Members of the Federal Open Market Committee deemed it necessary to act to promote a stronger economic recovery since progress toward the dual mandate of maximum employment and price stability was termed “disappointingly slow,” with the consensus being it would remain slow, according to minutes of the meeting Nov. 2-3, which were released Tuesday.
“Accordingly, most members judged it appropriate to take action to promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with the committee’s mandate,” the minutes noted.
The panel agreed to keep the federal funds rate target at 0 to ¼% and to expand the Federal Reserve’s holdings of longer-term securities, by reinvesting principal payments from its securities holdings into longer-term Treasury securities, and by buying $600 billion of longer-term Treasury securities at a pace of about $75 billion per month through the second quarter of 2011.
“With respect to the statement to be released following the meeting, members agreed that it was appropriate to adjust the statement to make it clear that the unemployment rate was elevated, and that measures of underlying inflation were somewhat low, relative to levels that the committee judged to be consistent, over the longer run, with its dual mandate,” it said.
“Nearly all members agreed that the statement should reiterate the expectation that economic conditions were likely to warrant exceptionally low levels of the federal funds rate for an extended period. Members agreed that the statement should note that the committee will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.”