PRESS RELEASE from Board of Governors of
the Federal Reserve System
Release Date: September 13, 2012
For immediate release
Information received since the Federal Open Market Committee met in
August 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
continued to advance, but growth in business fixed investment appears
to have slowed. The housing sector has shown some further signs of
improvement, albeit from a depressed level. Inflation has been subdued,
although the prices of some key commodities have increased recently.
Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster
maximum employment and price stability. The Committee is concerned
that, without further 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 agreed today to increase policy accommodation by
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 securities as announced in June, 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.
The Committee will closely monitor incoming information on economic and
financial developments in coming months. If the outlook for the labor
market does not improve substantially, the Committee will continue its
purchases of agency mortgage-backed securities, undertake additional
asset purchases, and employ its other policy tools as appropriate until
such improvement is achieved in a context of price stability. In
determining the size, pace, and composition of its asset purchases, the
Committee will, as always, take appropriate account of the likely
efficacy and costs of such purchases.
To support continued progress toward maximum employment and price
stability, the Committee expects that a highly accommodative stance of
monetary policy will remain appropriate for a considerable time after
the economic recovery strengthens. In particular, the Committee also
decided today to keep the target range for the federal funds rate at 0
to 1/4 percent and currently anticipates that exceptionally low levels
for the federal funds rate are likely to be warranted at least through
mid-2015.
Voting for the FOMC monetary policy action were: Ben S. Bernanke,
Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis
P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin;
Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L.
Yellen. Voting against the action was Jeffrey M. Lacker, who opposed
additional asset purchases and preferred to omit the description of the
time period over which exceptionally low levels for the federal funds
rate are likely to be warranted.