Federal Reserve Commentary: Today's FOMC Meeting AnnouncementJuly 31, 2013 Posted by: Eric Souza
FOMC Announcement - July 31, 2013The Federal Reserve today decided to keep the target range for the federal funds rate unchanged at 0 to 0.25 percent. Policymakers suggest that U.S. economic activity has been expanding at a modest pace, with labor market conditions showing "further improvement," however the unemployment rate remains elevated. There was some change to the inflation language as the "Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back towards its objective over the medium term." There was a slight change to the language regarding the economy saying economic growth will "pick up from its recent pace" while in June they said economic growth will "proceed at a moderate pace." For the first time the Committee addressed the rise in mortgage rates.
To support a stronger economic recovery and ensure inflation is kept at bay, the Committee has decided to continue its $85 billion per month bond purchasing program. In the coming months, the Fed will closely monitor incoming information on the economic and financial developments, and is prepared to increase or reduce the pace of its purchases in order to maintain the appropriate policy accommodation.
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