Citing an economy that continues to grow at a “moderate pace,” the Federal Reserve’s Federal Open Market Committee (FOMC) broke from its economic policy meeting Wednesday with message similar to that of meetings from the recent past.
THE FOMC opted Wednesday to hold rates at a range between 0% and 0.25% and extended the pledge to continue its “highly accommodative stance” on rates through mid-2015. Most of its observations about the U.S. economy echo the sentiments it noted following previous meetings: employment growth has been slow/unemployment remains high, household spending is increasing, real estate is continuing to rebound albeit “from a depressed level.” It did note some inflationary pressure increases, mainly on energy prices, but continued to argue that long-term inflation expectations have remained stable.
The FOMC will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month as well as its program to extend the average maturity of its holdings of Treasury securities. This was a move that gained near-unanimous support among FOMC members with the notable exception of inflation-hawk Jeffrey Lacker.
Brian Shappell, CBA, NACM staff writer