WASHINGTON – The Federal Reserve affirmed its plan to purchase $600 billion of Treasury bonds through June, while holding the federal funds target rate in the zero to 0.25% range, the Federal Open Market Committee announced Wednesday.
For the first time in over a year, the FOMC decision was unanimous, breaking a string of one dissent for all the 2010 meetings.
“Growth in household spending picked up late last year,” the Fed said. But spending remains “constrained” by high unemployment.
The primary discount rate remained unchanged at 0.75%, the same rate since February 2010. The Fed has not changed the federal funds rate from its current range since December 2008.
On inflation, the Fed acknowledged rising commodity prices.
“Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward,” the Fed said.
The Fed “knows it can’t do much about energy prices,” said David Wyss, senior economist at Standard & Poor’s, before the release.
This was the first meeting for the Fed regional presidents who are voting members this year: Charles L. Evans, Richard W. Fisher, Narayana Kocherlakota and Charles I. Plosser.
Plosser, president of the Federal Reserve Bank of Philadelphia, and Fisher, president of the Federal Reserve Bank of Dallas, are considered by Fed observers to be deficit hawks. They are expected to assume a conservative monetary policy stance held by Thomas M. Hoenig last year. Hoenig voted to dissent at every FOMC policy meeting in 2010.
However, neither dissented at this meeting.
With Hoenig out as a voting member in 2011, the Fed “is losing one hawk and gaining two” in Fisher and Plosser, Wyss said.
The Fed maintained its $600 billion Treasury asset purchase program through June.
