The Federal Open Market Committee (FOMC), which sets monetary policy at the Federal Reserve, is sticking with its low interest rate policy. The latest statement from the FOMC said there has been some improvement in the economy, but not enough for the Fed to change course.
“Information received since the Federal Open Market Committee met in September indicates that economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year. Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has increased at a somewhat faster pace in recent months. Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable,” the statement said.
Fed Chief Ben Bernanke and all but one of the other FOMC members voted to stick with the current policies of low interest rates and the Fed’s decision announced a month ago to increase its holdings of long-term securities of government agencies, including mortgage-backed securities. The lone dissenter, Charles Evans, President of the Chicago Federal Reserve Bank, wanted even more accommodation to keep interest rates low.
The FOMC statement said its members expect the low interest rate target to remain in place at least through mid-2013.