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Economy in Brief

FOMC Pares Back Bond Purchases; Worries About Inflation Running Too Low
by Tom Moeller  March 19, 2014

At today's meeting of the Federal Open Market Committee, the Fed reduced the amount of its asset purchases of agency mortgage-backed and longer-term Treasury securities to $55 billion per month from $65 billion per month. It sighted broader economic strength and improvement in the labor market as rationales for the move.

The Federal funds rate was left unchanged in a range of 0.00% - 0.25% and the discount rate remained at 0.75%.

Economic goals continued to be consumer price inflation of 2 percent and maximum employment. Worries about economic performance were voiced if inflation continued to run under its objective, suggesting that a 6.5% unemployment rate might not be a firm target.

GDP growth was projected for this year of 2.8% to 3.0% and next year of 3.0% to 3.2%. The unemployment rate target this year was reduced to 6.1% to 6.3% and next year to 5.6% to 5.9%. Core PCE inflation forecasts were left roughly unchanged at 1.4% to 1.6% this year and 1.7% to 2.0% for 2015.

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 2013 2012 2011 2010
Federal Funds Rate, % (Target) 0.00-0.25 0.00-0.25 0.11 0.14 0.10 0.17
Discount Rate, % 0.75 0.75 0.75 0.75 0.75 0.72
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