–August 9 Statement Follows for Comparison
WASHINGTON (MNI) – The following is the text of the Federal Open
Market Committee’s monetary policy statement released Wednesday. The
statement from the August 9 meeting follows for comparison:
Information received since the Federal Open Market Committee met in
August indicates that economic growth remains slow. Recent indicators
point to continuing weakness in overall labor market conditions, and the
unemployment rate remains elevated. Household spending has been
increasing at only a modest pace in recent months despite some recovery
in sales of motor vehicles as supply-chain disruptions eased. Investment
in nonresidential structures is still weak, and the housing sector
remains depressed. However, business investment in equipment and
software continues to expand. Inflation appears to have moderated since
earlier in the year as prices of energy and some commodities have
declined from their peaks. Longer-term inflation expectations have
remained stable.
Consistent with its statutory mandate, the Committee seeks to
foster maximum employment and price stability. The Committee continues
to expect some pickup in the pace of recovery over coming quarters but
anticipates that the unemployment rate will decline only gradually
toward levels that the Committee judges to be consistent with its dual
mandate. Moreover, there are significant downside risks to the economic
outlook, including strains in global financial markets. The Committee
also anticipates that inflation will settle, over coming quarters, at
levels at or below those consistent with the Committee’s dual mandate as
the effects of past energy and other commodity price increases dissipate
further. However, the Committee will continue to pay close attention to
the evolution of inflation and inflation expectations.
To support a stronger economic recovery and to help ensure that
inflation, over time, is at levels consistent with the dual mandate, the
Committee decided today to extend the average maturity of its holdings
of securities. The Committee intends to purchase, by the end of June
2012, $400 billion of Treasury securities with remaining maturities of 6
years to 30 years and to sell an equal amount of Treasury securities
with remaining maturities of 3 years or less. This program should put
downward pressure on longer-term interest rates and help make broader
financial conditions more accommodative. The Committee will regularly
review the size and composition of its securities holdings and is
prepared to adjust those holdings as appropriate.
To help support conditions in mortgage markets, the Committee will
now reinvest principal payments from its holdings of agency debt and
agency mortgage-backed securities in agency mortgage-backed securities.
In addition, the Committee will maintain its existing policy of rolling
over maturing Treasury securities at auction.
The Committee also decided 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
mid-2013.
The Committee discussed the range of policy tools available to
promote a stronger economic recovery in a context of price stability. It
will continue to assess the economic outlook in light of incoming
information and is prepared to employ its tools as appropriate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles
L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
Voting against the action were Richard W. Fisher, Narayana Kocherlakota,
and Charles I. Plosser, who did not support additional policy
accommodation at this time.
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The following is the FOMC statement released August 9, 2011:
Information received since the Federal Open Market Committee met in
June indicates that economic growth so far this year has been
considerably slower than the Committee had expected. Indicators suggest
a deterioration in overall labor market conditions in recent months, and
the unemployment rate has moved up. Household spending has flattened
out, investment in nonresidential structures is still weak, and the
housing sector remains depressed. However, business investment in
equipment and software continues to expand. Temporary factors,
including the damping effect of higher food and energy prices on
consumer purchasing power and spending as well as supply chain
disruptions associated with the tragic events in Japan, appear to
account for only some of the recent weakness in economic activity.
Inflation picked up earlier in the year, mainly reflecting higher prices
for some commodities and imported goods, as well as the supply chain
disruptions. More recently, inflation has moderated as prices of energy
and some commodities have declined from their earlier peaks.
Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to
foster maximum employment and price stability. The Committee now
expects a somewhat slower pace of recovery over coming quarters than it
did at the time of the previous meeting and anticipates that the
unemployment rate will decline only gradually toward levels that the
Committee judges to be consistent with its dual mandate. Moreover,
downside risks to the economic outlook have increased. The Committee
also anticipates that inflation will settle, over coming quarters, at
levels at or below those consistent with the Committee’s dual mandate as
the effects of past energy and other commodity price increases dissipate
further. However, the Committee will continue to pay close attention to
the evolution of inflation and inflation expectations.
To promote the ongoing economic recovery and to help ensure that
inflation, over time, is at levels consistent with its mandate, the
Committee decided today to keep the target range for the federal funds
rate at 0 to 1/4 percent. The Committee 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
mid-2013. The Committee also will maintain its existing policy of
reinvesting principal payments from its securities holdings. The
Committee will regularly review the size and composition of its
securities holdings and is prepared to adjust those holdings as
appropriate.
The Committee discussed the range of policy tools available to
promote a stronger economic recovery in a context of price stability.
It will continue to assess the economic outlook in light of incoming
information and is prepared to employ these tools as appropriate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles
L. Evans; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
Voting against the action were: Richard W. Fisher, Narayana
Kocherlakota, and Charles I. Plosser, who would have preferred to
continue to describe economic conditions as likely to warrant
exceptionally low levels for the federal funds rate for an extended
period.
** Market News International Washington Bureau: 202-371-2121 **
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