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Economy in Brief

FOMC Reaffirms the Need to Maintain An Easy-Money Posture
by Tom Moeller  October 30, 2013

At today's meeting of the Federal Open Market Committee, the Fed elected to continue purchasing $85 billion per month of agency mortgage-backed and Treasury securities. It "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." The Federal funds rate was left unchanged in a range of 0.00% - 0.25% and the discount rate remained at 0.75%.

The Fed painted a picture of modest economic improvement. "Economic activity has continued to expand at a moderate pace. Indicators of labor market conditions have shown some further improvement, but the unemployment rate remains elevated. Available data suggest that 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."

To the upside, "Taking into account the extent of federal fiscal retrenchment over the past year, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program as consistent with growing underlying strength in the broader economy."

Regarding inflation, "Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."

Reiterated was 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."

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

Haver's SURVEYS database contains the projections from the Federal Reserve Board.

  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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