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Minutes of the Federal Open Market Committee


November 4–5, 2020
A joint meeting of the Federal Open Market Committee Matthew J. Eichner,2 Director, Division of Reserve
and the Board of Governors was held by videoconfer- Bank Operations and Payment Systems, Board of
ence on Wednesday, November 4, 2020, at 9:00 a.m. and Governors; Michael S. Gibson, Director, Division
continued on Thursday, November 5, 2020, at 9:00 a.m.1 of Supervision and Regulation, Board of
Governors; Andreas Lehnert, Director, Division of
PRESENT: Financial Stability, Board of Governors
Jerome H. Powell, Chair
John C. Williams, Vice Chair Sally Davies and Brian M. Doyle, Deputy Directors,
Michelle W. Bowman Division of International Finance, Board of
Lael Brainard Governors; Michael T. Kiley, Deputy Director,
Richard H. Clarida Division of Financial Stability, Board of Governors
Patrick Harker
Robert S. Kaplan Jon Faust, Senior Special Adviser to the Chair, Division
Loretta J. Mester of Board Members, Board of Governors
Randal K. Quarles
Joshua Gallin, Special Adviser to the Chair, Division of
Thomas I. Barkin, Raphael W. Bostic, Mary C. Daly, Board Members, Board of Governors
Charles L. Evans, and Michael Strine, Alternate
Members of the Federal Open Market Committee William F. Bassett, Antulio N. Bomfim, Wendy E.
Dunn, Kurt F. Lewis, Ellen E. Meade, and Chiara
James Bullard, Esther L. George, and Eric Rosengren, Scotti, Special Advisers to the Board, Division of
Presidents of the Federal Reserve Banks of St. Board Members, Board of Governors
Louis, Kansas City, and Boston, respectively
Linda Robertson, Assistant to the Board, Division of
Ron Feldman, First Vice President, Federal Reserve Board Members, Board of Governors
Bank of Minneapolis
Michael G. Palumbo, Senior Associate Director,
James A. Clouse, Secretary Division of Research and Statistics, Board of
Matthew M. Luecke, Deputy Secretary Governors
Michelle A. Smith, Assistant Secretary
Mark E. Van Der Weide, General Counsel Marnie Gillis DeBoer, David López-Salido, and Min
Michael Held, Deputy General Counsel Wei, Associate Directors, Division of Monetary
Trevor A. Reeve, Economist Affairs, Board of Governors; Glenn Follette,
Stacey Tevlin, Economist Associate Director, Division of Research and
Beth Anne Wilson, Economist Statistics, Board of Governors; Paul Wood,
Associate Director, Division of International
Shaghil Ahmed, Rochelle M. Edge, David E. Lebow, Finance, Board of Governors
Ellis W. Tallman, William Wascher, and Mark L.J.
Wright, Associate Economists Andrew Figura, Deputy Associate Director, Division of
Research and Statistics, Board of Governors;
Lorie K. Logan, Manager, System Open Market Christopher J. Gust, Deputy Associate Director,
Account Division of Monetary Affairs, Board of Governors;
Jeffrey D. Walker,2 Deputy Associate Director,
Ann E. Misback, Secretary, Office of the Secretary, Division of Reserve Bank Operations and Payment
Board of Governors Systems, Board of Governors

1The Federal Open Market Committee is referenced as the 2 Attended through the discussion on asset purchases.
“FOMC” and the “Committee” in these minutes.
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Page 2 Federal Open Market Committee

Brian J. Bonis, Michiel De Pooter, Zeynep Senyuz,2 and Alex Richter, Senior Economist and Advisor, Federal
Rebecca Zarutskie,2 Assistant Directors, Division Reserve Bank of Dallas
of Monetary Affairs, Board of Governors; Paul
Lengermann, Assistant Director, Division of Ryan Bush,2 Markets Manager, Federal Reserve Bank
Research and Statistics, Board of Governors of New York

Matthias Paustian, Assistant Director and Chief, Developments in Financial Markets and Open Mar-
Division of Research and Statistics, Board of ket Operations
Governors The System Open Market Account (SOMA) manager
first discussed developments in financial markets. Fi-
Alyssa G. Anderson,2 Benjamin K. Johannsen,2 and nancial conditions were little changed, on net, over the
Matthew Malloy,2 Section Chiefs, Division of intermeeting period and remained accommodative.
Monetary Affairs, Board of Governors; Penelope Market participants suggested that evolving expectations
A. Beattie,2 Section Chief, Office of the Secretary, for U.S. fiscal policy as well as stronger-than-expected
Board of Governors economic data and corporate earnings reports helped
support equity prices. Later in the intermeeting period,
David H. Small, Project Manager, Division of however, rising COVID-19 cases in Europe and the
Monetary Affairs, Board of Governors United States weighed on the outlook, and equity prices
reversed some of their earlier gains. Implied volatility in
Michele Cavallo, Dobrislav Dobrev, Anna Orlik, and the equity market moved higher during the intermeeting
Judit Temesvary,2 Principal Economists, Division period, reflecting uncertainties associated with the U.S.
of Monetary Affairs, Board of Governors election and the future path of fiscal policy as well as
concerns about the trajectory of COVID-19 cases.
Arsenios Skaperdas,2 Senior Economist, Division of
Market participants’ expectations for the path of the fed-
Monetary Affairs, Board of Governors
eral funds rate were little changed over the intermeeting
period. In the Open Market Desk’s Survey of Primary
Randall A. Williams, Lead Information Manager,
Dealers and Survey of Market Participants, respondents’
Division of Monetary Affairs, Board of Governors
views on when the Committee will most likely start rais-
ing the target range for the federal funds rate were cen-
Gregory L. Stefani, First Vice President, Federal
tered around 2024. Expectations for the economic con-
Reserve Bank of Cleveland
ditions that will prevail when the FOMC first lifts the
target range were little changed since the September sur-
Kartik B. Athreya, Joseph W. Gruber, Glenn D.
veys.
Rudebusch, Daleep Singh, and Christopher J.
Waller, Executive Vice Presidents, Federal Reserve Respondents to the Desk’s surveys generally expected
Banks of Richmond, Kansas City, San Francisco, the Federal Reserve’s purchases of Treasury securities
New York, and St. Louis, respectively and agency mortgage-backed securities (MBS) to con-
tinue at the current pace through the end of 2021 and
Spencer Krane, Antoine Martin,2 Paolo A. Pesenti, and then to slow in subsequent years, although there was a
Nathaniel Wuerffel,2 Senior Vice Presidents, wide range of views about purchase amounts for 2022
Federal Reserve Banks of Chicago, New York, and 2023. Market participants appeared increasingly fo-
New York, and New York, respectively cused on how the Committee’s communications on as-
set purchases might evolve. They expected those com-
Satyajit Chatterjee, Mark J. Jensen, Dina Marchioni,2 munications to place a greater emphasis on fostering ac-
Matthew D. Raskin,2 and Patricia Zobel, Vice commodative financial conditions, and many noted the
Presidents, Federal Reserve Banks of Philadelphia, possibility that at some point the Committee might con-
Atlanta, New York, New York, and New York, vey additional guidance about the future path of asset
respectively purchases. Some market participants expected the Com-
mittee to eventually lengthen the weighted average ma-
Daniel Cooper, Senior Economist and Policy Advisor, turity of the Federal Reserve’s purchases of Treasury se-
Federal Reserve Bank of Boston curities.
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Minutes of the Meeting of November 4–5, 2020 Page 3

