WASHINGTON (MNI) – The following is an excerpt of the Committee
Policy Action section from the text of the minutes of the Federal Open
Market Committee’s November 1-2 meeting published Tuesday:

Committee Policy Action

Members noted that information received over the intermeeting
period pointed to somewhat stronger economic growth in the third
quarter, partly reflecting a reversal of temporary factors that had
depressed economic growth in the first half of the year.

However, overall labor market conditions remained weak. Members
generally anticipated that unemployment would decline only gradually
from levels significantly above those that the Committee would expect to
prevail in the longer run, with inflation likely to settle at levels at
or below those consistent with the Committee’s dual mandate.
Accordingly, in the discussion of monetary policy for the period ahead,
all Committee members agreed to continue the program of extending the
average maturity of the Federal Reserve’s holdings of securities as
announced in September.

The Committee decided to maintain its existing policy of
reinvesting principal payments from its holdings of agency debt and
agency MBS in agency MBS and of rolling over maturing Treasury
securities at auction.

In addition, the Committee agreed to keep the target range for the
federal funds rate at 0 to 1/4 percent and to reiterate its expectation
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 at least
through mid-2013.

A few members expressed interest in using language specifying a
period of time during which the federal funds rate was expected to
remain exceptionally low, rather than a calendar date, arguing that such
language might be better to indicate a constant stance of monetary
policy over time. However, members generally preferred to retain the
existing forward guidance, at least for now. A few members indicated
that they believed the economic outlook might warrant additional policy
accommodation. However, it was noted that any such accommodation would
likely be more effective if it were provided in the context of a future
communications initiative, and most of these members agreed that they
could support retention of the current policy stance at this meeting.

One member dissented from the policy decision on the grounds that
additional monetary policy accommodation was warranted at this time.

With the Committee in the process of reviewing its monetary policy
strategies and communication, and no additional accommodation being
provided at this meeting, a few members indicated that they could
support the Committee’s decision even though they had not favored recent
policy actions. The Committee reiterated that it will regularly review
the size and composition of its securities holdings and that it is
prepared to adjust those holdings as appropriate to promote a stronger
economic recovery in the context of price stability. With respect to the
statement to be released following the meeting, members agreed that only
relatively small changes were needed to reflect the modest improvement
in the economic outlook and to note that the Committee would continue to
implement its policy steps from recent meetings.

** Market News International Washington Bureau: 202-371-2121 **

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