Global| Jul 31 2013FOMC Will Continue to Provide Abundant Liquidity to the Economy
by:Tom Moeller
|in:Economy in Brief
Summary
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 [...]
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%. Little-changed were the Fed's comments on the
economy.
Financial liquidity will remain abundant. "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 will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability."
"The Committee today 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."
With respect to economic activity, the Fed stated that it "expanded at a modest pace during the first half of the year. Labor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. Partly reflecting transitory influences, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable."
As for the outlook and risks, "The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term."
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.
| 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 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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