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How to Write a Monetary Policy Statement for Your Presentation

The purpose of the monetary policy statement is to bring together the team’s analysis, policy recommendation and supporting reasons.

Required: Teams must hand judges a written “statement” closely modeled on the FOMC statement.

Optional: The statement may also be incorporated into the oral discussion in a style consistent with the teams’ presentations. For example, a team using a talk show format should provide judges with a statement modeled on actual FOMC statements; however, the statement presented in the discussion can be in a format consistent with a talk show.

All statements should include the following elements:

  • clear announcement of the policy decision,
  • summary of current gross domestic product (GDP) and employment conditions and outlook,
  • summary of current inflation conditions and outlook, and
  • explanation for the policy decision.

The following elements are optional:

  • discussion of the balance of risks to the economy going forward—that is, are the major risks to the economy on the employment or inflation end—along with the most likely course of future policy moves, and
  • discussion of any other policy moves such as the discount rate.

For an example, see how these elements appear in an actual FOMC statement issued on June 22, 2011:

Information received since the Federal Open Market Committee met in April indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected.  Also, recent labor market indicators have been weaker than anticipated.  The slower pace of the recovery reflects in part factors that are likely to be temporary, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan.  Household spending and business investment in equipment and software continue to expand.  However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.  Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions.  However, longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The unemployment rate remains elevated; however, the Committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline toward levels that the Committee judges to be consistent with its dual mandate.  Inflation has moved up recently, but the Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate.  However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations. 

To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent.  The Committee continues to anticipate that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate for an extended period.  The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month and will maintain its existing policy of reinvesting principal payments from its securities holdings.  The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate. 

The Committee will monitor the economic outlook and financial developments and will act as needed to best foster maximum employment and price stability.

October 2011