Differences Between Current And Previous FOMC Announcements

Release Date: August 1,September 13, 2012
For immediate release

Information received since the Federal Open Market Committee met in JuneAugust suggests that economic activity decelerated somewhat over the first half of this year. Growthhas continued to expand at a moderate pace in recent months. Growth in employment has been slow in recent months,slow, and the unemployment rate remains elevated. Business fixed investment Household spending has continued to advance. Household spending has been rising at a somewhat slower pace than earlieradvance, but growth in the year. Despitebusiness fixed investment appears to have slowed. The housing sector has shown some further signs of improvement, the housing sector remains depressed. Inflationalbeit from a depressed level. Inflation has declined since earlier this year, mainly reflecting lowerbeen subdued, although the prices of crude oil and gasoline, and longer-termsome key commodities have increased recently. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The The Committee expectsis concerned that, without further policy accommodation, economic growth might not be strong enough to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore,generate sustained improvement in labor market conditions. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The The Committee also anticipates that inflation over the medium term willlikely would run at or below the rate that it judges most consistent with its dual mandate.2 percent objective.

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 expectsagreed today to maintainincrease policy accommodation by purchasing additional agency mortgage-backed securities at a highly accommodative stance for monetary policy. In particular, thepace of $40 billion per month. The Committee decided today to keepalso will continue through the target range forend of the federal funds rate at 0year its program to 1/4 percentextend the average maturity of its holdings of securities as announced in June, and currently anticipates that economic conditions-including low ratesit is maintaining its existing policy of resource utilizationreinvesting principal payments from its holdings of agency debt and a subdued outlook for inflation overagency mortgage-backed securities in agency mortgage-backed securities. These actions, which together will increase the medium run-are likely to warrant exceptionally low levels for the federal funds rate at leastCommittee's holdings of longer-term securities by about $85 billion each month through late 2014.the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments andin coming months. If the outlook for the labor market does not improve substantially, the Committee will providecontinue its purchases of agency mortgage-backed securities, undertake additional accommodation as needed to promote a stronger economic recoveryasset purchases, and sustainedemploy its other policy tools as appropriate until such improvement in labor market conditionsis achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, take appropriate account of the likely efficacy and costs of such purchases.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. In particular, the Committee also decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.