Federal Open Market Committee
The Federal Reserve voted on several different decisions on March 17th to implement the
monetary policy stance. There are three that stuck out to me as the most important. The first being,
The Board of Governors of the Federal Reserve System decided to continue using the same federal
funds rate at a target range of 0 to 1/4th percent. Secondly, they voted to raise holdings of Treasury
securities and agency MBS by buying commercial mortgage-backed securities to maintain the
functioning of markets for these different kinds of securities. Finally, the third voting decision was
to increase Treasury securities by $80 billion per month and of agency mortgage-backed securities
by $40 billion per month.
The rationale for taking these actions were based on focusing to get the economy back on
track after a year of the COVID-19 pandemic. The Federal Reserve has goals to maximize
employment and have price stability, and to reach these goals the decision above had to be made.
Their reasoning for the decision on asset purchases and maintaining the federal funds rate is to
provide strong support for the economy, and to help labor market conditions reach levels of
consistency with maximum employment. The decision to increase Treasury securities by $80
to increase the holdings of Treasury securities and keep the interest rate at 0.10%.