Talking Points
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Description
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Changes from July’s statement
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- July 28,2021:
- The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered.
- Inflation has risen, largely reflecting transitory factors
- The economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings.
- September 22, 2021:
- The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery.
- Inflation is elevated, largely reflecting transitory factors
- If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.
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Dot Plots vs. June
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- June 16, 2021:
- 7 out of 18 members expect at least one rate hike next year
- 2023 median FOMC dots at 0.625%. 13 FOMC members expect at least one rate hike by 2023
- September 22, 2021:
- 9 out of 18 members expect at least one rate hike next year
- 2023 median FOMC dots at 1% . 17 FOMC members expect at least one rate hike by 2023
- New 2024 FOMC dots are released. Median dots for 2024 is at 1.75%
- Longer-term median dot is unchanged at 2.5%
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Summary of Economic Projections (SEP)
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- Median Real GDP expected at 3.8% and 2.5% for 2022 and 2023
- Median Unemployment rate expected at 3.8% and 3.5% for 2022 and 2023
- Median Core PCE inflation expected at 2.2% for 2022 and 2023
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On Tapering and Rate Hike Path
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- While no decisions are made on tapering, as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate
- The timing and pace of the reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff
- Holdings of longer-term securities will keep financial conditions accommodative
- Drawdown of the $120bn monthly bond purchases could begin after the November 2-3 policy meeting as long as job growth through September is reasonably strong (Press Conference)
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