The manager turned next to a discussion of financial The participants’ discussion was preceded by staff
market functioning, open market operations, and condi- presentations. The staff reviewed some key considera-
tions in short-term funding markets. Markets for Treas- tions relevant for conducting asset purchases in the cur-
ury securities and agency MBS continued to function rent environment. The staff judged that the Commit-
smoothly, with bid-ask spreads and a range of other mar- tee’s forward guidance on the federal funds rate, the ex-
ket functioning indicators remaining near pre-pandemic pansion of the Federal Reserve’s securities holdings
levels. Weekly operations continued for agency com- since March, and expectations for a further expansion all
mercial mortgage-backed securities (CMBS), with the had contributed to a very low level of longer-term yields
Desk purchasing only modest amounts. Short-term dol- despite substantial Treasury debt issuance. The staff
lar funding markets also continued to function smoothly noted that financial market participants generally ex-
over the period, and forward measures of funding rates pected the Committee to continue its net asset purchases
were consistent with expectations for calm conditions at the current pace through next year and at a reduced
over year-end. pace in subsequent years. The staff discussed various
changes the Committee could make to the structure of
The Federal Reserve’s balance sheet increased modestly
its purchases, including to their pace and composition as
over the intermeeting period to $7.2 trillion, as growth
well as to the guidance the Committee has been provid-
in securities holdings was partially offset by a decline in
ing to the public about its future asset purchases. The
U.S. dollar liquidity swaps outstanding. Outstanding
staff discussed the structure of asset purchase programs
balances for credit and liquidity facilities were little
of several foreign central banks and how they have
changed. The manager noted that market participants
evolved during the pandemic. Finally, the staff evaluated
continued to view these facilities as important backstops
how higher levels of reserves associated with the ongo-
that would support market functioning and the flow of
ing expansion in the Federal Reserve’s asset holdings
credit should stresses reemerge.
might influence banks’ balance sheets and money market
By unanimous vote, the Committee ratified the Desk’s rates and discussed the various tools that the Federal Re-
domestic transactions over the intermeeting period. serve has for managing money market rates in an envi-
There were no intervention operations in foreign curren- ronment with very high levels of reserves.
cies for the System’s account during the intermeeting pe-
In their discussion regarding the role of the Committee’s
riod.
asset purchases, participants noted that these purchases
Discussion on Asset Purchases have supported and sustained smooth market function-
Participants discussed the FOMC’s asset purchases, in- ing and helped foster accommodative financial condi-
cluding the role they are playing in supporting the Com- tions. With market functioning seen as having largely
mittee’s maximum-employment and price-stability goals. recovered, many participants indicated that the role of
In their discussions, participants focused on the objec- asset purchases had shifted more toward fostering ac-
tives of these purchases; considerations for assessing the commodative financial conditions for households and
appropriate pace and composition of asset purchases businesses to support the Committee’s employment and
over time; communications regarding the future path of inflation goals. Still, participants generally judged that
asset purchases; and the potential effects of higher levels asset purchases would continue to support smooth mar-
of reserves, associated with the ongoing expansion in ket functioning, and many judged that asset purchases
Federal Reserve asset holdings, on banks’ balance sheets helped provide insurance against risks that might
and money market rates. Participants agreed that this reemerge in financial markets in an environment of high
discussion would be helpful for future assessments of uncertainty. A few participants indicated that asset pur-
the appropriate structure of the Committee’s asset pur- chases could also help guard against undesirable upward
chases. While participants judged that immediate adjust- pressure on longer-term rates that could arise, for exam-
ments to the pace and composition of asset purchases ple, from higher-than-expected Treasury debt issuance.
were not necessary, they recognized that circumstances Several participants noted the possibility that there may
could shift to warrant such adjustments. Accordingly, be limits to the amount of additional accommodation
participants saw the ongoing careful consideration of that could be provided through increases in the Federal
potential next steps for enhancing the Committee’s guid- Reserve’s asset holdings in light of the low level of
ance for its asset purchases as appropriate. longer-term yields, and they expressed concerns that a
significant expansion in asset holdings could have unin-
tended consequences.
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Page 4 Federal Open Market Committee

