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Economy in Brief

FOMC Ends QE As Economy Improves & Inflation Remains Low
by Tom Moeller  October 29, 2014

At today's meeting of the Federal Open Market Committee, the Fed indicated that labor market improvement, moderate growth in household spending and positive business investment growth allowed for ending its asset purchase program, known as Quantitative Easing (QE). That end came in the context of stability in both inflation pressures and long-term inflation expectations.

Measured inflation, however, was expected to rise. "Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year."

Ongoing economic improvement was to be assessed in the context of the dual objectives of maximum employment and price stability (2% inflation).

The Federal funds rate was left unchanged in a range of 0.00% - 0.25% and the discount rate remained at 0.75%. "Economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

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

The backdrop to today's meeting was slower M2 growth of 5.5% y/y and slower growth in the monetary base of 13.6% y/y.

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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