A Conversation with

the Fed

Sarah Arteaga

Regional Director

Florida Trust Seminar

August 13, 2021

The views expressed are mine, and not necessarily those of

the Atlanta Fed or the Federal Reserve System.

The Line Up

• The Fed

• Regional Economic Information Network

(REIN)

• The Economy and the Monetary Policy

Response

Functions of the Federal Reserve

3

• Supervision, Regulation and Credit

• Financial Services

• Monetary Policy

Supervision, Regulation and Credit

4

The Fed Supervises:

• State-chartered banks

• Bank and financial holding

companies

• International banking organizations

The Fed is one of the regulating

bodies along with:

• The Federal Deposit Insurance

Corp (FDIC)

• The Office of the Comptroller of the

Currency (OCC)

Financial Services

• The Reserve Banks operate collectively to:

• Distribute currency and cash

• Process checks

• Process electronic payments

• The Federal Reserve promotes efficiency in the payment

system5

Monetary Policy

6

The Fed’s Dual Mandate from Congress:

• Maximum employment

• Price stability

Tools the Fed uses to meet this mandate:

• Reserve requirements

• Discount rate

• Open market operations

Decentralized Structure of the Fed

7

Board of Governors Washington, DC

12 Federal Reserve Banks & their Branches

and Directors

Federal Open Market Committee (FOMC)

Vacant

Jerome H. Powell

Chair

Board of Governors of the Federal Reserve System

8

Lael Brainard

Christopher J. Waller

Randal Quarles

Vice Chair for

Supervision

Richard H. Clarida

Vice Chair

Michelle W. Bowman

The Federal Reserve Bank Presidents

9

Eric Rosengren

Boston

1st District

Patrick Harker

Philadelphia

3rd District

Loretta Mester

Cleveland

4th District

Charles Evans

Chicago

7th District

Neel Kashkari

Minneapolis

9th District

Mary Daly

San Francisco

12th District

Esther George

Kansas City

10th District

Robert Kaplan

Dallas

11th District

James Bullard

St. Louis

8th District

Raphael Bostic

Atlanta

6th District

John Williams

New York

2nd District

Tom Barkin

Richmond

5th District

The Sixth District

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Raphael Bostic

President and CEO

Federal Reserve Bank of Atlanta

Nashville

Birmingham

New Orleans

Atlanta

Jacksonville

Miami

Atlanta Board of Directors

Claire Lewis Arnold

Chief Executive Officer

Leapfrog Services, Inc.

Atlanta, Georgia

Gregory A. Haile, J.D.

President

Broward College

Fort Lauderdale, Florida

Robert W. Dumas

Chairman, President, and CEO

AuburnBank

Auburn, Alabama

Claire W. Tucker

Founding President and

CEO Emerita

CapStar Bank

Nashville, Tennessee

Kessel D. Stelling, Jr.

Executive Chair

Synovus Financial Corporation

Columbus, Georgia

Elizabeth A. Smith

Former Executive Chair

Bloomin’ Brands, Inc.

Tampa, Florida

Michael Russell

Chief Executive Officer

H. J. Russell & Company

Atlanta, Georgia

Mary A. Laschinger

Former Chairman and CEO

Veritiv Corporation

Atlanta, Georgia

Myron A. Gray

Former President, U.S. Operations

United Parcel Service

Atlanta, Georgia

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Jacksonville Branch Board of Directors

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Dawn Lockhart

Director of Strategic Partnerships

City of Jacksonville

Jacksonville, Florida

John Hirabayashi

President & CEO

Community First Credit union

Jacksonville, Florida

Paul Boynton

Chairman, President & CEO

Rayonier Advanced Materials, Inc.

Jacksonville, Florida

Eddy Moratin

Executive Director

LIFT Orlando

Orlando, Florida

Bill West

Chief Executive Officer

The Bank of Tampa

Tampa, Florida

Nicole Thomas

President

Baptist Medical Center

Jacksonville, Florida

Tim Cost

President

Jacksonville University

Jacksonville, Florida

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Regional Economic

Information Network

“REIN”

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ECONOMIC OUTLOOK

The Fed’s Dual Mandate

• The Fed is pursuing two objectives as given to us by

Congress—maximum employment and price stability.

• The maximum level of employment is largely determined by

nonmonetary factors that affect the structure and dynamics of

the job market, although a stronger economy does help with

job creation.

• The Federal Open Market Committee (FOMC) has chosen an

inflation target of two percent year-over-year growth over the

longer term.

15

Summary of the Economic Environment:

The July 2021 FOMC Policy Statement

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Excerpts from the July 2021 FOMC Statement

• Overall financial conditions remain accommodative, in

part reflecting policy measures to support the

economy and the flow of credit to U.S. households

and businesses.

• The path of the economy continues to depend on the

course of the virus.

• Progress on vaccinations will likely continue to reduce

the effects of the public health crisis on the economy

but risks to the economic outlook remain.

