WASHINGTON — The Fed will continue open-ended programs to purchase longer-term Treasuries at a rate of $45 billion per month and mortgage-backed securities at a rate of $40 billion per month, the Federal Open Market Committee said in a statement released Wednesday following the committee's two-day meeting.
The committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions "maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative," the FOMC said in its statement.
"The committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability," the statement said.
FOMC added that "asset purchases are not on a preset course, and the committee's decisions about their pace will remain contingent on the committee's economic outlook as well as its assessment of the likely efficacy and costs of such purchases."
The FOMC also decided to keep the target range for the federal funds rate at zero to 0.25% and said it currently anticipates that exceptionally low levels for the federal funds rate will likely be warranted at least as long as the unemployment rate remains above 6.5% and inflation is projected to be no more than 2.5%
Voting against the decision was Kansas City Fed Bank President Esther L. George, who remains concerned the "continued high level of monetary accommodation increased the risks of future economic and financial imbalances," and could cause an increase in long-term inflation expectations.
The Fed said labor market conditions have shown some improvement in recent months, but that the unemployment rate remains elevated.