Dollars and Jens
Wednesday, April 25, 2012
The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in
JanuaryMarch suggests that the economy has been expanding moderately. Labor market conditions have improved furtherin recent months; the unemployment rate has declined notably in recent monthsbut remains elevated. Household spending and business fixed investment have continued to advance. TheDespite some signs of improvement, the housing sector remains depressed. Inflation has been subdued in recent months, althoughpicked up somewhat, mainly reflecting higher prices of crude oil and gasoline have increased lately. Longer-termHowever, longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects
moderate economic growtheconomic growth to remain moderate over coming quarters and consequentlythen to pick up gradually. Consequently, the Committee anticipates that the unemployment rate will decline gradually toward levels that the Committeeit judges to be consistent with its dual mandate. Strains in global financial markets have eased, though theycontinue to pose significant downside risks to the economic outlook. The recentincrease in oil and gasoline prices will push up inflationearlier this year is expected to affect inflation only temporarily, butand the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.