–FOMC’s August 10 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 August 10 meeting follows for
comparison:
Information received since the Federal Open Market Committee met in
August indicates that the pace of recovery in output and employment has
slowed in recent months. 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 are at a depressed
level. Bank lending has continued to contract, but at a reduced rate in
recent months. The Committee anticipates a gradual return to higher
levels of resource utilization in a context of price stability, although
the pace of economic recovery is likely to be modest in the near term.
Measures of underlying inflation are currently at levels somewhat
below those the Committee judges most consistent, over the longer run,
with its mandate to promote maximum employment and price stability. With
substantial resource slack continuing to restrain cost pressures and
longer-term inflation expectations stable, inflation is likely to remain
subdued for some time before rising to levels the Committee considers
consistent with its mandate.
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 also will maintain its existing policy of
reinvesting principal payments from its securities holdings.
The Committee will continue to monitor the economic outlook and
financial developments and is prepared to provide additional
accommodation if needed to support the economic recovery and to return
inflation, over time, to 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; Eric S. Rosengren; Daniel K. Tarullo; and Kevin
M. Warsh.
Voting against the policy was Thomas M. Hoenig, who judged that the
economy continues to recover at a moderate pace. Accordingly, he
believed that continuing to express the expectation of exceptionally low
levels of the federal funds rate for an extended period was no longer
warranted and will lead to future imbalances that undermine stable
long-run growth. In addition, given economic and financial conditions,
Mr. Hoenig did not believe that continuing to reinvest principal
payments from its securities holdings was required to support the
Committee’s policy objectives.
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The following is the FOMC statement released August 10, 2010:
Information received since the Federal Open Market Committee met in
June indicates that the pace of recovery in output and employment has
slowed in recent months. 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; however, investment in nonresidential structures
continues to be weak and employers remain reluctant to add to payrolls.
Housing starts remain at a depressed level. Bank lending has continued
to contract. Nonetheless, the Committee anticipates a gradual return to
higher levels of resource utilization in a context of price stability,
although the pace of economic recovery is likely to be more modest in
the near term than had been anticipated.
Measures of underlying inflation have trended lower in recent
quarters and, with substantial resource slack continuing to restrain
cost pressures and longer-term inflation expectations stable, inflation
is likely to be subdued for some time.
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 of the federal funds rate for an
extended period.
To help support the economic recovery in a context of price
stability, the Committee will keep constant the Federal Reserve’s
holdings of securities at their current level by reinvesting principal
payments from agency debt and agency mortgage-backed securities in
longer-term Treasury securities.1 The Committee will continue to roll
over the Federal Reserve’s holdings of Treasury securities as they
mature.
The Committee will continue to monitor the economic outlook and
financial developments and will employ its policy tools as necessary to
promote economic recovery and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A.
Duke; Donald L. Kohn; Sandra Pianalto; Eric S. Rosengren; Daniel K.
Tarullo; and Kevin M. Warsh.
Voting against the policy was Thomas M. Hoenig, who judges that the
economy is recovering modestly, as projected. Accordingly, he believed
that continuing to express the expectation of exceptionally low levels
of the federal funds rate for an extended period was no longer warranted
and limits the Committee’s ability to adjust policy when needed. In
addition, given economic and financial conditions, Mr. Hoenig did not
believe that keeping constant the size of the Federal Reserve’s holdings
of longer-term securities at their current level was required to support
a return to the Committee’s policy objectives.
** Market News International Washington Bureau: 202-371-2121 **
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