full range of tools to support the U.S.
ipants pointed to rising housing costs and rents, more
economy during this challenging time, thereby promot-
widespread wage growth driven by labor shortages, and
ing the Committee’s statutory goals of maximum em-
more prolonged global supply-side frictions, which
ployment and price stability. Participants discussed the
could be exacerbated by the emergence of the Omicron
progress the economy had made toward the criteria the
variant. Moreover, participants widely cited business
Committee had specified in its forward guidance for the
contacts feeling confident that they would be able to
federal funds rate. Participants agreed that the Commit-
pass on higher costs of labor and material to customers.
tee’s criteria of inflation rising to 2 percent and moder-
Participants noted their continuing attention to the pub-
ately exceeding 2 percent for some time had been more
lic’s concern about the sizable increase in the cost of liv-
than met. All participants remarked that inflation had
ing that had taken place this year and the associated bur-
continued to run notably above 2 percent, reflecting sup-
den on U.S. households, particularly those who had lim-
ply and demand imbalances related to the pandemic and
ited scope to pay higher prices for essential goods and
the reopening of the economy. With respect to the max-
services.
imum-employment criterion, participants noted that the
In their comments on inflation expectations, some par- labor market had been making rapid progress as meas-
ticipants discussed the risk that recent elevated levels of ured by a variety of indicators, including solid job gains
inflation could increase the public’s longer-term expec- reported in recent months, a substantial further decline
tations for inflation to a level above that consistent with in a range of unemployment rates to levels well below
the Committee’s longer-run inflation objective. They those prevailing a year ago, and a labor force participa-
noted that the realization of such a development could tion rate that had recently edged up. Many participants
make it harder for the Committee to achieve 2 percent judged that, if the current pace of improvement contin-
inflation over the longer run. A couple of participants ued, labor markets would fast approach maximum em-
pointed to reports of higher inflation expectations of ployment. Several participants remarked that they
businesses and of increased use of cost-of-living adjust- viewed labor market conditions as already largely con-
ments in wage negotiations as early developments that sistent with maximum employment.
 Minutes of the Meeting of December 14–15, 2021 Page 11
_____________________________________________________________________________________________

In support of the Committee’s goals of maximum em- noted that, given their individual outlooks for the econ-
ployment and inflation at the rate of 2 percent over the omy, the labor market, and inflation, it may become war-
longer run, participants judged that it would be appro- ranted to increase the federal funds rate sooner or at a
priate for the Committee to keep the target range for the faster pace than participants had earlier anticipated.
federal funds rate at 0 to ¼ percent until labor market Some participants also noted that it could be appropriate
conditions had reached levels consistent with the Com- to begin to reduce the size of the Federal Reserve’s bal-
mittee’s assessments of maximum employment, a condi- ance sheet relatively soon after beginning to raise the
tion most participants judged could be met relatively federal funds rate. Some participants judged that a less
soon if the recent pace of labor market improvements accommodative future stance of policy would likely be
continued. A few participants remarked that maximum warranted and that the Committee should convey a
employment consistent with price stability evolves over strong commitment to address elevated inflation pres-
time and that further improvements in labor markets sures. These participants noted, however, that a meas-
were likely over subsequent years as the economy con- ured approach to tightening policy would help enable
tinued to expand. Some participants also remarked that the Committee to assess incoming data and be in posi-
there could be circumstances in which it would be ap- tion to react to the full range of plausible economic out-
propriate for the Committee to raise the target range for comes.
the federal funds rate before maximum employment had
Committee Policy Action
been fully achieved—for example, if the Committee
In their discussion of monetary policy for this meeting,
judged that its employment and price-stability goals were
members agreed that with progress on vaccinations and
not complementary in light of economic developments
strong policy support, indicators of economic activity
and that inflation pressures and inflation expectations
and employment had continued to strengthen. They
were moving materially and persistently higher in a way
noted that the sectors most adversely affected by the
that could impede the attainment of the Committee’s
pandemic had improved in recent months but continued
longer-run goals.
to be affected by COVID-19. Job gains had been solid
In light of elevated inflation pressures and the strength- in recent months, and the unemployment rate had de-
ening labor market, participants judged that the increase clined substantially. They remarked that supply and de-
in policy accommodation provided by the ongoing pace mand imbalances related to the pandemic and the reo-
of net asset purchases was no longer necessary. They pening of the economy had continued to contribute to
remarked that a quicker conclusion of net asset pur- elevated levels of inflation. Overall financial conditions
chases would better position the Committee to set policy remained accommodative, in part reflecting policy
to address the full range of plausible economic out- measures to support the economy and the flow of credit
comes. Participants judged that it would be appropriate to U.S. households and businesses. Members also
to double the pace of the ongoing reduction in net asset acknowledged that the path of the economy continued
purchases. Such a change would result in reducing the to depend on the course of the virus. Progress on vac-
monthly pace of net purchases of Treasury securities by cinations and an easing of supply constraints were ex-
$20 billion and of agency MBS by $10 billion starting in pected to support continued gains in economic activity
January. Participants also expected that economic con- and employment as well as a reduction in inflation, but
ditions would evolve in a manner such that similar re- risks to the economic outlook remained, including from
ductions in the pace of net asset purchases would be ap- new variants of the virus.
propriate each subsequent month, resulting in an end to
As elevated inflation had persisted for longer than they
net asset purchases in mid-March, a few months sooner
had previously anticipated, members agreed that it was
than participants had anticipated at the November
appropriate to remove the reference to “transitory” fac-
FOMC meeting. In addition, participants remarked that
tors affecting inflation in the postmeeting statement and
the Committee should continue to be prepared to adjust
instead note that supply and demand imbalances have
the pace of purchases if warranted by changes in the eco-
continued to contribute to elevated inflation. Members
nomic outlook.
also agreed that, with the emergence of the Omicron
Participants continued to stress that maintaining flexibil- variant, it was appropriate to note the risk of new vari-
ity to implement appropriate policy adjustments on the ants of the virus in their assessment of risks to the eco-
basis of risk-management considerations should be a nomic outlook.
guiding principle in conducting policy in the current
highly uncertain environment. Participants generally
Page 12 Federal Open Market Committee
_____________________________________________________________________________________________

