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Economy in Brief

FOMC Sees Economic Rebound; Pares Back Bond Purchases Further
by Tom Moeller  July 30, 2014

At today's meeting of the Federal Open Market Committee, the Fed indicated that the economy, consumer spending, business investment and job creation each had improved. It continued to note, however, significant labor market underutilization and the slow housing market recovery. The Fed stated that fiscal policy was restraining overall economic growth to a diminished degree.

Regarding pricing power, the Fed stated that "the likelihood of inflation running persistently below 2 percent has diminished somewhat."

As a result of the economy's improvement, the Fed reduced the amount of its asset purchases of agency mortgage-backed and longer-term Treasury securities to $25 billion per month from $35 billion per month. The Federal funds rate was left unchanged in a range of 0.00% - 0.25% and the discount rate remained at 0.75%.

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

The backdrop to today's meeting was a pickup in M2 growth to 6.8% y/y from a low of 5.4% y/y at the end of last year.

Haver's SURVEYS database contains the economic 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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