April 27, 2011
March 15, 2011
April 27, 2011 FOMC Statement
FOMC statement
FOMC statement
For immediate release
Information received since the Federal Open Market Committee met in January suggests March indicates that the economic recovery is on proceeding at a firmer footing, moderate pace and overall conditions in the labor market appear to be are improving gradually. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Commodity prices have risen significantly since the last summer, and concerns about global supplies of crude oil have contributed to a sharp run-up further increase in oil prices since the Committee met in March. Inflation has picked up in recent weeks. Nonetheless, months, but longer-term inflation expectations have remained stable, stable and measures of underlying inflation have been are still subdued.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. The recent increases Increases in the prices of energy and other commodities are currently putting upward pressure on inflation. have pushed up inflation in recent months. The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations. The Committee continues to anticipate a gradual return to higher levels of resource utilization in a context of price stability.
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase will complete purchases of $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. current quarter. The Committee will regularly review the pace size and composition of its securities purchases and the overall size of the asset-purchase program holdings in light of incoming information and will is prepared to adjust the program those holdings as needed to best foster maximum employment and price stability.
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.
The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
Our summary
What changed
- The FOMC upgraded its economic assessment, noting the recovery is proceeding at a moderate pace, a slight shift from the firmer footing language in March.
- It acknowledged that inflation has picked up in recent months, while reiterating that longer-term inflation expectations remain stable and underlying inflation is subdued.
- The asset purchase program was updated: the FOMC will complete the $600 billion Treasury purchases by the end of the current quarter, rather than the second quarter of 2011.
- The FOMC revised its review language, stating it will regularly review the size and composition of its securities holdings and is prepared to adjust them as needed.
- The vote was unanimous and unchanged from the previous meeting, with all ten members voting for the action.
Implications
The upgraded economic assessment and acknowledgment of higher inflation suggest the FOMC sees the recovery as on track, but the transitory inflation language indicates it does not yet see a need to tighten policy.
The shift to completing purchases by the end of the current quarter and the new emphasis on reviewing the size and composition of holdings signal that the FOMC is preparing to discuss the eventual exit from its asset purchase program.
Summary generated automatically from the statements. Not investment advice.
Press conference
April 27, 2011, 2:30 p.m. ET · Read the transcript
What Bernanke said that the statement didn't
- The chair said the FOMC's longer-run projections for output growth have a central tendency of 2.5 to 2.8 percent, unchanged from January.
- The chair said the central tendency of the longer-run projection for inflation, as measured by the PCE price index, is 1.7 to 2.0 percent, which can be interpreted as the mandate-consistent inflation rate.
- The chair said participants' projections for output growth have a central tendency of 3.1 to 3.3 percent for 2011, rising to 3.5 to 4.2 percent in 2012 and about the same in 2013.
- The chair said the unemployment rate is projected to edge down to 8.4 to 8.7 percent in the fourth quarter of 2011 and decline gradually to 6.8 to 7.2 percent in the fourth quarter of 2013.
- The chair said the "extended period" language is conditioned on resource slack, subdued inflation, and stable inflation expectations, and that it suggests a couple of meetings would probably pass before action.
Summary generated automatically from the transcript and the statement.