WASHINGTON (MNI) – The following is an excerpt from the latest
Federal Open Market Committee Minutes published Wednesday that concerns
the policy directive which, as announced Oct. 24, maintained existing
policy:
Committee Policy Action
Members viewed the information on U.S. economic activity received
over the intermeeting period as suggesting that the economy was, on
balance, expanding moderately, with a pickup in household spending and
further improvement in housing markets offset to some extent by a
slowdown in the business sector. Although the unemployment rate declined
in recent months, monthly gains in nonfarm payroll jobs remained modest,
and many members noted that, without sufficient policy accommodation,
economic growth might not be strong enough to generate sustained
improvement in the labor market. Inflation rose recently because of a
temporary run-up in energy prices. However, longer-term inflation
expectations were stable, and over the medium run, inflation was
anticipated to run at or below the Committee’s 2 percent objective.
In their discussion of monetary policy for the period ahead,
Committee members generally agreed that their overall assessments of the
economic outlook were little changed since their previous meeting.
Accordingly, all but one member judged that maintaining the current,
highly accommodative stance of monetary policy was warranted in order to
foster a stronger economic recovery in a context of price stability. The
Committee judged that continuing both the purchases of MBS at a pace of
$40 billion per month and the existing program to extend the average
maturity of its Treasury securities holdings remained appropriate. The
Committee also agreed to maintain its policy of reinvesting principal
payments from its holdings of agency debt and agency MBS into agency
MBS. One member opposed further asset purchases because he viewed them
as unlikely to help the Committee achieve its goals and because he
thought that purchases of MBS represented inappropriate credit
allocation. Many members saw the adjustments in the Committee’s forward
guidance at the September meeting as having been effective in
communicating its intention to maintain a highly accommodative stance of
monetary policy for a considerable time after the economic recovery
strengthens and judged that the guidance remained appropriate at this
meeting. However, one member continued to object to the
calendar-date-based forward guidance for the federal funds rate. With
respect to the statement to be released following the meeting, members
made only relatively small modifications to update the description of
recent developments in consumer and business spending and in inflation.
With the economic outlook little changed, they agreed that the remainder
of the statement would reiterate the policy actions and intentions
adopted at the September meeting.
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]
