Parsing the Fed: How the Statement Changed# Stock
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Fed Statement Tracker
Aug. 01, 2012 → Sep. 13, 2012 show changes Compare other statements »
Information received since the Federal Open Market Committee met in August
suggests that economic activity has continued to expand at a moderate pace
in recent months. Growth in employment has been slow, and the unemployment
rate remains elevated. Household spending has continued to advance, but
growth in business fixed investment appears to have slowed. The housing
sector has shown some further signs of improvement, albeit from a depressed
level. Inflation has been subdued, although the prices of some key
commodities have increased recently. Longer-term inflation expectations have
remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum
employment and price stability. The Committee is concerned that, without
further policy accommodation, economic growth might not be strong enough to
generate sustained improvement in labor market conditions. Furthermore,
strains in global financial markets continue to pose significant downside
risks to the economic outlook. The Committee also anticipates that inflation
over the medium term likely would run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation,
over time, is at the rate most consistent with its dual mandate, the
Committee agreed today to increase policy accommodation by purchasing
additional agency mortgage-backed securities at a pace of $40 billion per
month. The Committee also will continue through the end of the year its
program to extend the average maturity of its holdings of securities as
announced in June, and it is maintaining its existing policy of reinvesting
principal payments from its holdings of agency debt and agency mortgage-
backed securities in agency mortgage-backed securities. These actions, which
together will increase the Committee's holdings of longer-term securities
by about $85 billion each month through the end of the year, should put
downward pressure on longer-term interest rates, support mortgage markets,
and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and
financial developments in coming months. If the outlook for the labor market
does not improve substantially, the Committee will continue its purchases
of agency mortgage-backed securities, undertake additional asset purchases,
and employ its other policy tools as appropriate until such improvement is
achieved in a context of price stability. In determining the size, pace, and
composition of its asset purchases, the Committee will, as always, take
appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability,
the Committee expects that a highly accommodative stance of monetary policy
will remain appropriate for a considerable time after the economic recovery
strengthens. In particular, the Committee also decided today to keep the
target range for the federal funds rate at 0 to 1/4 percent and currently
anticipates that exceptionally low levels for the federal funds rate are
likely to be warranted at least through mid-2015.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman;
William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart;
Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein;
Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the
action was Jeffrey M. Lacker, who opposed additional asset purchases and
preferred to omit the description of the time period over which
exceptionally low levels for the federal funds rate are likely to be
warranted.
[Statement Regarding Transactions in Agency Mortgage-Backed Securities and
Treasury Securities (195 KB PDF)](/newsevents/press/monetary/
monetary20120913a1.pdf)
http://blogs.wsj.com/economics/2012/09/13/parsing-the-fed-how-t
Aug. 01, 2012 → Sep. 13, 2012 show changes Compare other statements »
Information received since the Federal Open Market Committee met in August
suggests that economic activity has continued to expand at a moderate pace
in recent months. Growth in employment has been slow, and the unemployment
rate remains elevated. Household spending has continued to advance, but
growth in business fixed investment appears to have slowed. The housing
sector has shown some further signs of improvement, albeit from a depressed
level. Inflation has been subdued, although the prices of some key
commodities have increased recently. Longer-term inflation expectations have
remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum
employment and price stability. The Committee is concerned that, without
further policy accommodation, economic growth might not be strong enough to
generate sustained improvement in labor market conditions. Furthermore,
strains in global financial markets continue to pose significant downside
risks to the economic outlook. The Committee also anticipates that inflation
over the medium term likely would run at or below its 2 percent objective.
To support a stronger economic recovery and to help ensure that inflation,
over time, is at the rate most consistent with its dual mandate, the
Committee agreed today to increase policy accommodation by purchasing
additional agency mortgage-backed securities at a pace of $40 billion per
month. The Committee also will continue through the end of the year its
program to extend the average maturity of its holdings of securities as
announced in June, and it is maintaining its existing policy of reinvesting
principal payments from its holdings of agency debt and agency mortgage-
backed securities in agency mortgage-backed securities. These actions, which
together will increase the Committee's holdings of longer-term securities
by about $85 billion each month through the end of the year, should put
downward pressure on longer-term interest rates, support mortgage markets,
and help to make broader financial conditions more accommodative.
The Committee will closely monitor incoming information on economic and
financial developments in coming months. If the outlook for the labor market
does not improve substantially, the Committee will continue its purchases
of agency mortgage-backed securities, undertake additional asset purchases,
and employ its other policy tools as appropriate until such improvement is
achieved in a context of price stability. In determining the size, pace, and
composition of its asset purchases, the Committee will, as always, take
appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability,
the Committee expects that a highly accommodative stance of monetary policy
will remain appropriate for a considerable time after the economic recovery
strengthens. In particular, the Committee also decided today to keep the
target range for the federal funds rate at 0 to 1/4 percent and currently
anticipates that exceptionally low levels for the federal funds rate are
likely to be warranted at least through mid-2015.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman;
William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart;
Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein;
Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the
action was Jeffrey M. Lacker, who opposed additional asset purchases and
preferred to omit the description of the time period over which
exceptionally low levels for the federal funds rate are likely to be
warranted.
[Statement Regarding Transactions in Agency Mortgage-Backed Securities and
Treasury Securities (195 KB PDF)](/newsevents/press/monetary/
monetary20120913a1.pdf)
http://blogs.wsj.com/economics/2012/09/13/parsing-the-fed-how-t