Release Date: October 30,December 18, 2013
For immediate release
Information received since the Federal Open Market Committee met in September generally suggestsOctober indicates that economic activity has continued to expandis expanding at a moderate pace. Indicators of laborLabor market conditions have shown some further improvement, butimprovement; the unemployment rate has declined but remains elevated. Available data suggest that householdHousehold
spending and business fixed investment advanced, while the recovery in
the housing sector slowed somewhat in recent months. Fiscal policy is
restraining economic growth. Apart from fluctuations due to changes in energy prices, inflationgrowth, although the extent of restraint may be diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster
maximum employment and price stability. The Committee expects that, with
appropriate policy accommodation, economic growth will pick up from its
recent pace and the unemployment rate will gradually decline toward
levels the Committee judges consistent with its dual mandate. The
Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall.become more nearly balanced. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, butand it anticipatesis monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term.
Taking into account the extent of federal fiscal retrenchment oversince the past year,inception of its current asset purchase program, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase programover that period as consistent with growing underlying strength in the broader economy. However,In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions, the Committee decided to await more evidence that progress will be sustained before adjustingmodestly reduce the pace of its asset purchases. Accordingly,Beginning in January, the Committee decidedwill add to continue purchasing additionalits holdings of agency mortgage-backed securities at a pace of $40$35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than
$45 billion per month. The Committee is maintaining its existing policy
of reinvesting principal payments from its holdings of agency debt and
agency mortgage-backed securities in agency mortgage-backed securities
and of rolling over maturing Treasury securities at auction. Taken together, these actionsThe Committee's sizable and still-increasing holdings of longer-term securities
should maintain downward pressure on longer-term interest rates,
support mortgage markets, and help to make broader financial conditions
more accommodative, which in turn should promote a stronger economic
recovery and help to ensure that inflation, over time, is at the rate
most consistent with the Committee's dual mandate.
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. In judging when to moderate the pace of asset purchases, the Committee will, at its coming meetings, assess whetherIf incoming information continues to supportbroadly supports the Committee's expectation of ongoing improvement in labor market conditions and inflation moving back toward its longer-run objective. Assetobjective,
the Committee will likely reduce the pace of asset purchases in further
measured steps at future meetings. However, 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 for the labor market and inflation as well as its assessment of the likely efficacy and costs of such purchases.
To support continued progress toward maximum employment and price
stability, the Committee today reaffirmed its view that a highly
accommodative stance of monetary policy will remain appropriate for a
considerable time after the asset purchase program ends and the economic
recovery strengthens. In particular, theThe Committee decided to keepalso reaffirmed its expectation that the current exceptionally low target range for the federal funds rate atof 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate
will be appropriate at least as long as the unemployment rate remains
above 6-1/2 percent, inflation between one and two years ahead is
projected to be no more than a half percentage point above the
Committee's 2 percent longer-run goal, and longer-term inflation
expectations continue to be well anchored. In determining how long to
maintain a highly accommodative stance of monetary policy, the Committee
will also consider other information, including additional measures of
labor market conditions, indicators of inflation pressures and inflation
expectations, and readings on financial developments. The
Committee now anticipates, based on its assessment of these factors,
that it likely will be appropriate to maintain the current target range
for the federal funds rate well past the time that the unemployment rate
declines below 6-1/2 percent, especially if projected inflation
continues to run below the Committee's 2 percent longer-run goal.
When the Committee decides to begin to remove policy accommodation, it
will take a balanced approach consistent with its longer-run goals of
maximum employment and inflation of 2 percent.