Sources: Bureau of Economic Analysis; Haver Analytics through Q2-21

Contributions to Real GDP Growth

17

33.8

4.5

6.3 6.5

-40

-35

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

30

35

40

45

2018 2019 2020 2021

quarterly, percent, seasonally adjusted annualized rate

Intellectual Property Products Government Net Exports

Nonresidential Equipment & Software Private Inventory Investment Residential Investment

Nonresidential Structures Consumer Spending Real GDP

The Employment Picture

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• In July, U.S. employers added 943,000 net jobs to payrolls.

• The unemployment rate declined to 5.4 percent from 5.9

percent in June.

• This measure is down considerably from its high at the end

of April 2020.

• However, it remains well above its level prior to the

coronavirus (COVID-19) pandemic of 3.5 percent.

Source: Bureau of Labor Statistics August 6, 2021

19

-25,000

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

Ma

r-2

0

Ap

r-2

0

Ma

y-2

0

Ju

n-2

0

Ju

l-2

0

Au

g-2

0

Se

p-2

0

Oct-

20

No

v-2

0

De

c-2

0

Ja

n-2

1

Fe

b-2

1

Mar-

21

Ap

r-2

1

May-2

1

Ju

n-2

1

Goods Producing Retail Trade Services (Information, Financial, and Other)

Wholesale Trade, Transportation, and Utilities Professional and Business Services Leisure and Hospitality

Government Education & Health Services Total Nonfarm

thousands, seasonally adjusted

Leisure and

Hospitality

-7.5 million jobs

in April

Sources: Bureau of Labor; Haver Analytics through June 2021

Contributions to Change in Nonfarm Payroll

Employment

The Inflation Picture

• The Committee seeks to achieve maximum employment

and inflation at the rate of 2 percent over the longer run.

• With inflation having run persistently below this longer-run

goal, the Committee will aim to achieve inflation moderately

above 2 percent for some time so that inflation averages 2

percent over time and longer-term inflation expectations

remain well anchored at 2 percent.

20

Summary of the Economic Environment:

The July 2021 FOMC Policy Statement

21

Excerpts from the July 2021 FOMC Statement

• With progress on vaccinations and strong policy

support, indicators of economic activity and

employment have continued to strengthen.

• The sectors most adversely affected by the pandemic

have shown improvement but have not fully

recovered.

• Inflation has risen, largely reflecting transitory factors.

22

Sources: Bureau of Economic Analysis; Federal Reserve Bank of Dallas; Haver Analytics through June 2021

Personal Consumption Expenditure (PCE) Price Index

Personal Consumption Expenditure (PCE)

Price Index

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

year-over-year percent change, monthly

PCE Core PCE Trimmed Mean PCE3.9 3.5 2.0

FOMC Inflation Objective

23

Atlanta Fed’s Business Inflation Expectations

Survey

Source: Atlanta Fed Business Inflation Expectations Survey

For more information, visit: http://www.frbatlanta.org/research/inflationproject/bie/

1

1.5

2

2.5

3

Jul-13 Jul-14 Jul-15 Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21

year-ahead unit cost expectationspercent, monthly

Atlanta Fed’s Business Inflation Expectations Survey

through July 2021

Jerome Powell, Chair,

Federal Reserve Board of Governors

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“With inflation having run

persistently below 2 percent, we will

aim to achieve inflation moderately

above 2 percent for some time so

that inflation averages 2 percent

over time and longer-term inflation

expectations remain well anchored

at 2 percent. We expect to maintain

an accommodative stance of

monetary policy until these

employment and inflation outcomes

are achieved.”Chair Powell’s Press Conference

July 28, 2021

The Monetary Policy Response:

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• In July, the Committee decided to maintain the target range for the federal funds rate

at 0 to 1/4 percent.

• The Committee expects it will be appropriate to maintain this target range until labor

market conditions have reached levels consistent with the Committee’s assessments

of maximum employment, and inflation has risen to 2 percent and is on track to

moderately exceed 2 percent for some time.

• In assessing the appropriate stance of monetary policy, the Committee will continue to

monitor the implications of incoming information for the economic outlook. The

Committee would be prepared to adjust the stance of monetary policy as appropriate if

risks emerge that could impede the attainment of the Committee’s goals.

• This assessment will take into account a wide range of information, including:

➢Readings on public health

➢Labor market measures

➢ Inflation pressures and inflation expectations

➢Readings on financial and international developments

COVID-19 Resources and Information

• Follow these links for the latest COVID-19 updates

from the Federal Reserve:

• Federal Reserve System Board of Governors:

https://www.federalreserve.gov/covid-19.htm

• Federal Reserve Bank of Atlanta:

https://www.atlantafed.org/news/covid-19

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Questions?

The views expressed are mine, and not necessarily those of

the Atlanta Fed or the Federal Reserve System.