Participants commented on considerations related to the be well coordinated in terms of achieving the Commit-
appropriate pace and composition of asset purchases. tee’s objectives. Most participants judged that the guid-
Participants generally saw the current pace and compo- ance for asset purchases should imply that increases in
sition as effective in fostering accommodative financial the Committee’s securities holdings would taper and
conditions. Participants noted that the Committee could cease sometime before the Committee would begin to
provide more accommodation, if appropriate, by in- raise the target range for the federal funds rate. A num-
creasing the pace of purchases or by shifting its Treasury ber of participants highlighted the view that after net
purchases to those with a longer maturity without in- purchases cease there would likely be a period of time in
creasing the size of its purchases. Alternatively, the which maturing assets would be reinvested to roughly
Committee could provide more accommodation, if ap- maintain the size of the Federal Reserve’s securities
propriate, by conducting purchases of the same pace and holdings.
composition over a longer horizon. Pointing to the re-
Participants commented on how a higher level of re-
cently announced change in the Bank of Canada’s asset
serves associated with the expansion in the Federal Re-
purchase program, several participants judged that the
serve’s asset holdings might affect the banking sector
Committee could maintain its current degree of accom-
and money markets. A few participants raised concerns
modation by lengthening the maturity of the Commit-
about the possibility that much higher levels of reserves
tee’s Treasury purchases while reducing the pace of pur-
might create pressure on banks’ balance sheets, includ-
chases somewhat. In their view, such a change in the
ing on regulatory ratios, or could potentially put undue
Committee’s purchase structure would have to be care-
downward pressure on money market rates. Most par-
fully communicated to the public to avoid the misper-
ticipants judged that the Federal Reserve had effective
ception that the reduced pace of purchases represented
tools to address these circumstances. Some participants
a decline in the degree of accommodation. A few par-
noted that, if needed, the Federal Reserve could consider
ticipants expressed concern that maintaining the current
various steps to manage the levels of short-term interest
pace of agency MBS purchases could contribute to po-
rates and the quantity of reserves, such as adjusting ad-
tential valuation pressures in housing markets.
ministered rates, expanding the overnight reverse repur-
The September FOMC statement indicated that asset chase agreement program, or implementing a maturity
purchases will continue “over coming months,” and par- extension program.
ticipants viewed this guidance for asset purchases as hav-
Staff Review of the Economic Situation
ing served the Committee well so far. Most participants
The coronavirus pandemic and the measures undertaken
judged that the Committee should update this guidance
to contain its spread continued to affect economic
at some point and implement qualitative outcome-based
activity in the United States and abroad. The
guidance that links the horizon over which the Commit-
information available at the time of the November 4–5
tee anticipates it would be conducting asset purchases to
meeting suggested that U.S. real gross domestic product
economic conditions. These participants indicated that
(GDP) had rebounded at a rapid rate in the third quarter
updating the Committee’s guidance for asset purchases
but remained well below its level at the start of the year.
in this manner would help keep the market’s expectation
Labor market conditions improved further in
for future asset purchases aligned with the Committee’s
September, although the pace of gains eased and
intentions. Some of these participants also saw such up-
employment continued to be well below its level at the
dated guidance as reinforcing the Committee’s commit-
beginning of the year. Consumer price inflation—as
ment to fostering outcomes consistent with maximum
measured by the 12-month percentage change in the
employment and inflation that averages 2 percent over
price index for personal consumption expenditures
time. A few participants were hesitant to make changes
(PCE) through September—had returned to its year-
in the near term to the guidance for asset purchases and
earlier pace but remained noticeably below the rates that
pointed to considerable uncertainty about the economic
were posted in January and February.
outlook and the appropriate use of balance sheet policies
given that uncertainty. Total nonfarm payroll employment expanded strongly in
September, but the gain was markedly below the even
Participants noted that it would be important for the
larger increases seen in previous months. Through Sep-
Committee’s guidance for future asset purchases to be
tember, payroll employment had retraced only about
consistent with the Committee’s forward guidance for
half of the decline seen at the onset of the pandemic.
the federal funds rate so that the use of these tools would
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Minutes of the Meeting of November 4–5, 2020 Page 5

The unemployment rate moved down further to 7.9 per- Board had moved higher, on net, since August; although
cent in September. The unemployment rates for African both indexes stood above their April troughs, they re-
Americans and Asians both decreased, but the unem- mained well below their levels at the start of the year.
ployment rate for Hispanics was little changed, and each
Housing-sector activity advanced in the third quarter,
group’s rate remained well above the national average.
with real residential investment and home sales both
In addition, the overall labor force participation rate de-
moving above their first-quarter levels. Activity in this
clined, and the employment-to-population ratio rose
sector was likely being supported by low interest rates,
only slightly. Initial claims for unemployment insurance
the sector’s ability to adjust business practices in re-
continued to move lower, on net, through late October,
sponse to social distancing, and pent-up demand follow-
and weekly estimates of private-sector payrolls con-
ing the widespread shutdowns earlier in the year.
structed by the Board’s staff using data provided by the
payroll processor ADP suggested that employment gains Business fixed investment expanded strongly, led by an
from mid-September to mid-October remained solid. outsized increase in third-quarter equipment spending.
The employment cost index (ECI) for total hourly labor By contrast, spending on nonresidential structures con-
compensation in the private sector, which likely had tinued to move lower and was likely restrained by firms’
been less influenced than other hourly compensation hesitation to commit to projects with lengthy times to
measures by the concentration of recent job losses completion and uncertain future returns as well as by the
among lower-wage workers, rose 2.4 percent over the effect of lower oil prices on drilling investment.
12 months ending in September. This gain was a little
Growth in both total industrial production and manu-
smaller than the index’s year-earlier 12-month change; in
facturing output turned negative in September after hav-
addition, the 3-month changes in the ECI in June and
ing slowed markedly in August. Part of the softness in
September were noticeably below the average pace seen
manufacturing production appeared to be attributable to
over the period from 2017 through 2019.
pandemic-related delays in the motor vehicle industry’s
Total PCE price inflation was 1.4 percent over the model-year changeover, though subdued foreign de-
12 months ending in September and continued to be mand and weaker demand from domestic energy pro-
held down by relatively weak aggregate demand and the ducers were also likely acting to restrain factory output.
declines in consumer energy prices seen earlier in the As of September, manufacturing output had recovered
year. Core PCE price inflation, which excludes changes roughly two-thirds of the drop seen earlier in the year.
in consumer energy prices and many consumer food
Total real government purchases declined in the third
prices, was 1.5 percent over the same period, while the
quarter. Federal nondefense purchases fell especially
trimmed mean measure of 12-month PCE price infla-
sharply, largely reflecting a step-down in lender pro-
tion constructed by the Federal Reserve Bank of Dallas
cessing fees associated with the Paycheck Protection
was 1.9 percent in September. On a monthly basis, in-
Program (PPP). In addition, real purchases by state and
flation was a little lower in September, largely reflecting
local governments declined further.
slower goods price inflation. The latest readings on sur-
vey-based measures of longer-run inflation expectations The nominal U.S. international trade deficit narrowed in
moved lower, though each remained within the range in September after widening in August. Both exports and
which it has fluctuated in recent years; in October, the imports continued to rebound from their collapse in the
University of Michigan Surveys of Consumers measure first half of the year. Goods imports fully recovered to
for the next 5 to 10 years fell back to the level that pre- their January level, with broad-based increases in August
vailed in early 2020, while in September the 3-year-ahead and September. In contrast, goods exports by Septem-
measure from the Federal Reserve Bank of New York ber recovered only two-thirds of their decline since Jan-
retraced its August increase. uary despite brisk growth in exports of agricultural prod-
ucts and industrial supplies. Services trade remained de-
Real PCE rose strongly in the third quarter, though the
pressed, driven by the continued suspension of most in-
increase was not sufficient to return consumer spending
ternational travel. Altogether, net exports made a sub-
to its pre-pandemic level. Real disposable personal in-
stantial negative contribution to real GDP growth in the
come declined, reflecting a large reduction in govern-
third quarter.
ment transfer payments. As a result, the personal saving
rate moved sharply lower, though it was still elevated rel- Economic activity abroad rebounded sharply in the third
ative to its 2019 average. The consumer sentiment quarter following a rollback of pandemic-related re-
measures from the Michigan survey and the Conference strictions. GDP levels, however, generally remained well
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Page 6 Federal Open Market Committee

