Oct. 25, 2012 – As NAFCU expected, the Federal Open Market Committee announced no new policy changes at the conclusion of its two-day meeting Wednesday, echoing last month’s statement that the current federal funds rate target of 0 to 0.25 percent is “likely to be warranted at least through mid-2015.”
The FOMC announced a third round of quantitative easing in September. The same day, the panel said it would continue its average maturity extension program, keep reinvesting its current holdings and purchase additional agency mortgage-backed securities at a pace of $40 billion a month.
Wednesday’s policy statement reaffirmed the central bank’s commitment to the policies unveiled last month. “Without taking action, the FOMC believes economic growth will be insufficient to reduce unemployment,” noted NAFCU Staff Economist Curt Long.
On the economic front, the FOMC noted that employment growth has been slow but that “household spending has advanced a bit more quickly.” Overall, the economy has continued to expand, the committee said, but at “a moderate pace in recent months.” The FOMC reiterated its expectation that over the medium term, inflation “will run at or below its 2 percent objective.”
Long said the statement “was nearly identical to last month’s as the committee took a breather to assess the economic impact of QE3.” As with the previous statement, the committee yesterday “left the door open for further action if the labor market does not show substantial improvement in coming months.”