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19 Mar 2014
Fed continues to taper QE program, updates forward guidance
FXStreet (Córdoba) - The Federal Open Market Committee decided to cut its assets purchases by $10 billion for the third straight meeting in March to $55 billion a month from $65 billion starting in April. Meanwhile the Fed left the target range for the federal funds rate at 0 to 1/4 percent.
The Fed shifted its forward guidance on how long it plans to keep short-term interest rates at exceptional low levels, dropping the 6.5% numerical threshold on the unemployment rate. The Fed said it will now consider a "wide range" of factors instead of relying mainly on the unemployment rate.
"This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments", the statement reads. "The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored".
With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements.
Voting against the action was Narayana Kocherlakota.
In the summary of economic projections, the median vote for the appropriate pace of policy firming shifted the target federal funds at year-end to 1.0% in 2015 and 2.0% in 2016. 13 of 16 FOMC officials don't expect the first rate hike until 2015
The Fed shifted its forward guidance on how long it plans to keep short-term interest rates at exceptional low levels, dropping the 6.5% numerical threshold on the unemployment rate. The Fed said it will now consider a "wide range" of factors instead of relying mainly on the unemployment rate.
"This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments", the statement reads. "The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored".
With the unemployment rate nearing 6-1/2 percent, the Committee has updated its forward guidance. The change in the Committee's guidance does not indicate any change in the Committee's policy intentions as set forth in its recent statements.
Voting against the action was Narayana Kocherlakota.
In the summary of economic projections, the median vote for the appropriate pace of policy firming shifted the target federal funds at year-end to 1.0% in 2015 and 2.0% in 2016. 13 of 16 FOMC officials don't expect the first rate hike until 2015