Members agreed that the Federal Reserve was commit- the Committee’s goals. They also concurred that, in as-
ted to using its full range of tools to support the U.S. sessing the appropriate stance of monetary policy, they
economy in this challenging time, thereby promoting its would take into account a wide range of information, in-
maximum employment and price stability goals. All cluding readings on public health, labor market condi-
members reaffirmed their commitment to seek to tions, inflation pressures and inflation expectations, and
achieve maximum employment and inflation at the rate financial and international developments.
of 2 percent over the longer run.
At the conclusion of the discussion, the Committee
Members agreed that the postmeeting statement should voted to authorize and direct the Federal Reserve Bank
be updated to reflect the Committee’s assessment of the of New York, until instructed otherwise, to execute
progress the economy had made toward the criteria transactions in the System Open Market Account in ac-
specified in its forward guidance for the target range for cordance with the following domestic policy directive,
the federal funds rate. They agreed that the inflation cri- for release at 2:00 p.m.:
teria in the guidance had been met and that the
“Effective December 16, 2021, the Federal
postmeeting statement should note that with inflation
Open Market Committee directs the Desk to:
having exceeded 2 percent for some time, the Commit-
tee expected that it would be appropriate to maintain the  Undertake open market operations as nec-
current target range of 0 to ¼ percent until labor market essary to maintain the federal funds rate in
conditions had reached levels consistent with the Com- a target range of 0 to ¼ percent.
mittee’s assessments of maximum employment.
 Complete the increase in System Open
In light of inflation developments and the further im- Market Account (SOMA) holdings of
provement in the labor market, members decided to re- Treasury securities by $60 billion and of
duce the monthly pace of the Federal Reserve’s net asset agency mortgage-backed securities (MBS)
purchases by $20 billion for Treasury securities and by $30 billion, as indicated in the monthly
$10 billion for agency MBS. Specifically, beginning in purchase plans released in mid-December.
January, the Committee would increase its holdings of
Treasury securities by at least $40 billion per month and  Increase the SOMA holdings of Treasury
of agency MBS by at least $20 billion per month. Mem- securities by $40 billion and of agency
bers also agreed that similar reductions in the pace of net MBS by $20 billion, during the monthly
asset purchases would likely be appropriate in subse- purchase period beginning in mid-January.
quent months, implying that increases in the Federal Re-
 Increase holdings of Treasury securities
serve’s securities holdings would cease by mid-March and agency MBS by additional amounts as
under the Committee’s outlook, a few months sooner
needed to sustain smooth functioning of
than had been anticipated at the previous meeting.
markets for these securities.
Members noted that the Committee was prepared to ad-
just the pace of purchases if warranted by changes in the  Conduct overnight repurchase agreement
economic outlook and that it was important to maintain operations with a minimum bid rate of
the flexibility to adjust the stance of policy as appropriate 0.25 percent and with an aggregate opera-
in response to changes in the Committee’s outlook for tion limit of $500 billion; the aggregate op-
the labor market and inflation. Members also noted that eration limit can be temporarily increased
the Federal Reserve’s ongoing asset purchases and hold- at the discretion of the Chair.
ings of securities would continue to foster smooth mar-
ket functioning and accommodative financial condi-  Conduct overnight reverse repurchase
tions, thereby supporting the flow of credit. agreement operations at an offering rate of
0.05 percent and with a per-counterparty
Members agreed that, in assessing the appropriate stance limit of $160 billion per day; the
of monetary policy, they would continue to monitor the per-counterparty limit can be temporarily
implications of incoming information for the economic increased at the discretion of the Chair.
outlook and that they would be prepared to adjust the
stance of monetary policy as appropriate in the event  Roll over at auction all principal payments
that risks emerged that could impede the attainment of from the Federal Reserve’s holdings of
Treasury securities and reinvest all princi-
pal payments from the Federal Reserve’s
 Minutes of the Meeting of December 14–15, 2021 Page 13
_____________________________________________________________________________________________

