Dollars and Jens
Thursday, September 13, 2012
I've generally quit doing the FOMC statement differences since the WSJ has been doing theirs, but, frankly, my algorithm is a bit better in some ways, and this meeting's WSJ version vexed me enough that I hereby present
The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in
JuneAugust suggests that economic activity decelerated somewhat over the first half of this yearhas continued to expand at a moderate pace in recent months. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investmentHousehold spending has continued to advance, but growth in business fixed investment appears to have slowed. Household spending has been rising at a somewhat slower pace than earlier in the year. DespiteThe housing sector has shown some further signs of improvement, the housing sector remains depressedalbeit from a depressed level. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-termInflation has been subdued, although the prices of some key commodities have increased recently. 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 economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate.The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee also anticipates that inflation over the medium term willlikely would run at or below the rate that it judges most consistent with its dual mandateits 2 percent objective.
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 policyagreed today to increase policy accommodation by purchasing additional agency mortgage-backed securities at a pace of $40 billion per month. 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 towill continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement inin coming months. If the outlook for the labor market conditionsdoes not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.
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; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who opposed additional asset purchases and preferred to omit the description of the time period over which
economic conditions are likely to warrant an exceptionally low level ofexceptionally low levels for the federal funds rate are likely to be warranted.
Possibly moved phrases: decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate