FOMC Keeps Target Range For Fed Funds Rate

he economy showing possible signs of recovery, the Federal Open Market Committee (FOMC) has decided to maintain the target range for the federal funds rate at 0% to .25%. The committee anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. In a statement announcing the widely expected decision, the Federal Reserve noted that household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for some time, the FOMC continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. The FOMC says it will continue to evaluate the timing and overall amounts of the Federal Reserve's purchases of securities in light of the evolving economic outlook and conditions in financial markets. As previously announced, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by this fall. The Federal Reserve is monitoring the size and composition of its balance sheet and says it will make adjustments to its credit and liquidity programs as warranted. SOURCE: Federal


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