FOMC Minutes: No Change In Target Rate, Asset Buys

The Federal Open Market Committee decided to keep its policy target rate and large-scale asset purchase programs basically unchanged when it met Sept. 22-23, according to minutes of the meeting released yesterday.

Members believe “a gradual reduction in the pace at which the Federal Reserve buys agency debt and agency [mortgage-backed securities] could help promote a smooth transition in markets as the announced asset purchases are completed” — similar to the approach used for the purchase of Treasury securities. “Most participants supported extending purchases of agency debt and agency MBS through the first quarter of 2010,” the minutes state.

The FOMC remains convinced ­inflation will remain subdued for some time. “Under these circumstances, the committee judged that the costs of growth turning out to be weaker than anticipated could be relatively high,” the minutes said. “Accordingly, the committee agreed that it was appropriate to maintain its ­target range for the federal funds rate at 0 to 1/4% and to reiterate its view that ­economic conditions were likely to ­warrant an exceptionally low level of the federal funds rate for an extended ­period.”

For reprint and licensing requests for this article, click here.
MORE FROM BOND BUYER