Differences Between Past and Current FOMC Statements

Release Date: July 31,September 18, 2013
For immediate release

Information received since the Federal Open Market Committee met in JuneJuly suggests that economic activity expandedhas been expanding at a modest pace during the first halfmoderate pace. Some indicators of the year. Laborlabor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, but mortgage rates have risen somewhatfurther and fiscal policy is restraining economic growth. Partly reflecting transitory influences,Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but 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 that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. The Committee sees the downside risks to the outlook for the economy and the labor market as having diminisheddiminished, on net, since last fall, but the fall.tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market. The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term.

To support a strongerTaking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic recoveryactivity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However, the Committee decided to help ensureawait more evidence that inflation, over time, is atprogress will be sustained before adjusting the rate most consistent withpace of its dual mandate,purchases. Accordingly, the Committee decided to continue purchasing 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. The Committee 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 and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

The Committee will closely monitor incoming information on economic and financial developments in coming months. The Committeemonths and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability. The Committee is preparedIn judging when to increase or reducemoderate the pace of asset purchases, the Committee will, at its purchasescoming meetings, assess whether incoming information continues to maintain appropriate policy accommodation as the outlook forsupport the Committee's expectation of ongoing improvement in labor market orconditions and inflation changes. In determining the size, pace,moving back toward its longer-run objective. Asset purchases are not on a preset course, and composition of its asset purchases, the CommitteeCommittee's decisions about their pace will continue to take appropriate accountremain contingent on the Committee's economic outlook as well as its assessment of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives.purchases.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.