Fed Keeps Stimulus in Place as Economy Picks Up
In a news release, the FOMC said that since it last met in January the economy has returned to moderate economic growth following a pause late last year.
The committee said it has 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, the FOMC said.
In addition, the committee authorized keeping the target range for the federal funds rate at 0% to 0.25% 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 6.5%, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee’s 2% longer-run goal, and longer-term inflation expectations continue to be well anchored.
To read the FOMC’s news release click here.