June 20, 2012
Statement·Presser·Minutes·Policy
BBBen S. BernankeJune 20, 2012 FOMC Press Conference
- The chair said the FOMC participants' projections for the unemployment rate in the fourth quarter of 2012 have a central tendency of 8.0 to 8.2 percent, declining to 7.0 to 7.7 percent in the fourth quarter of 2014.
- The chair said the participants' projections of inflation have a central tendency of 1.2 to 1.7 percent for 2012 and 1.5 to 2.0 percent for 2014.
- The chair said the Federal Reserve was too optimistic early in the recovery about the pace of recovery and had to add additional accommodation as headwinds kept the recovery from being as strong as desired.
- The chair said the Fed's asset purchase programs, QE1 and QE2, had significant effects on asset prices and financial conditions, and QE2 ended what looked to be an incipient deflation problem.
- The chair said the Fed is prepared to take further action, including additional asset purchases, if needed to strengthen the economy, but such nonstandard programs carry costs and risks related to market functioning, financial stability, and the exit process.
From the opening statement
Press conference
CHAIRMAN BERNANKE. Good afternoon. Before we get to questions, I’ll summarize today’s policy action by the Federal Open Market Committee and then place the Committee’s decision in the context of our economic outlook and our collective judgment about the appropriate path of monetary policy.
As indicated in the statement released earlier this afternoon, the Committee is maintaining a highly accommodative policy. We decided to keep the target range for the federal funds rate at 0 to ¼ percent, and we continue to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate at least through late 2014. In addition, the Committee decided to continue through the end of the year our program of lengthening the maturity of our securities holdings rather than completing the program this month as previously scheduled. Specifically, the Committee intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. The details of our plans for our securities purchases and sales were described in an accompanying statement released today and can be found on the Federal Reserve Bank of New York’s website. The continuation of the maturity extension program should put downward pressure on longer -term interest rates and make broader financial conditions more accommodative than they would otherwise be, thereby supporting economic recovery.
In conjunction with today’ s meeting, FOMC participants—the 7 Board members and the 12 Reserve Bank presidents—submitted their individual economic projections and policy assessments for the years 2012 to 2014 and over the longer run. These projections are important