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December 2016

Monetary Policy Update

  • The Federal Open Market Committee voted unanimously to raise the federal funds rate by 0.25 percentage points to a target range of 0.50 to 0.75 percent during its two-day December meeting. The Committee had set the previous target range during its December 2015 meeting.
  • “In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal funds rate to 0.50 to 0.75 percent. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation,” its statement said.
  • FOMC Chair Janet Yellen gave a press conference following the FOMC’s meeting in which she discussed the Fed’s actions and policymakers’ summary of economic projections and fielded media questions.
  • Chair Yellen emphasized the Committee’s language regarding the role that incoming data plays in decisions regarding the future path of the federal funds rate, and reiterated that monetary policy was not on a “pre-set path.” She noted that there was still “considerable uncertainty” regarding future policy decisions.
  • Richmond Fed President Jeffrey Lacker is not a voting member this year, but participates in the discussions.
  • The FOMC’s first 2017 meeting is scheduled for January 31–February 1.
Sources: FOMC Statement December 14, FOMC Meeting Minutes

The FOMC holds eight regularly scheduled meetings each year.

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