Fed Keeps Status Quo, Says Economy Ticked Up
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As expected, the Federal Reserve maintained its "exceptionally low" interest rate policy and longer-term treasury buying plans as the U.S. economy showed signs of life.
The Fed said they will continue to hold the federal funds rate exceptionally low at least through mid-2013. They will also continue its program to extend the average maturity of its holdings of securities as announced in September.
The Fed noted economic growth strengthened somewhat in the third quarter, which they said reverses some temporary factors which weighed on growth. Household spending increased at a faster pace in recent months and Business investment continued to expand. Not surprising, the Fed said unemployment and the housing sector remain an overhang.
A moderate pace of economic growth is expected in coming quarters and the unemployment rate is expected to decline over time, but only gradually. That said, strains in global financial markets pose significant downside risks to the economic outlook.
On inflation, the Fed expects it to settle at levels at or below those consistent with its dual mandate of maximum employment and price stability.
In addition to continuing its program to extend the average maturity of its holdings of securities, the Fed maintained its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.
Only one member dissented. Charles Evans wanted additional policy accommodation at this time.
Fed Chairman Ben Bernanke's press conference is schedule today at 2:15PM ET. It can be viewed online here.
The Fed said they will continue to hold the federal funds rate exceptionally low at least through mid-2013. They will also continue its program to extend the average maturity of its holdings of securities as announced in September.
The Fed noted economic growth strengthened somewhat in the third quarter, which they said reverses some temporary factors which weighed on growth. Household spending increased at a faster pace in recent months and Business investment continued to expand. Not surprising, the Fed said unemployment and the housing sector remain an overhang.
A moderate pace of economic growth is expected in coming quarters and the unemployment rate is expected to decline over time, but only gradually. That said, strains in global financial markets pose significant downside risks to the economic outlook.
On inflation, the Fed expects it to settle at levels at or below those consistent with its dual mandate of maximum employment and price stability.
In addition to continuing its program to extend the average maturity of its holdings of securities, the Fed maintained its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.
Only one member dissented. Charles Evans wanted additional policy accommodation at this time.
Fed Chairman Ben Bernanke's press conference is schedule today at 2:15PM ET. It can be viewed online here.
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