below their pre-pandemic peaks, with China being a no- from their stressed levels in the spring. However, both
table exception. Domestic demand supported the re- the 5-year and 5-to-10-year measures of inflation com-
covery, and in Asia there was also a strong rebound of pensation remained near the lower ends of their histori-
exports, especially of electronics and, more recently, au- cal ranges.
tos. Third-quarter growth was particularly rapid in those
The expected path for the federal funds rate over the
economies that experienced some of the deepest con-
next few years, as implied by a straight read of overnight
tractions in the second quarter, including France, Italy,
index swap quotes, was little changed, on net, since the
and Spain among the advanced foreign economies
September FOMC meeting and remained close to the
(AFEs) and Mexico among the emerging market econo-
effective lower bound (ELB) until the end of 2023. Sur-
mies. After falling through the end of the summer in
vey-based expectations favored the first increase in the
many countries, inflation rates started to rise over the
federal funds rate to occur in 2024.
past two months but remained well below rates from
early in the year. Broad stock price indexes increased, on balance, over
the intermeeting period amid volatility associated with
The rapid increase over recent weeks of new COVID-19
market participants’ reactions to news on the U.S. elec-
cases in several AFEs, especially in Europe, prompted
tion, the pandemic’s trajectory, and the fiscal policy out-
governments to reintroduce restrictions to rein in this
look. One-month option-implied volatility on the S&P
renewed wave of infections. In late October, the gov-
500—the VIX—increased some, on net, after briefly ris-
ernments of several European countries—including
ing sharply late in the intermeeting period. Spreads on
England, France, and Germany—announced new na-
corporate bond yields over comparable-maturity Treas-
tionwide restrictions (including the closures of bars and
ury yields narrowed across the credit spectrum and stood
restaurants) and, in some cases, restrictions to the mo-
somewhat below their historical median levels at the end
bility of individuals within and across regions. Still, rel-
of the intermeeting period.
ative to the spring, restrictions were noticeably less se-
vere; factories, most businesses, and schools generally Conditions in short-term funding markets remained sta-
remained open. ble over the intermeeting period. Spreads on commer-
cial paper (CP) and negotiable certificates of deposit
Staff Review of the Financial Situation
across different tenors were little changed and remained
Financial market sentiment was little changed over the
at pre-pandemic levels. The outstanding level of nonfi-
intermeeting period against the backdrop of evolving
nancial CP continued to move down over the intermeet-
U.S. election and fiscal outlooks, as well as rising
ing period, reportedly driven by issuers’ relatively low
COVID-19 cases in the United States and Europe. On
appetite for CP funding in light of the availability of
net, the Treasury yield curve steepened modestly, corpo-
longer-term financing on attractive terms. September
rate bond spreads narrowed somewhat, and broad equity
quarter-end effects were muted, and there was no credit
price indexes increased. Inflation compensation in-
outstanding through the Commercial Paper Funding Fa-
creased a little further, remaining close to pre-pandemic
cility by the end of the intermeeting period. Conditions
levels. Financing conditions for businesses with access
in money market funds (MMFs) were also generally calm
to capital markets and households with high credit
over the intermeeting period, and net yields of MMFs
scores remained generally accommodative, although
remained stable near historical lows.
conditions remained tight or tightened somewhat for
other borrowers. The effective federal funds rate stood at 9 basis points,
unchanged from the average over the previous inter-
Yields on two-year nominal Treasury securities were lit-
meeting period. The Secured Overnight Financing Rate
tle changed over the intermeeting period, while longer-
averaged 8 basis points, edging down from the previous
term yields increased modestly, on net, reportedly re-
intermeeting period amid a modest net decrease in
flecting market participants’ reassessments of the elec-
Treasury bill issuance. The amount of Federal Reserve
tion outcome and the outlook for fiscal policy. FOMC
repurchase agreements outstanding remained at zero
communications and macroeconomic data releases did
over the intermeeting period, as dealers were able to ob-
not elicit material yield reactions. Measures of inflation
tain more attractive rates in the private market. The Fed-
compensation based on Treasury Inflation-Protected
eral Reserve increased holdings of Treasury securities
Securities (TIPS) edged up, on net, remaining close to
and agency MBS at the same pace as over the previous
their pre-pandemic levels. This development reflected
intermeeting period.
in part the recovery of TIPS market liquidity conditions
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Minutes of the Meeting of November 4–5, 2020 Page 7

