Information received since the
Federal Open Market Committee met in September generally suggestsOctober indicates that economic activity has continued to expandis expanding at a moderate pace. Indicators of labor Labor
market conditions have shown some further
improvement, but;
the unemployment rate has declined
but remains elevated. Available data suggest that household Household spending and business fixed
investment advanced, while the recovery in the housing sector slowed somewhat
in recent months. Fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy
prices, inflation, although the
extent of restraint may be diminishing. Inflation has been running below the
Committee's longer-run objective, but 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 that, with appropriate policy accommodation, economic
growth will pick up from its recent pace and the unemployment rate will
gradually decline toward levels the Committee judges consistent with its dual
mandate. The Committee sees the downside risks to the outlook for the economy
and the labor market as having diminished, on net, since last fallbecome more nearly balanced. The Committee recognizes that
inflation persistently below its 2 percent objective could pose risks to
economic performance, butand it anticipatesis monitoring inflation developments carefully for
evidence that inflation will move back
toward its objective over the medium term.
Taking into account the extent of
federal fiscal retrenchment oversince the past yearinception of its current asset purchase program, the Committee sees the improvement
in economic activity and labor market conditions since it began its asset purchase programover that period as consistent with growing
underlying strength in the broader economy. HoweverIn light of
the cumulative progress toward maximum employment and the improvement in the
outlook for labor market conditions,
the Committee decided to await more evidence that progress will be sustained
before adjustingmodestly
reduce the pace of its asset purchases.
The Committee will closely monitor
incoming information on economic and financial developments in coming months
and will continue its purchases of Treasury and agency mortgage-backed
securities, and employ its other policy tools as appropriate, until the outlook
for the labor market has improved substantially in a context of price
stability. In judging when to moderate the
pace of asset purchases, the Committee will, at its coming meetings, assess
whetherIf incoming information continues to supportbroadly supports the Committee's expectation of
ongoing improvement in labor market conditions and inflation moving back toward
its longer-run objective. Asset, the
Committee will likely reduce the pace of asset purchases in further measured
steps at future meetings. However, asset purchases are not on a preset
course, and the Committee's decisions about their pace will remain contingent
on the Committee's economic outlook for the labor market and inflation as well as its assessment of the
likely efficacy and costs of such purchases.
To support continued progress toward
maximum employment and price stability, the Committee today reaffirmed its view
that a highly accommodative stance of monetary policy will remain appropriate
for a considerable time after the asset purchase program ends and the economic
recovery strengthens. In particular, the The Committee
decided to keep the also reaffirmed its expectation that the current
exceptionally low target
range for the federal funds rate atof 0 to 1/4 percent and currently anticipates that this exceptionally
low range for the federal funds rate
will be appropriate at least as long as the unemployment rate remains above
6-1/2 percent, inflation between one and two years ahead is projected to be no
more than a half percentage point above the Committee's 2 percent longer-run
goal, and longer-term inflation expectations continue to be well anchored. In
determining how long to maintain a highly accommodative stance of monetary
policy, the Committee will also consider other information, including
additional measures of labor market conditions, indicators of inflation
pressures and inflation expectations, and readings on financial developments. The Committee now anticipates, based on its
assessment of these factors, that it likely will be appropriate to maintain the
current target range for the federal funds rate well past the time that the
unemployment rate declines below 6-1/2 percent, especially if projected
inflation continues to run below the Committee's 2 percent longer-run goal. When the Committee decides to begin
to remove policy accommodation, it will take a balanced approach consistent
with its longer-run goals of maximum employment and inflation of 2 percent.
Voting for the FOMC monetary policy
action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James
Bullard; Charles L. Evans; Esther L.
George; Jerome H. Powell; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo;
and Janet L. Yellen. Voting against the action was Esther L. GeorgeEric S. Rosengren, who was concernedbelieves
that, with the continued high level of monetary accommodation
increased unemployment rate still elevated
and the risks of futureinflation rate well below the target, changes in
the purchase program are premature until incoming data more clearly indicate
that economic and financial imbalances and, over time, could
cause an increase in long-term inflation expectations.growth is likely to be sustained above its
potential rate.