Information received since the Federal Open Market Committee met in
March suggests that the economy has been expanding moderately. Labor
market conditions have improved in recent months; the unemployment rate
has declined but remains elevated. Household spending and business fixed
investment have continued to advance. Despite some signs of improvement,
the housing sector remains depressed. Inflation has picked up somewhat,
mainly reflecting higher prices of crude oil and gasoline. However,
longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster
maximum employment and price stability. The Committee expects economic
growth to remain moderate over coming quarters and then to pick up
gradually. Consequently, the Committee anticipates that the unemployment
rate will decline gradually toward levels that it judges to be
consistent with its dual mandate. Strains in global financial markets
continue to pose significant downside risks to the economic outlook. The
increase in oil and gasoline prices earlier this year is expected to
affect inflation only temporarily, and the Committee anticipates that
subsequently inflation will run at or below the rate that it judges most
consistent with its dual mandate.
To support a stronger economic recovery and to help ensure that
inflation, over time, is at the rate most consistent with its dual
mandate, the Committee expects to maintain a highly accommodative stance
for monetary policy. In particular, the Committee decided today to keep
the target range for the federal funds rate at 0 to 1/4 percent and
currently anticipates that economic conditions--including low rates of
resource utilization and a subdued outlook for inflation over the medium
run--are likely to warrant exceptionally low levels for the federal
funds rate at least through late 2014.
The
Committee also decided to continue its program to extend the average
maturity of its holdings of securities as announced in September. The
Committee is maintaining its existing policies of reinvesting principal
payments from its holdings of agency debt and agency mortgage-backed
securities in agency mortgage-backed securities and of rolling over
maturing Treasury securities at auction. The Committee will regularly
review the size and composition of its securities holdings and is
prepared to adjust those holdings as appropriate to promote a stronger
economic recovery in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P.
Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John
C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey
M. Lacker, who does not anticipate that economic conditions are likely
to warrant exceptionally low levels of the federal funds rate through
late 2014.
