President's Letter
Greetings, and welcome to the Bank’s 2019 Annual Report. You have my gratitude for your ongoing commitment to the Federal Reserve Bank of Chicago. While the Covid-19 pandemic will undoubtedly impact the economic situation in unprecedented ways throughout the rest of the current year, we take this opportunity to reflect on what happened in 2019 at the Chicago Fed.
The Economy
The economy was on a solid footing as we entered 2019. Like many of my colleagues, I expected that economic growth would decelerate but remain above potential. Inflation was also picking up a bit after running below the Federal Open Market Committee’s (FOMC) 2 percent symmetric target for many years. These solid fundamentals led me and most FOMC participants to expect that it would likely be appropriate to raise policy rates another 50 to 75 basis points in 2019. However, as the year progressed, concerns about weak global growth, trade policy uncertainty, and muted inflation expectations mounted.
The FOMC held policy rates steady for the first half of the year as it evaluated the rising downside risks. By midyear, a deteriorating outlook and rising uncertainty prompted the FOMC to lower the target range for the federal funds rate by 25 basis points, followed by two additional 25 basis point reductions later in the year. I viewed these policy actions as sufficiently accommodative to maintain solid economic growth. I also saw the actions as promoting a faster return of inflation to our symmetric 2 percent objective. The year ended with solid annual growth of 2.3 percent and an unemployment rate of only 3.5 percent. However, inflation edged down further in 2019 and ended the year at only 1.6 percent.
Fed Listens
Also last year, the Federal Open Market Committee conducted a major review of its monetary policy strategies, tools, and communications practices. The review was prompted in part by the difficulties in providing monetary policy accommodation in an environment in which equilibrium real interest rates are low. The Chicago Fed played a prominent role in this work, as several of our economists are leaders in this area and contributed directly to the review process.
May 2020
- The Renewing the Promise of the Middle Class research conference that explored the role of policy in creating a wider path to the middle class and highlighting research that focused on successes and shortcomings of recent policy initiatives.
- The Fed’s Inclusive Economies Initiative included a series of focus groups with community leaders in mid-sized Seventh District cities, understanding how these communities think about connecting economic growth to economic opportunity.
- The Fed’s Community Development Finance in Smaller Markets Initiative included organized efforts in understanding the ecosystem of investors, intermediaries, and service providers.
Kathryn Medina was promoted to Senior Vice President of People & Culture and Chief Human Resources Officer
Anna Paulson was promoted to Executive Vice President and Director of Research
Frederick Martin became Senior Vice President and Chief Financial Officer (CFO)
2019 Board of Directors
Chicago Board of Directors
Federal Reserve Chair Jerome Powell (center) visited the Chicago Fed in June 2019.
(Pictured left to right): Helen D. Gayle,Detroit Board of Directors
Federal Reserve Chair Jerome Powell (center) visited the Chicago Fed in June 2019.
(Pictured left to right): Michael L. Seneski*, Michael HoppeNew Directors for 2020
Linda Jojo
Executive Vice President of Technology & Chief Digital Officer,
United Airlines, Inc.
Auditor Independence
The Federal Reserve Board engaged KPMG to audit the 2019 combined and individual financial statements of the Reserve Banks. 1
In 2019, KPMG also conducted audits of internal controls over financial reporting for each of the Reserve Banks. Fees for KPMG services totaled $7.0 million. To ensure auditor independence, the Board of Governors 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 2019, the Bank did not engage KPMG for any non-audit services.
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.
