Ben Bernanke and friends at the FOMC have decided in a 9 to 1 vote to keep the monetary policy as is. Interest rates steady at the target 0.00% to 0.25% for overnight rates. This was no shock and the detail of the offering was going to be what everyone was focusing on. The tweak was to the economy with a tad up-tick in inflation but it remains of the opinion that inflation will remain at or under its longer-term targets. Fed governor Lacker was the dissenting vote on keeping the language so accommodative.
The FOMC is keeping its language that Fed Funds will remain at exceptionally low rates until at least late in 2014 and that is highly accommodative.
The FOMC is scaling back its economic outlook and the Operation Twist will continue as the FOMC will continue extending the maturity of its securities. On this front, the Fed will regularly review the size and the composition of the Treasury’s holdings.
Household spending and business investment was deemed to be up in most districts. A concern is that global financial strains still pose a significant risk to the U.S. economy. Overall the FOMC expects that unemployment will decline gradually and that growth will be moderate and pick up gradually. Housing remains depressed according to the FOMC statement.