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Annual Report, 2016
Chicago Fed President Charles Evans discusses the economy's performance in 2016.
Economic Growth
After a sluggish first half in 2016, economic activity strengthened in the second half of the year, and real gross domestic product (GDP) ended up increasing 1.9 percent from the fourth quarter of 2015 to the fourth quarter of 2016.
Promoting Full Employment
The achievement of the Fed’s full employment goal looks to be on course, with the unemployment rate just below the median long-run projection of 4.8 percent made by the Federal Open Market Committee (FOMC) in December.
Achieving Our Inflation Target
Inflation, at 1.4 percent from the fourth quarter of 2015 to the fourth quarter of 2016, increased in 2016, but continues to run below our 2 percent target. With the effects of past declines in energy and import prices dissipating and the anticipation of some further tightening in the labor market, the FOMC expects that inflation will stabilize around its target over the medium term.
Our Policy Response
With the economy improving and inflation moving back toward target, the FOMC made modest increases in the federal funds rate in December and March.
New Director
We also have a new director in Detroit. Directors participate in the formulation of monetary policy, act as a link between the Federal Reserve System and the public and supervise the administration of the Bank's operations.
New Executive Committee Members
I hope you enjoyed this 2016 year-in-review. To conclude, I leave you with our financial statements for the year.
Charles L. EvansPresident and Chief Executive OfficerFederal Reserve Bank of Chicago
Financial Statements

Auditor Independence

The Federal Reserve Board engaged KPMG to audit the 2016 combined and individual financial statements of the Reserve Banks. [1]


In 2016, KPMG also conducted audits of internal controls over financial reporting for each of the Reserve Banks. Fees for KPMG services totaled $6.7 million. To ensure auditor independence, the Board requires that KPMG be independent in all matters relating to the audits. Specifically, KPMG may not perform services for the Reserve Banks or others that would place it in a position of auditing its own work, making management decisions on behalf of the Reserve Banks, or in any other way impairing its audit independence. In 2016, the Bank did not engage KPMG for any non-audit services.


The Federal Reserve Bank of Chicago — Financial Statements as of and for the Years Ended December 31, 2016 and 2015, Management’s Report on Internal Control Over Financial Reporting, and Independent Auditors’ Report

[1] In addition, KPMG audited the Office of Employee Benefits of the Federal Reserve System (OEB), the Retirement Plan for Employees of the Federal Reserve System (System Plan) and the Thrift Plan for Employees of the Federal Reserve System (Thrift Plan). The System Plan and the Thrift Plan provide retirement benefits to employees of the Board, the Federal Reserve Banks, the OEB and the Consumer Financial Protection Bureau.

Photo Credits: Ping Homeric/Chicago Fed; Jeffrey Youngberg/Chicago Fed; Yuri Arcurs/Getty Images; Brent Clark/AP Images; Britt Leckman/Federal Reserve Board of Governors; Victor Powell/Powell Photography.

Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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