FOMC | Release | Rate Increase

For release
at 2 p.m. EST
December 14, 2016
Decisions Regarding Monetary Policy Implementation The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement on December 14, 2016:
The Board of Governors of the Federal Reserve System voted unanimously to raise the interest rate paid on required and excess reserve balances to 0.75 percent, effective December 15, 2016.
As part of its policy decision, the Federal Open Market Committee voted to authorize and
direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed
otherwise, to execute transactions in the System Open Market Account in accordance
with the following domestic policy directive:
 

“Effective December 15, 2016, the Federal Open Market Committee directs the Desk

to undertake open market operations as necessary to maintain the federal funds rate in

a target range of 1/2 to 3/4 percent, including overnight reverse repurchase operations

(and reverse repurchase operations with maturities of more than one day when

necessary to accommodate weekend, holiday, or similar trading conventions) at an

offering rate of 0.50 percent, in amounts limited only by the value of Treasury

securities held outright in the System Open Market Account that are available for

such operations and by a per-counter party limit of $30 billion per day.

The Committee directs the Desk to continue rolling over maturing Treasury securities

at auction and to continue reinvesting principal payments on all agency debt and

agency mortgage-backed securities in agency mortgage-backed securities. The

Committee also directs the Desk to engage in dollar roll and coupon swap

transactions as necessary to facilitate settlement of the Federal Reserve’s agency

mortgage-backed securities transactions.”

More information regarding open market operations may be found on the Federal Reserve Bank of New York’s website

 In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve a 1/4 percentage point increase in the discount rate (the primary credit rate) to 1.25 percent, effective December 15, 2016. In taking this action, the Board approved requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Kansas City, Dallas, and San Francisco.
This information will be updated as appropriate to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding details of the Federal Reserve’s operational tools and approach used to implement monetary policy