Investor sentiment abroad turned negative over the in- October Senior Loan Officer Opinion Survey on Bank
termeeting period amid rising COVID-19 case counts, Lending Practices (SLOOS), banks reported that stand-
newly adopted restrictions aimed at containing the ards for C&I loans continued to tighten during the third
spread of the virus, and indicators pointing to a slowing quarter, although fewer banks reported tightening than
recovery in several foreign economies, particularly in the in previous quarters. In addition, demand for C&I loans
euro area. Uncertainty about additional U.S. fiscal stim- reportedly weakened in the third quarter.
ulus and the outcome of the U.S. presidential election
Financing conditions for small businesses remained tight
also caused some asset price volatility abroad. On net,
as a result of the pandemic. Small business loan origina-
most foreign equity indexes declined, option-implied
tions dropped off sharply in August after a temporary
volatility in the euro area increased a bit, and most AFE
boost from PPP distributions over the summer. At the
long-term sovereign yields fell.
same time, small businesses’ liquidity needs were high
Overall, the broad dollar index was little changed over and appeared likely to increase further, with the most re-
the intermeeting period. The dollar appreciated mod- cent Census Bureau Small Business Pulse Survey point-
estly against most AFE currencies except the Japanese ing to a majority of small businesses having no more
yen and the British pound. Several Asian currencies, in- than two months of cash on hand and many small busi-
cluding the Chinese renminbi, the South Korean won, nesses anticipating some need for additional financial as-
and the Taiwanese dollar, appreciated against the U.S. sistance in the next six months. However, the uncer-
dollar amid improving growth prospects and low tainty surrounding earning prospects was reportedly
COVID-19 case counts. Most Latin American curren- making many business owners less willing to take on
cies (especially the Brazilian real) and the Turkish lira de- debt at prevailing terms. Small business loan perfor-
preciated against the U.S. dollar on concerns about fiscal mance generally deteriorated further over the intermeet-
and political prospects in Latin America and Turkey. ing period.
Financing conditions in capital markets continued to be For commercial real estate (CRE) financed through cap-
broadly accommodative over the intermeeting period, ital markets, financing conditions remained accommo-
supported by low interest rates and high equity valua- dative over the intermeeting period. Spreads on agency
tions. With historically low corporate bond yields, gross CMBS were narrow, and issuance was very strong in
issuance of both investment- and speculative-grade cor- September. Spreads on triple-A non-agency CMBS,
porate bonds remained solid in September, moderating which were already within their pre-pandemic range in
from robust readings in August but staying close to the August, moved down further in September and early
averages seen in recent years. Most of this issuance was October, while non-agency issuance remained relatively
reportedly intended to refinance existing debt. Gross in- subdued in September. In contrast, CRE loan growth at
stitutional leveraged loan issuance continued to pick up banks decelerated in the third quarter, while standards
in September but remained below its average pace in for CRE loans tightened further, according to the Octo-
2019. Collateralized loan obligation issuance was strong ber SLOOS.
in September, likely supporting robust investor demand
Financing conditions in the residential mortgage market
for newly issued leveraged loans in the coming months.
were little changed over the intermeeting period. Mort-
The credit quality of nonfinancial corporations contin- gage rates remained near historical lows, supporting high
ued to show signs of stabilization. The volume of down- volumes of both home-purchase and refinancing origi-
grades to corporate bonds and leveraged loans fell to nations. Credit continued to flow to higher-score bor-
pre-pandemic levels through September. Corporate rowers meeting standard conforming loan criteria, while
bond and leveraged loan defaults were low in August it remained tight for borrowers with lower credit scores
and September relative to their elevated readings in July. and for nonstandard mortgage products. Residential
Market indicators of expected corporate bond and lev- real estate loans on banks’ balance sheets declined, and
eraged loan defaults remained somewhat elevated at the October SLOOS suggested that lending standards
above pre-pandemic levels, especially for lower-rated tightened for all mortgage types. Mortgage forbearance
leveraged loan issuers. rates continued their downward trend, and the rate of
new delinquencies remained low.
Commercial and industrial (C&I) loans on banks’ bal-
ance sheets continued to decline through September, re- In consumer credit markets, conditions remained ac-
flecting a mix of weak origination activity and the repay- commodative for borrowers with relatively strong credit
ment of credit-line draws from earlier in the year. In the
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Page 8 Federal Open Market Committee

scores but continued to be tight for borrowers with sub- identified in outreach to the public in recent months, in-
prime credit scores. Banks in the October SLOOS indi- cluding concerns associated with the outlook for the
cated that standards tightened and demand was little pandemic and business defaults.
changed, on balance, across consumer loan types follow-
Staff Economic Outlook
ing a sharp contraction in demand in the second quarter.
In the U.S. economic projection prepared by the staff
Credit card balances continued to decline through the
for the November FOMC meeting, the rate of real GDP
third quarter, with gains in balances for account holders
growth and the pace of declines in the unemployment
with prime credit scores offset by declines in those for
rate over the second half of this year were similar to
nonprime accounts. Interest rates on existing accounts
those in the September forecast despite material
were little changed and remained below pre-crisis levels,
revisions to several assumptions influencing the outlook
while interest rates on new accounts to nonprime bor-
along with incoming data that were, on balance, better
rowers remained elevated. Auto loan balances increased
than expected. In particular, in the absence of clear
solidly for prime and near-prime borrowers but declined
progress toward an agreement on further fiscal stimulus,
for subprime borrowers. Auto loan interest rates in-
the staff removed the assumption that an additional
creased but stayed below pre-pandemic levels. Condi-
tranche of fiscal policy support would be enacted.
tions in the asset-backed securities market remained sta-
Although this lack of additional fiscal support was
ble over the intermeeting period.
expected to cause significant hardships for a number of
The staff provided an update on its assessment of the households, the staff now assessed that the savings
stability of the financial system. The staff judged that, cushion accumulated by other households would be
accounting for low interest rates, asset valuations ap- enough to allow total consumption to be largely
peared moderate, with measures of compensation for maintained through year-end. Hence, as in the
risk generally in the middle of their historical ranges. September projection, the staff continued to expect a
However, uncertainty regarding the pandemic and eco- rapid but partial rebound in activity over the second half
nomic outlook has been high, and the risk of sizable de- of the year following the unprecedented contraction in
clines in asset prices, should adverse shocks materialize, the spring. The inflation forecast for the rest of the year
has remained significant. CRE prices had started to de- was revised up slightly in response to incoming readings
cline in some sectors, while market conditions, including on inflation that were, on balance, higher than expected.
rising vacancies and declining rents, pointed to a risk of Nevertheless, inflation was still projected to finish the
further drops, especially in severely affected sectors. year at a relatively subdued level, reflecting substantial
The staff assessed vulnerabilities associated with house- margins of slack in labor and product markets and the
hold and business borrowing as notable. Household fi- large declines in consumer energy prices seen earlier in
nances had weakened with the economic downturn, and the year.
some households could find debt levels burdensome go-
In the staff’s medium-term projection, the assumption
ing forward. Business debt levels were high before the
that significant additional fiscal support would not be
pandemic, and the ability of some businesses to service
enacted pointed to a lower trajectory for aggregate
these obligations will depend on the course of the eco-
demand going forward. However, recent data on tax
nomic recovery. The staff assessed vulnerabilities aris-
receipts also suggested that the fiscal positions of states
ing from financial leverage as moderate. While the bank-
and localities had deteriorated less than expected, which
ing sector has been resilient to recent developments,
led the staff to boost the projected path of state and local
banks’ profitability, as well as that of a range of financial
government purchases. Hence, with monetary policy
institutions, could be affected by future losses, the weak-
assumed to remain highly accommodative and
ening of the economic outlook relative to pre-pandemic
social-distancing measures expected to ease further, the
conditions, and low interest rates. With regard to fund-
staff continued to project that real GDP over the
ing risks, the staff highlighted that structural vulnerabili-
medium term would outpace potential, leading to a
ties in markets for short-term funding and corporate
considerable further decline in the unemployment rate.
bonds remained present. Emergency facilities were
The resulting take-up of economic slack was in turn
viewed as critical in restoring market functioning and
expected to cause inflation to increase gradually, and the
continued to serve as important backstops. The staff
inflation rate was projected to moderately overshoot
also summarized near-term risks to financial stability
2 percent for some time in the years beyond 2023 as
monetary policy remained accommodative.
_____________________________________________________________________________________________
Minutes of the Meeting of November 4–5, 2020 Page 9

