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Economy in Brief

FOMC Will Reduce the Rate of Asset Purchases
by Tom Moeller  December 18, 2013

At today's meeting of the Federal Open Market Committee the Fed elected to begin reducing, in January, its purchases of agency mortgage-backed and Treasury securities to $75 billion per month from $85 billion per month.

The Fed nevertheless "reaffirmed its expectation that the current exceptionally low target range for the federal funds rate of 0 to 1/4 percent 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 economic outlook was unchanged. "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 of maximum employment and price stability."

The perspective on the current economy also was unchanged from "activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. 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, although the extent of restraint may be diminishing."

Regarding prices, "Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."

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

Haver's SURVEYS database contains the economic 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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