Fed­eral Open Mar­ket Com­mit­tee is­sue state­ment

The Pak Banker - - Front Page -


In­for­ma­tion re­ceived since the Fed­eral Open Mar­ket Com­mit­tee met in Septem­ber sug­gests that eco­nomic ac­tiv­ity has con­tin­ued to ex­pand at a mod­er­ate pace in re­cent months. Growth in em­ploy­ment has been slow, and the un­em­ploy­ment rate re­mains el­e­vated.

House­hold spend­ing has ad­vanced a bit more quickly, but growth in busi­ness fixed in­vest­ment has slowed. The hous­ing sec­tor has shown some fur­ther signs of im­prove­ment, al­beit from a de­pressed level. In­fla­tion re­cently picked up some­what, re­flect­ing higher en­ergy prices. Longer-term in­fla­tion ex­pec­ta­tions have re­mained sta­ble.

Con­sis­tent with its statu­tory man­date, the Com­mit­tee seeks to fos­ter max­i­mum em­ploy­ment and price sta­bil­ity. The Com­mit­tee re­mains con­cerned that, with­out suf­fi­cient pol­icy ac­com­mo­da­tion, eco­nomic growth might not be strong enough to gen­er­ate sus­tained im­prove­ment in la­bor mar­ket con­di­tions. Fur­ther­more, strains in global fi­nan­cial mar­kets continue to pose sig­nif­i­cant down­side risks to the eco­nomic out­look. The Com­mit­tee also an­tic­i­pates that in­fla­tion over the medium term likely would run at or be­low its 2 per­cent ob­jec­tive.

To sup­port a stronger eco­nomic re­cov­ery and to help en­sure that in­fla­tion, over time, is at the rate most con­sis­tent with its dual man­date, the Com­mit­tee will continue pur­chas­ing ad­di­tional agency mort­gage-backed se­cu­ri­ties at a pace of $40 bil­lion per month.

The Com­mit­tee also will continue through the end of the year its pro­gram to ex­tend the av­er­age ma­tu­rity of its hold­ings of Trea­sury se­cu­ri­ties, and it 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.

These ac­tions, which to­gether will in­crease the Com­mit­tee's hold­ings of longer- term se­cu­ri­ties by about $85 bil­lion each month through the end of the year, should put down­ward pres­sure on longer-term in­ter­est rates, sup­port mort­gage mar­kets, and help to make broader fi­nan­cial con­di­tions more ac­com­moda­tive.

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