The staff continued to observe that the uncertainty noted that households’ balance sheets generally ap-
related to the future course of the pandemic and its peared healthy and an unwinding of the large pool of
consequences for the economy was high. The staff also household savings accumulated during the pandemic
continued to view the risks to the economic outlook as could provide greater-than-anticipated momentum to
tilted to the downside, with the latest data suggesting an consumer spending over coming months. However,
increased probability of a resurgence in the disease. several participants expressed concern that, in the ab-
sence of additional fiscal support, lower- and moderate-
Participants’ Views on Current Conditions and the
income households might need to reduce their spending
Economic Outlook
sharply when their savings were exhausted. A couple of
Participants noted that the COVID-19 pandemic was
these participants noted reports from their banking con-
causing tremendous human and economic hardship
tacts that households appeared to be rapidly exhausting
across the United States and around the world. Eco-
funds they received from fiscal relief programs.
nomic activity and employment had continued to re-
cover but remained well below their levels at the begin- Participants noted that business equipment investment
ning of the year. Weaker demand and earlier declines in had also picked up. A few participants expected the mo-
oil prices had been holding down consumer price infla- mentum in investment to extend into next year as the
tion. Overall financial conditions remained accommo- economic recovery continued, while a couple of other
dative, in part reflecting policy measures to support the participants noted that many businesses in their Districts
economy and the flow of credit to U.S. households and were deferring longer-term commitments because of
businesses. Participants agreed that the path of the heighted uncertainty about the economic outlook. The
economy would depend on the course of the virus and recovery was viewed as unevenly distributed across in-
that the ongoing public health crisis would continue to dustries. While many business contacts, particularly
weigh on economic activity, employment, and inflation those in the durable goods or housing industries, re-
in the near term and posed considerable risks to the ported progress in adapting to the pandemic or im-
economy’s medium-term outlook. proved business conditions, others—especially those
with ties to small businesses and the hospitality, aviation,
Participants observed that the economy had registered a
and nonresidential construction industries—were still
rapid though incomplete rebound, with third-quarter
seeing very difficult circumstances. Contacts reported
real GDP rising at an annual rate of 33 percent, reflect-
improved conditions in the agricultural sector, boosted
ing gains across consumer spending, housing-sector ac-
by strong demand from China as well as domestic etha-
tivity, and business equipment investment. In recent
nol production, higher crop prices, and federal aid pay-
months, however, the pace of improvement had moder-
ments. Looking ahead, some business contacts ex-
ated, with slower growth expected for the fourth quarter.
pressed concerns that many households and businesses
Participants noted that economic activity thus far had re-
were currently in a weaker position to weather additional
covered faster than had been expected earlier in the year.
economic shocks than they had been at the beginning of
Household spending on goods, especially durable goods,
the pandemic.
had been strong and had moved above its pre-pandemic
level. Participants commented that the rebound in con- Participants observed that labor market conditions had
sumer spending was due in part to federal stimulus pay- continued to improve in recent months, with roughly
ments and expanded unemployment benefits, which half of the 22 million jobs lost over March and April
provided essential support to many households. Partic- having been regained. The unemployment rate had de-
ipants viewed accommodative monetary policy as also clined further, and the employment gains since the
contributing to gains in durable goods and residential in- spring were generally seen as larger than anticipated.
vestment as well as the surge in home sales. In contrast, Business contacts in a couple of Districts—particularly
participants noted that consumer outlays for services those in the manufacturing, health-care, and technology
were increasing more slowly than for durable goods, par- sectors—reported having trouble hiring workers for rea-
ticularly for items such as air travel, hotel accommoda- sons likely related to virus cases or workers’ need to pro-
tions, and restaurant meals, which had been significantly vide childcare. Several participants noted that the de-
disrupted by voluntary and mandated social-distancing cline in the unemployment rate in recent months had
measures. Participants generally expected the strength been accompanied by a fall in the labor force participa-
in household spending to continue, especially for dura- tion rate, particularly among those with a high school
ble goods and residential investment. A few participants education or lower and among women. Although the
number of workers on temporary layoff had fallen
_____________________________________________________________________________________________
Page 10 Federal Open Market Committee

sharply, the number of permanent job losers had contin- the respondents reported having no more than two
ued to rise. Most participants commented that the pace months of cash on hand.
of labor market improvement was likely to moderate go-
Participants continued to see the uncertainty surround-
ing forward. A couple of them noted that many busi-
ing the economic outlook as quite elevated, with the path
nesses in industries severely affected by the pandemic
of the economy highly dependent on the course of the
were downsizing or that some businesses were focused
virus; on how individuals, businesses, and public officials
on cutting costs or increasing productivity, including
responded to it; and on the effectiveness of public health
through automation. Many participants observed that
measures to address it. Participants cited several down-
high rates of job losses had been especially prevalent
side risks that could threaten the recovery. While an-
among lower-wage workers, particularly in the services
other broad economic shutdown was seen as unlikely,
sector, and among women, African Americans, and His-
participants remained concerned about the possibility of
panics. A few participants noted that these trends, if
a further resurgence of the virus that could undermine
slow to reverse, could exacerbate racial, gender, and
the recovery. The majority of participants also saw the
other social-economic disparities. In addition, a slow job
risk that current and expected fiscal support for house-
market recovery would cause particular hardship for
holds, businesses, and state and local governments might
those with less educational attainment, less access to
not be sufficient to sustain activity levels in those sectors,
childcare or broadband, or greater need for retraining.
while a few participants noted that additional fiscal stim-
In their comments about inflation, participants noted ulus that was larger than anticipated could be an upside
that some consumer prices had increased more quickly risk. Some participants commented that the recent surge
than expected in recent months but that broader price in virus cases in Europe and the reimposition of re-
trends were still quite soft. The upturn in consumer strictions there could lead to a slowdown in economic
price inflation was primarily attributed to price increases activity in the euro area and have negative spillover ef-
in sectors where the pandemic had induced stronger de- fects on the U.S. recovery. Some participants raised con-
mand, such as consumer durables. In contrast, services cerns regarding the longer-run effects of the pandemic,
price inflation remained softer than pre-pandemic rates, including sectoral restructurings that could slow employ-
as prices for the categories most affected by social dis- ment growth or an acceleration of technological disrup-
tancing, such as accommodations and airfares, contin- tions that could be limiting the pricing power of some
ued to be very depressed and housing services inflation firms.
moderated. Several participants commented on the un-
A number of participants commented on various poten-
usually large relative price movements caused by the
tial risks to financial stability. A few participants noted
pandemic and the considerable uncertainty as to how
that the banking system showed considerable resilience
long these price changes would persist.
through the end of the third quarter, and a few observed
Participants noted that financial conditions were gener- that this resilience partly reflected stronger-than-ex-
ally accommodative and that actions by the Federal Re- pected balance sheets of their customers, with delin-
serve, including the establishment of emergency lending quency rates declining or showing only moderate in-
facilities with the approval of and, in some cases, provi- creases. Moreover, capital positions and loan loss re-
sion of equity investments by the Treasury, were sup- serves for large banks were higher than before the pan-
porting the flow of credit to households, businesses, and demic. Several participants emphasized the need to en-
communities. While these actions were viewed as con- sure that banks continue to maintain strong capital lev-
tributing to accommodative financial conditions, partic- els, as lower levels of capital are typically associated with
ipants noted important differences in credit availability tighter credit availability from banks. Several partici-
across borrowers. In particular, financing conditions pants commented on the vulnerabilities witnessed dur-
eased further for residential mortgage borrowers and for ing the March selloff in the Treasury market. The sub-
large corporations that were able to access capital mar- stantial maturity and liquidity transformations under-
kets, but surveys of credit availability indicated that bank taken by some nonbank financial institutions—such as
lending conditions tightened further. A few participants prime MMFs and corporate bond and bank loan mutual
noted that the financing conditions for small businesses funds—were also discussed. A couple of participants
were especially worrisome, as the PPP had ended and expressed concerns that a prolonged period of low in-
the prospect for additional fiscal support remained un- terest rates and highly accommodative financial market
certain. They pointed to the most recent Census Bureau conditions could lead to excessive risk-taking, which in
Small Business Pulse Survey, in which more than half of
_____________________________________________________________________________________________
Minutes of the Meeting of November 4–5, 2020 Page 11

