WASHINGTON - The Federal Reserve will complete its Treasury securities purchasing program at the end of June and will continue to reinvest principal holdings, while the Fed funds rate target was held to a range between zero and 0.25%, The Federal Open Market Committee announced Wednesday.
Although inflation “has picked up,” expectations are still stable and underlying inflation remains “subdued,” the Fed said, noting it will keep a close eye on the “evolution of inflation.” The economic recovery is continuing at a “moderate pace” and employment conditions “are improving gradually,” the Fed said. Commodity prices “have risen significantly” as “concerns about global supplies of crude oil have contributed to a further increase in oil prices” since the Fed’s March meeting.
No members dissented on today’s decision.
During the March FOMC meeting, several participants said the risks to forecasts of inflation had shifted higher, according to the minutes released earlier this month. The Fed repeated in its statement that it expects commodity price increase to be “transitory.”
In March, the consumer price index rose 0.5% on higher gasoline and food prices, the Labor Department reported. Core prices edged up 0.1% for the month.
The 10-year U.S. Treasury yielded 3.37% this morning following a 5-year auction, according to Thomson Reuters. The 10-year Treasury yielded 3.31% on Tuesday.