holdings of agency debt and agency MBS maximum employment. In light of inflation de-
in agency MBS. velopments and the further improvement in the
labor market, the Committee decided to reduce
 Allow modest deviations from stated the monthly pace of its net asset purchases by
amounts for purchases and reinvestments, $20 billion for Treasury securities and $10 bil-
if needed for operational reasons. lion for agency mortgage-backed securities. Be-
 Engage in dollar roll and coupon swap ginning in January, the Committee will increase
transactions as necessary to facilitate settle- its holdings of Treasury securities by at least
ment of the Federal Reserve’s agency MBS $40 billion per month and of agency mort-
transactions.” gage-backed securities by at least $20 billion per
month. The Committee judges that similar re-
The vote also encompassed approval of the statement ductions in the pace of net asset purchases will
below for release at 2:00 p.m.: likely be appropriate each month, but it is pre-
“The Federal Reserve is committed to using its pared to adjust the pace of purchases if war-
full range of tools to support the U.S. economy ranted by changes in the economic outlook.
in this challenging time, thereby promoting its The Federal Reserve’s ongoing purchases and
maximum employment and price stability goals. holdings of securities will continue to foster
smooth market functioning and accommoda-
With progress on vaccinations and strong policy tive financial conditions, thereby supporting the
support, indicators of economic activity and flow of credit to households and businesses.
employment have continued to strengthen. The
sectors most adversely affected by the pandemic In assessing the appropriate stance of monetary
have improved in recent months but continue policy, the Committee will continue to monitor
to be affected by COVID-19. Job gains have the implications of incoming information for
been solid in recent months, and the unemploy- the economic outlook. The Committee would
ment rate has declined substantially. Supply and be prepared to adjust the stance of monetary
demand imbalances related to the pandemic and policy as appropriate if risks emerge that could
the reopening of the economy have continued impede the attainment of the Committee’s
to contribute to elevated levels of inflation. goals. The Committee’s assessments will take
Overall financial conditions remain accommo- into account a wide range of information, in-
dative, in part reflecting policy measures to sup- cluding readings on public health, labor market
port the economy and the flow of credit to U.S. conditions, inflation pressures and inflation ex-
households and businesses. pectations, and financial and international de-
velopments.”
The path of the economy continues to depend
on the course of the virus. Progress on vaccina- Voting for this action: Jerome H. Powell, John C.
tions and an easing of supply constraints are ex- Williams, Thomas I. Barkin, Raphael W. Bostic, Michelle
pected to support continued gains in economic W. Bowman, Lael Brainard, Richard H. Clarida, Mary C.
activity and employment as well as a reduction Daly, Charles L. Evans, Randal K. Quarles, and
in inflation. Risks to the economic outlook re- Christopher J. Waller.
main, including from new variants of the virus. Voting against this action: None.
The Committee seeks to achieve maximum em- Consistent with the Committee’s decision to leave the
ployment and inflation at the rate of 2 percent target range for the federal funds rate unchanged, the
over the longer run. In support of these goals, Board voted unanimously to maintain the interest rate
the Committee decided to keep the target range paid on reserve balances at 0.15 percent, effective De-
for the federal funds rate at 0 to ¼ percent. cember 16, 2021. The Board also voted unanimously to
With inflation having exceeded 2 percent for approve establishment of the primary credit rate at the
some time, the Committee expects it will be ap- existing level of 0.25 percent, effective December 16,
propriate to maintain this target range until la- 2021.
bor market conditions have reached levels con-
sistent with the Committee’s assessments of
Page 14 Federal Open Market Committee
_____________________________________________________________________________________________

At the end of the meeting, the Chair noted that the

Board’s staff had made substantial progress in develop-
ing formal polices to implement the tough and compre-
hensive ethics rules for senior officials that were an-
nounced in October.
It was agreed that the next meeting of the Committee
would be held on Tuesday–Wednesday, January 25–26,
2022. The meeting adjourned at 11:00 a.m. on Decem-
ber 15, 2021.
Notation Vote
By notation vote completed on November 23, 2021, the
Committee unanimously approved the minutes of the
Committee meeting held on November 2–3, 2021.

_______________________
James A. Clouse
Secretary