The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in
JuneAugust indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising ; however,, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak and employers. Employers remain reluctant to add to payrolls. Housing starts remainare at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months. Nonetheless, theThe Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moremodest in the near term than had been anticipated.
Measures of underlying inflation
have trended lower in recent quarters and, withare currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to beremain subdued for some time before rising to levels the Committee considers consistent with its mandate.
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
offor the federal funds rate for an extended period.
To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve's holdings of securities at their current level by The Committee also will maintain its existing policy of reinvesting principal payments from
agency debt and agency mortgage-backed securities in longer-term Treasury securitiesits securities holdings.
The Committee will continue to monitor the economic outlook and financial developments and
will employ its policy tools as necessary to promoteis prepared to provide additional accommodation if needed to support the economic recovery and price stabilityto return inflation, over time, to levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; James Bullard; Elizabeth A. Duke;
Donald L. Kohn;Sandra Pianalto; Eric S. Rosengren; Daniel K. Tarullo; and Kevin M. Warsh.
Voting against the policy was Thomas M. Hoenig, who
judgesjudged that the economy is recovering modestly, as projectedcontinues to recover at a moderate pace. Accordingly, he believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted and limits the Committee's ability to adjust policy when neededwill lead to future imbalances that undermine stable long-run growth. In addition, given economic and financial conditions, Mr. Hoenig did not believe that keeping constant the size of the Federal Reserve's holdings of longer-term securities at their current levelcontinuing to reinvest principal payments from its securities holdings was required to support a return tothe Committee's policy objectives.