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Release Date: October 24, 2012
For immediate release
Information received since the Federal Open Market Committee met
in September 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
advanced a bit more quickly, but growth in business fixed investment has
slowed. The housing sector has shown some further signs of
improvement, albeit from a depressed level. Inflation recently picked
up somewhat, reflecting higher energy prices. Longer-term inflation
expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to
foster maximum employment and price stability. The Committee remains
concerned that, without sufficient 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 will continue 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 Treasury securities, 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 Committee’s 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 disagreed with the description of the
time period over which a highly accommodative stance of monetary policy
will remain appropriate and exceptionally low levels for the federal
funds rate are likely to be warranted.
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