–Aug 1 Statement Follows for Comparison
WASHINGTON (MNI) – The following is the text of the Federal Open
Market Committee’s monetary policy statement released Thursday. The
statement released after the July 31-Aug. 1 meeting follows for
comparison:
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 Committees
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)
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The following is the FOMC statement released after the meeting held
July 31-Aug. 1, 2012:
Information received since the Federal Open Market Committee met in
June suggests that economic activity decelerated somewhat over the first
half of this year. Growth in employment has been slow in recent months,
and the unemployment rate remains elevated. Business fixed investment
has continued to advance. Household spending has been rising at a
somewhat slower pace than earlier in the year. Despite some further
signs of improvement, the housing sector remains depressed. Inflation
has declined since earlier this year, mainly reflecting lower prices of
crude oil and gasoline, and longer-term inflation expectations have
remained stable.
Consistent with its statutory mandate, the Committee seeks to
foster maximum employment and price stability. The Committee expects
economic growth to remain moderate over coming quarters and then to pick
up very gradually. Consequently, the Committee anticipates that the
unemployment rate will decline only slowly toward levels that it judges
to be consistent with its dual mandate. Furthermore, strains in global
financial markets continue to pose significant downside risks to the
economic outlook. The Committee anticipates that inflation over the
medium term will run at or below the rate that it judges most consistent
with its dual mandate.
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 expects to maintain a highly accommodative stance
for monetary policy. In particular, the Committee decided today to keep
the target range for the federal funds rate at 0 to 1/4 percent and
currently anticipates 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 late 2014.
The Committee also decided to 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.
The Committee will closely monitor incoming information on economic and
financial developments and will provide additional accommodation as
needed to promote a stronger economic recovery and sustained improvement
in labor market conditions in a context of price stability.
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 preferred to omit
the description of the time period over which economic conditions are
likely to warrant an exceptionally low level of the federal funds rate.
** MNI Washington Bureau: 202-371-2121 **
[TOPICS: MMUFE$,MGU$$$,M$U$$$]
