WASHINGTON – With the economy expanding moderately, the Federal Open Market Committee kept the fed funds rate target at zero to 0.25%, saying it anticipates economic conditions to warrant exceptionally low levels for the rate at least through late 2014.
Noting some improvement in overall labor market conditions, FOMC members reiterated concern that the unemployment rate remains elevated. It expects the unemployment rate to decline only gradually toward the levels that the committee deems to be consistent with its dual mandate. However, the committee noted that strains in global financial markets continued to pose significant downside risks to the economic outlook.
The FOMC said it seeks to foster maximum employment and price stability. The committee anticipates a subdued outlook for inflation over the medium run.
The committee voted to continue extending the average maturity of its holdings of securities and to maintain its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities as well as of rolling over maturing Treasury securities at auction.
The committee will regularly review the size and composition of its securities holdings as is prepared to adjust those holdings as appropriate.
The only dissenter was Richmond Federal Reserve Bank President Jeffrey Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant exceptionally low levels of the federal funds rate.