turn could result in elevated firm bankruptcies and sig- well short of the Committee’s goals and the uncertainty
nificant employment losses in the next economic down- about the course of the virus and the outlook for the
turn. A few participants noted that climate change poses economy continued to be very elevated. Participants
important challenges to financial stability and welcomed viewed the resurgence of COVID-19 cases in the United
analysis of climate change as both a source of shocks and States and abroad as a downside risk to the recovery; a
an underlying vulnerability. A couple of participants few participants noted that diminished odds for further
commented that the actions taken by the Federal Re- significant fiscal support also increased downside risks
serve to support the economy and achieve its mandated and added to uncertainty about the economic outlook.
goals also supported financial stability. Relatedly, several
Regarding asset purchases, participants judged that it
participants emphasized the important roles various sec-
would be appropriate over coming months for the Fed-
tion 13(3) facilities played in restoring financial market
eral Reserve to increase its holdings of Treasury securi-
confidence and supporting financial stability; they noted
ties and agency MBS at least at the current pace. These
that these facilities were still serving as an important
actions would continue to help sustain smooth market
backstop in financial markets. A few participants noted
functioning and help foster accommodative financial
that it was important to extend them beyond year-end.
conditions, thereby supporting the flow of credit to
In their consideration of monetary policy at this meeting, households and businesses. Many participants judged
participants reaffirmed the Federal Reserve’s commit- that the Committee might want to enhance its guidance
ment to using its full range of tools in order to support for asset purchases fairly soon. Most participants fa-
the U.S. economy during this challenging time, thereby vored moving to qualitative outcome-based guidance for
promoting the Committee’s statutory goals of maximum asset purchases that links the horizon over which the
employment and price stability. Participants agreed that Committee anticipates it would be conducting asset pur-
the path of the economy would depend significantly on chases to economic conditions. A few participants were
the course of the virus and that the ongoing public hesitant to make changes in the near term to the guid-
health crisis would continue to weigh on economic ac- ance for asset purchases and pointed to considerable un-
tivity, employment, and inflation in the near term and certainty about the economic outlook and the appropri-
posed considerable risks to the economic outlook over ate use of balance sheet policies given that uncertainty.
the medium term. In light of this assessment, all partic-
Discussion on Recommended Changes to the Sum-
ipants judged that maintaining an accommodative stance
mary of Economic Projections
of monetary policy was essential to foster economic re-
Participants considered two recommendations from the
covery and to achieve the Committee’s long-run 2 per-
subcommittee on communications for changes to the
cent inflation objective.
Summary of Economic Projections (SEP) that would
Participants remarked that the Committee’s action in enhance the information provided to the public. These
September to provide more explicit outcome-based for- recommendations included accelerating the release of
ward guidance for the federal funds rate had been an im- the full set of SEP exhibits from three weeks after the
portant step to affirm the Committee’s strong commit- corresponding FOMC meeting, when the minutes of
ment to the goals and strategy articulated in its revised that meeting are released, to the day of the policy deci-
Statement on Longer-Run Goals and Monetary Policy sion and adding new charts that display a time series of
Strategy. Several participants noted that they were en- diffusion indexes for participants’ judgments of uncer-
couraged by evidence that suggested that market partic- tainty and risks. With these recommendations, the writ-
ipants’ expectations of the economic conditions that ten summary of the projections that has been included
would likely prevail at the time of liftoff seemed broadly as an addendum to the minutes of the corresponding
consistent with the Committee’s forward guidance and FOMC meeting would be discontinued.
revised consensus statement.
Most of the participants who commented noted that re-
Participants agreed that monetary policy was providing leasing all SEP materials at the time of the postmeeting
substantial accommodation, and most concurred that, statement would provide greater context for the policy
with the federal funds rate at the ELB, much of that ac- decision, highlight the risk-management factors relevant
commodation was due to the Committee’s forward guid- for the decision, or further emphasize the degree of un-
ance and increases in securities holdings. They judged certainty around participants’ modal projections. Some
that the current stance of monetary policy remained ap- who commented noted that the SEP serves a valuable
propriate, as both employment and inflation remained role in illustrating how participants’ policy assessments
_____________________________________________________________________________________________
Page 12 Federal Open Market Committee

