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Economy in Brief

FOMC Leaves Fed Funds, Growth and Inflation Outlook Unchanged
by Tom Moeller  May 1, 2013

As expected, the Federal Open Market Committee today left the Federal funds rate in a "range from 0 to 1/4 percent". The Fed funds rate has remained unchanged since late-2008 at its lowest level ever. The discount rate also was left unchanged at 0.75%. The Fed indicated that "Labor market conditions have shown some improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy is restraining economic growth."

Risks to economic growth and inflation were voiced as at the last meeting. "The Committee continues to see downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective."

Also repeated was that "the Committee decided to keep the target range for the federal funds rate at 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 addition, "The Committee 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 and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

The press release for today's FOMC meeting can be found here.

Haver's SURVEYS database contains the projections from the Federal Reserve Board. The economic data can be found in Haver's USECON database. 

  Current Last 2012 2011 2010 2009
Federal Funds Rate, % (Target 0.00-0.25 0.00-0.25 0.14 0.10 0.17 0.16
Discount Rate, % 0.75 0.75 0.75 0.75 0.72 0.50
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