FOMC: No policy changes yet
Oct. 31, 2013 – The Federal Open Market Committee announced no changes Wednesday in a key interest rate or in its pace of asset purchases, which is not surprising given the recent slowdown in the housing market and the economic impact of the government shutdown, said NAFCU Director of Research and Chief Economist David Carrier.
The FOMC statement reported that “household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months.”
In Wednesday’s policy announcement, released at the close of a two-day policy session, the FOMC said it is leaving the federal funds rate target at 0 to 0.25 percent for now and is going to hold its program of asset purchases at a pace of $85 billion a month. The Fed will continue to purchase additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.
“Employment and economic growth is widely expected to be weaker in the fourth quarter due to the government shutdown and ongoing fiscal sequester, inflation will remain low, and recovery is expected to be slow,” Carrier said in a NAFCU Macro Data Flash report released after the Fed meeting. “Meanwhile, interest rates have already begun to fall in response to changing expectations about the strength of the economic recovery and the Fed’s likely policy response.”
The FOMC said it will continue to monitor economic and financial developments in the coming months and “employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability.”
NAFCU Macro Data Flash report