Note that this is the meeting at which the set of regional reserve bank presidents who vote on the committee changed, and one of the new ones dissented. Most of the other changes are changes in tense; what was previously beginning to happen is now happening, in the estimation of the committee.
The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in
NovemberDecember suggests that economic activity has continued to pick upstrengthen and that the deterioration in the labor market is abating. The housing sector has shown some signs of improvement over recent months. Household spending appears to beHousehold spending is expanding at a moderate rate , though itbut remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment, though at a slower pace, andBusiness spending on equipment and software appears to be picking up, but investment in structures is still contracting and employers remain reluctant to add to payrolls ; they continue to make progress in bringing. Firms have brought inventory stocks into better alignment with sales. FinancialWhile bank lending continues to contract, financial market conditions have become moreremain supportive of economic growth. Although economic activitythe pace of economic recovery is likely to remain weakbe moderate for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a strengthening of economic growth anda gradual return to higher levels of resource utilization in a context of price stability.
With substantial resource slack
likely to continue to dampencontinuing to restrain cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remaininflation is likely to be subdued for some time.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter
of 2010.. The Committee will continue to evaluate the timing and overall amounts ofits purchases of securities in light of the evolving economic outlook and conditions in financial markets.
In light of
ongoing improvements in theimproved functioning of financial markets, the Committee and the Board of Governors anticipate that most of the Federal Reserve's special liquidity facilities will expire on February 1, 2010, consistent with the Federal Reserve's announcement of June 25, 2009. These facilities includeFederal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. The Federal Reserve will also be working with its central bank counterparties to close itsIn addition, the temporary liquidity swap arrangements bybetween the Federal Reserve and other central banks will expire on February 1. The Federal Reserve expects that amounts provided under theis in the process of winding down its Term Auction Facility will continue to be scaled back in early 2010.: $50 billion in 28-day credit will be offered on February 8 and $25 billion in 28-day credit wil be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 , 2010,for loans backed by new-issue commercial mortgage-backed securities and March 31 , 2010,for loans backed by all other types of collateral. The Federal Reserve is prepared to modify these plans if necessary to support financial stability and economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke
; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. LockhartSandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh ; and Janet L. Yellen. Voting against the policy action was Thomas M. Hoenig, who believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.