March 21, 2013 – The Federal Open Market Committee announced no changes in its monetary policy approach Wednesday following the close of its two-day policy-setting meeting despite advancements in housing, household spending and business fixed investment.
“The committee acknowledged that economic growth was returning to moderate growth in recent months and that the labor market has shown signs of improvement,” said NAFCU Research Assistant Doug Christman. “But despite some improvements, it also pointed to a ‘somewhat more restrictive’ fiscal policy at present. The panel gave no further details about a possible end date for its current round of quantitative easing.”
The panel is keeping the federal funds rate target within a range of 0 to 0.25 percent and prolonging purchases of additional agency mortgage-backed securities at a pace of $40 billion a month, said Christman. It also plans to continue to purchase longer-term Treasury securities at a pace of $45 billion per month and maintain its existing policy of reinvesting principle payments and rolling over maturing securities.
It said the current fed funds target range is appropriate as long as unemployment is above 6.5 percent, near-term inflation is projected to be no more than 2.5 percent and long-term inflation expectations continue to be well anchored.
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