WASHINGTON – Dec. 15, 2010 – At the conclusion of its regularly scheduled meeting yesterday, the Federal Open Market Committee confirmed that the economic recovery is continuing, though at a rate insufficient to bring down unemployment. Household spending is increasing at a moderate pace, and business spending on equipment and software is rising, though less rapidly than earlier in the year. Investment in nonresidential structures continues to be weak.
“The unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run,” the Committee said in its statement. As a result, interest rates were unchanged at the target range for the federal funds rate at 0 to 1/4 percent.
The Committee called progress toward its economic objectives “disappointingly slow.”
The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.
The Committee also suggested that it would not raise interest rates in the near future, saying it “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.”
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