Federal Reserve Commentary: Today's FOMC Meeting Announcement 09.18.2013September 18, 2013 Posted by: Eric Souza
FOMC Announcement - September 18, 2013The Federal Reserve today decided to keep the target range for the federal funds rate unchanged at 0 to 0.25 percent with many revisions to previous announcement and added some new statements. They maintain that policymakers suggest the U.S. economic activity has been expanding at a "moderate" pace which is a change from last month's phrase of "modest." On the economy, they added that the "tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market."
The Committee addressed the effects of quantitative easing and the market's recent focus on tapering by adding a few new phrases: "Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases."
In regards to their continued purchases of Treasury and agency mortgage-backed securities, they said the Committee will "assess whether incoming information continues to support the Committee's expectation of ongoing improvement in labor conditions and inflation." They added "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."
There was one dissenting vote from Esther L. George, who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.Read More