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Economy in Brief

FOMC Leaves Fed Funds, Economic Outlook and Securities Purchases Unchanged
by Tom Moeller  June 19, 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 was left at 0.75%. Also unchanged were the Fed's comments on the economy. "Economic activity has been expanding at a moderate pace. 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. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."

New was the statement that "Risks to the economic outlook for the economy and labor markets have diminished since the fall." The Committee continues to "anticipate that inflation over the medium term likely will run at or below its 2 percent objective."

"The Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. 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."

The "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."

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.

Low Inflation in a World of Securitization from the Federal Reserve Bank of St. Louis can be found here here.

  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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