Differences Between Past and Current FOMC Statements
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Release Date: July 30,September 17, 2014
For immediate release
Information received since the Federal Open Market Committee met in June indicatesJuly suggests that growth in economic activity rebounded in the second quarter. Laboris expanding at a moderate pace. On balance, labor market conditions improved, withimproved somewhat further; however, the unemployment rate declining further. However,is little changed and
a range of labor market indicators suggests that there remains
significant underutilization of labor resources. Household spending
appears to be rising moderately and business fixed investment is
advancing, while the recovery in the housing sector remains slow. Fiscal
policy is restraining economic growth, although the extent of restraint
is diminishing. Inflation has moved somewhat closer tobeen running below the Committee's longer-run objective. 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 activity will expand at a
moderate pace, with labor market indicators and inflation moving toward
levels the Committee judges consistent with its dual mandate. The
Committee sees the risks to the outlook for economic activity and the
labor market as nearly balanced and judges that the likelihood of
inflation running persistently below 2 percent has diminished somewhat.somewhat since early this year.
The Committee currently judges that there is sufficient underlying
strength in the broader economy to support ongoing improvement in labor
market conditions. In light of the cumulative progress toward maximum
employment and the improvement in the outlook for labor market
conditions since the inception of the current asset purchase program,
the Committee decided to make a further measured reduction in the pace
of its asset purchases. Beginning in August,October, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $10$5 billion per month rather than $15$10 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $15$10 billion per month rather than $20$15
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. The
Committee's sizable and still-increasing holdings of longer-term
securities should maintain downward pressure on longer-term interest
rates, support mortgage markets, and help to make broader financial
conditions more 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 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. If incoming
information broadly supports the Committee's expectation of ongoing
improvement in labor market conditions and inflation moving back toward
its longer-run objective, the Committee will likely reduce the paceend its current program of asset purchases in further measured steps at future meetings.its next meeting.
However, asset purchases are not on a preset course, and the
Committee's decisions about their pace will remain contingent on the
Committee's outlook for the labor market and inflation as well as its
assessment of the likely efficacy and costs of such 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 remains appropriate. In
determining how long to maintain the current 0 to 1/4 percent target
range for the federal funds rate, the Committee will assess
progress-both realized and expected-toward its objectives of maximum
employment and 2 percent inflation. This assessment will take into
account a wide range of information, including measures of labor market
conditions, indicators of inflation pressures and inflation
expectations, and readings on financial developments. The Committee
continues to anticipate, based on its assessment of these factors, that
it likely will be appropriate to maintain the current target range for
the federal funds rate for a considerable time after the asset purchase
program ends, especially if projected inflation continues to run below
the Committee's 2 percent longer-run goal, and provided that longer-term
inflation expectations remain well anchored.
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. The Committee currently
anticipates that, even after employment and inflation are near
mandate-consistent levels, economic conditions may, for some time,
warrant keeping the target federal funds rate below levels the Committee
views as normal in the longer run.