Text: FOMC Monetary Policy Statement for Dec 14

–FOMC’s Nov 3 Statement Follows for Comparison

WASHINGTON (MNI) – The following is the text of the statement
released Tuesday by the Federal Open Market Committee after its
monetary policy meeting. The statement from the Nov. 3 meeting follows
for comparison:

Information received since the Federal Open Market Committee met in
November confirms that the economic recovery is continuing, though at a
rate that has been insufficient to bring down unemployment. Household
spending is increasing at a moderate pace, but remains constrained by
high unemployment, modest income growth, lower housing wealth, and tight
credit. Business spending on equipment and software is rising, though
less rapidly than earlier in the year, while investment in
nonresidential structures continues to be weak. Employers remain
reluctant to add to payrolls. The housing sector continues to be
depressed. Longer-term inflation expectations have remained stable, but
measures of underlying inflation have continued to trend downward.

Consistent with its statutory mandate, the Committee seeks to
foster maximum employment and price stability. Currently, the
unemployment rate is elevated, and measures of underlying inflation are
somewhat low, relative to levels that the Committee judges to be
consistent, over the longer run, with its dual mandate. Although the
Committee anticipates a gradual return to higher levels of resource
utilization in a context of price stability, progress toward its
objectives has been disappointingly slow.

To promote a stronger pace of economic recovery and to help ensure
that inflation, over time, is at levels consistent with its mandate, the
Committee decided today to continue expanding its holdings of securities
as announced in November. The Committee will maintain its existing
policy of reinvesting principal payments from its securities holdings.
In addition, the Committee intends to purchase $600 billion of
longer-term Treasury securities by the end of the second quarter of
2011, a pace of about $75 billion per month. The Committee will
regularly review the pace of its securities purchases and the overall
size of the asset-purchase program in light of incoming information and
will adjust the program as needed to best foster maximum employment and
price stability.

The Committee will maintain the target range for the federal funds
rate at 0 to 1/4 percent and continues to anticipate that economic
conditions, including low rates of resource utilization, subdued
inflation trends, and stable inflation expectations, are likely to
warrant exceptionally low levels for the federal funds rate for an
extended period.

The Committee will continue to monitor the economic outlook and
financial developments and will employ its policy tools as necessary to
support the economic recovery and to help ensure that inflation, over
time, is at levels consistent with its mandate.

Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A.
Duke; Sandra Pianalto; Sarah Bloom Raskin; Eric S. Rosengren; Daniel K.
Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Voting against the policy was Thomas M. Hoenig. In light of the
improving economy, Mr. Hoenig was concerned that a continued high level
of monetary accommodation would increase the risks of future economic
and financial imbalances and, over time, would cause an increase in
long-term inflation expectations that could destabilize the economy.

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The following is the FOMC statement released Nov. 3, 2010:

Information received since the Federal Open Market Committee met in
September confirms that the pace of recovery in output and employment
continues to be slow. Household spending is increasing gradually, but
remains constrained by high unemployment, modest income growth, lower
housing wealth, and tight credit. Business spending on equipment and
software is rising, though less rapidly than earlier in the year, while
investment in nonresidential structures continues to be weak. Employers
remain reluctant to add to payrolls. Housing starts continue to be
depressed. Longer-term inflation expectations have remained stable, but
measures of underlying inflation have trended lower in recent quarters.

To promote a stronger pace of economic recovery and to help ensure
that inflation, over time, is at levels consistent with its mandate, the
Committee decided today to expand its holdings of securities. The
Committee will maintain its existing policy of reinvesting principal
payments from its securities holdings. In addition, the Committee
intends to purchase a further $600 billion of longer-term Treasury
securities by the end of the second quarter of 2011, a pace of about $75
billion per month. The Committee will regularly review the pace of its
securities purchases and the overall size of the asset-purchase program
in light of incoming information and will adjust the program as needed
to best foster maximum employment and price stability.

Voting against the policy was Thomas M. Hoenig. Mr. Hoenig believed
the risks of additional securities purchases outweighed the benefits.
Mr. Hoenig also was concerned that this continued high level of monetary
accommodation increased the risks of future financial imbalances and,
over time, would cause an increase in long-term inflation expectations
that could destabilize the economy.

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

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