For release 2:00 p.m. EST January 26, 2022 Indicators of economic activity and employment continued to strengthen. Sectors hardest hit by the pandemic have improved in recent months but are affected by the recent sharp increase in COVID-19 cases. Job gains have been solid in recent months and the unemployment rate has fallen significantly. Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to high levels of inflation. Overall, financial conditions remain accommodative, partly reflecting policy measures to support the economy and the flow of credit to US households and businesses. The trajectory of the economy continues to depend on the evolution of the virus. Progress in immunization and an easing of supply constraints should support continued gains in economic activity and employment as well as a reduction in inflation. There are risks to the economic outlook, including those related to new variants of the virus. The Committee seeks to achieve a maximum employment and inflation rate of 2% in the long term. In support of these objectives, the Committee decided to maintain the target range for the federal funds rate between 0 and 1/4%. With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate. The Committee has decided to continue to reduce the monthly rate of its net asset purchases in order to put an end to them at the beginning of March. Starting in February, the Committee will increase its holdings of Treasury securities by at least $20 billion per month and agency mortgage-backed securities by at least $10 billion per month. Ongoing securities purchases and holdings by the Federal Reserve will continue to support well-functioning markets and accommodative financial conditions, supporting the flow of credit to households and businesses. (more) For release 2:00 p.m. EST January 26, 2022 -2- In assessing the appropriate monetary policy stance, the Committee will continue to monitor the implications of new information on the economic outlook. The Committee would be ready to adjust the monetary policy stance, if necessary, if risks appear that could hinder the achievement of its objectives. The Committee’s assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and inflation expectations, as well as financial and international developments. Voting for monetary policy action was Jerome H. Powell, chairman; John C. Williams, Vice President; Michelle W. Bowman; Lael Brainard; James Bullard; Esther L. George; Patrick Harcker; Loretta J. Mester; and Christopher J. Waller. Patrick Harker voted as an alternate member at this meeting. -0- For release 2:00 p.m. EST January 26, 2022 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 January 26, 2022 statement: • The Board of Governors of the Federal Reserve System voted unanimously to maintain the rate of interest paid on reserve balances at 0.15%, effective January 27, 2022. • As part of its policy decision, the Federal Open Market Committee voted to authorize and direct the Open Market Bureau at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the account open market operations of the system in accordance with the following domestic policy directive: “Effective January 27, 2022, the Federal Open Market Committee directs the office to: o Engage in open market operations as necessary to maintain the rate of federal funds within a target range of 0 to 1/4%. o Complete the increase of the Open Ma System Market Account (SOMA) holdings of $40 billion Treasury Securities and $20 billion Agency Mortgage Backed Securities (MBS) as outlined in monthly purchase plans released in mid-January. o Increase SOMA’s holdings of Treasury securities by $20 billion and agency MBS by $10 billion, during the monthly buying period beginning in mid-February. o Increase holdings of Treasuries and agency MBS by additional amounts as needed to maintain the proper functioning of the markets for these securities. o Conduct overnight repo transactions with a minimum bid rate of 0.25% and with an aggregate transaction limit of $500 billion; the aggregate operating limit may be temporarily increased at the President’s discretion. o Conduct overnight reverse repurchase transactions at an offer rate of 0.05% and with a limit per counterparty of $160 billion per day; the limit per counterparty may be temporarily increased at the discretion of the President. o Roll over at auction all principal payments of Federal Reserve holdings of Treasury securities and reinvest all principal payments of Federal Reserve holdings of agency debt and agency MBS into agency MBS. o Allow modest deviations from stated amounts for purchases and reinvestments, if necessary for operational reasons. (more) For release at 2:00 p.m. EST January 26, 2022 -2- o Engage in dollar rollovers and coupon swaps as necessary to facilitate settlement of Federal Reserve Agency MBS transactions . • In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve setting the primary lending rate at the current level of 0.25%. This information will be updated as necessary to reflect decisions of the Federal Open Market Committee or the Board of Governors regarding the details of the Federal Reserve. operational tools and approach used to implement monetary policy. Further information regarding open market operations and reinvestments can be found on the website of the Federal Reserve Bank of New York.