respond to changes in the economic outlook. Most par- tioning and help foster accommodative financial condi-
ticipants who commented suggested that it would be tions, thereby supporting the flow of credit to house-
useful to continue thinking about options for refining holds and businesses.
the SEP. Participants unanimously supported the rec-
Members agreed that, in assessing the appropriate stance
ommended changes and agreed that they should be im-
of monetary policy, they would continue to monitor the
plemented beginning in December.
implications of incoming information for the economic
Committee Policy Action outlook and that they would be prepared to adjust the
In their discussion of monetary policy for this meeting, stance of monetary policy as appropriate in the event
members agreed that the COVID-19 pandemic was that risks emerged that could impede the attainment of
causing tremendous human and economic hardship the Committee’s goals. Members also agreed that, in as-
across the United States and around the world. They sessing the appropriate stance of monetary policy, they
noted that economic activity and employment had con- would take into account a wide range of information, in-
tinued to recover but remained well below their levels at cluding readings on public health, labor market condi-
the beginning of the year, and that weaker demand and tions, inflation pressures and inflation expectations, and
earlier declines in oil prices had been holding down con- financial and international developments.
sumer price inflation. Overall financial conditions re-
At the conclusion of the discussion, the Committee
mained accommodative, in part reflecting policy
voted to authorize and direct the Federal Reserve Bank
measures to support the economy and the flow of credit
of New York, until instructed otherwise, to execute
to U.S. households and businesses. Members agreed
transactions in the SOMA in accordance with the fol-
that the Federal Reserve was committed to using its full
lowing domestic policy directive, for release at 2:00 p.m.:
range of tools to support the U.S. economy in this chal-
lenging time, thereby promoting its maximum-employ- “Effective November 6, 2020, the Federal
ment and price-stability goals. Members also stated that Open Market Committee directs the Desk to:
the path of the economy would depend significantly on
the course of the virus. In addition, members agreed  Undertake open market operations as nec-
that the ongoing public health crisis would continue to essary to maintain the federal funds rate in
weigh on economic activity, employment, and inflation a target range of 0 to ¼ percent.
in the near term and was posing considerable risks to the  Increase the System Open Market Ac-
economic outlook over the medium term. count holdings of Treasury securities and
agency mortgage-backed securities (MBS)
All members reaffirmed that, in accordance with the at the current pace. Increase holdings of
Committee’s goals to achieve maximum employment Treasury securities and agency MBS by ad-
and inflation at the rate of 2 percent over the longer run ditional amounts and purchase agency
and with inflation running persistently below this longer- commercial mortgage-backed securities
run goal, they would aim to achieve inflation moderately (CMBS) as needed to sustain smooth func-
above 2 percent for some time so that inflation averages tioning of markets for these securities.
2 percent over time and longer-term inflation expecta-  Conduct term and overnight repurchase
tions remain well anchored at 2 percent. Members ex- agreement operations to support effective
pected to maintain an accommodative stance of mone- policy implementation and the smooth
tary policy until those outcomes were achieved. All functioning of short-term U.S. dollar
members agreed to maintain the target range for the fed- funding markets.
eral funds rate at 0 to ¼ percent, and they expected that
 Conduct overnight reverse repurchase
it would be appropriate to maintain this target range un-
agreement operations at an offering rate of
til labor market conditions had reached levels consistent
0.00 percent and with a per-counterparty
with the Committee’s assessments of maximum employ-
limit of $30 billion per day; the per-coun-
ment and inflation had risen to 2 percent and was on
terparty limit can be temporarily increased
track to moderately exceed 2 percent for some time. In
at the discretion of the Chair.
addition, members agreed that over coming months it
would be appropriate for the Federal Reserve to increase  Roll over at auction all principal payments
its holdings of Treasury securities and agency MBS at from the Federal Reserve’s holdings of
least at the current pace to sustain smooth market func- Treasury securities and reinvest all princi-
pal payments from the Federal Reserve’s
_____________________________________________________________________________________________
Minutes of the Meeting of November 4–5, 2020 Page 13

holdings of agency debt and agency MBS assessments of maximum employment and in-
in agency MBS. 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, over coming months the Federal Re-
if needed for operational reasons. serve will increase its holdings of Treasury secu-
 Engage in dollar roll and coupon swap rities and agency mortgage-backed securities at
transactions as necessary to facilitate set- least at the current pace to sustain smooth mar-
tlement of the Federal Reserve’s agency ket functioning and help foster accommodative
MBS transactions.” financial conditions, thereby supporting the
flow of credit to households and businesses.
The vote also encompassed approval of the statement
below for release at 2:00 p.m.: In assessing the appropriate stance of monetary
policy, the Committee will continue to monitor
“The Federal Reserve is committed to using its the implications of incoming information for
full range of tools to support the U.S. economy the economic outlook. The Committee would
in this challenging time, thereby promoting its be prepared to adjust the stance of monetary
maximum employment and price stability goals. policy as appropriate if risks emerge that could
The COVID-19 pandemic is causing tremen- impede the attainment of the Committee’s
dous human and economic hardship across the goals. The Committee’s assessments will take
United States and around the world. Economic into account a wide range of information, in-
activity and employment have continued to re- cluding readings on public health, labor market
cover but remain well below their levels at the conditions, inflation pressures and inflation ex-
beginning of the year. Weaker demand and ear- pectations, and financial and international de-
lier declines in oil prices have been holding velopments.”
down consumer price inflation. Overall finan- Voting for this action: Jerome H. Powell, John C.
cial conditions remain accommodative, in part Williams, Michelle W. Bowman, Lael Brainard, Richard
reflecting policy measures to support the econ- H. Clarida, Mary C. Daly, Patrick Harker, Robert S.
omy and the flow of credit to U.S. households Kaplan, Loretta J. Mester, and Randal K. Quarles.
and businesses.
Voting against this action: None.
The path of the economy will depend signifi-
cantly on the course of the virus. The ongoing Ms. Daly voted as alternate member at this meeting.
public health crisis will continue to weigh on Consistent with the Committee’s decision to leave the
economic activity, employment, and inflation in target range for the federal funds rate unchanged, the
the near term, and poses considerable risks to Board of Governors voted unanimously to leave the in-
the economic outlook over the medium term. terest rates on required and excess reserve balances at
The Committee seeks to achieve maximum em- 0.10 percent. The Board of Governors also voted unan-
ployment and inflation at the rate of 2 percent imously to approve establishment of the primary credit
over the longer run. With inflation running per- rate at the existing level of 0.25 percent, effective No-
sistently below this longer-run goal, the Com- vember 6, 2020.
mittee will aim to achieve inflation moderately It was agreed that the next meeting of the Committee
above 2 percent for some time so that inflation would be held on Tuesday–Wednesday, December 15–
averages 2 percent over time and longer-term 16, 2020. The meeting adjourned at 10:05 a.m. on No-
inflation expectations remain well anchored at vember 5, 2020.
2 percent. The Committee expects to maintain
an accommodative stance of monetary policy Notation Votes
until these outcomes are achieved. The Com- By notation vote completed on September 30, 2020, the
mittee decided to keep the target range for the Committee unanimously approved the selection of Tre-
federal funds rate at 0 to ¼ percent and expects vor Reeve to serve as economist and Rochelle Edge to
it will be appropriate to maintain this target serve as associate economist, effective October 1, 2020.
range until labor market conditions have
reached levels consistent with the Committee’s
_____________________________________________________________________________________________
Page 14 Federal Open Market Committee

By notation vote completed on October 6, 2020, the


Committee unanimously approved the minutes of the
Committee meeting held on September 15–16, 2020.

_______________________
James A. Clouse
Secretary