Members of the Federal Open Market Committee announced this afternoon that they will continue to keep the federal funds target rate between 0% and 0.25% for "at least as long" as unemployment stays above 6.5% (it's currently 7.6%) and inflation projections remain "well anchored" below 2.5%.
The committee believes the current rate of economic expansion in 2013 is modest, boosted by labor market improvements, increased spending and investment, and a continued housing market recovery. The announcement also noted that downside risks to the economy have tapered off since the fall.
However, it was quick to reaffirm that to fulfill its dual mandate of maximum employment and price stability, appropriate policy accommodation remained necessary. In addition to the low federal funds rate, the FOMC will continue to purchase $40 billion in agency mortgage-backed securities each month, as well as $45 billion in longer-term Treasury securities.
The committee noted: "Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."
Eleven of the FOMC members voted in favor, while Esther George of the Kansas City Federal Reserve dissented. George remains concerned that the "high level of monetary accommodation" sends the wrong message to the markets, increasing the risk of future imbalances and long-term inflation expectations.
The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Bosses Reveal: 10 Things That Will Help You Get Promoted in 2018
If your New Year's resolution was to score a promotion, here are 10 ways to make it happen.
Why Sierra Wireless, Inc. Stock Soared 22.3% in 2017
It wasn't a smooth ride up, but the Internet of Things pure play should be more than happy with its banner year.
It's Official: Facebook Messenger Has Become "Too Cluttered"
The social network vows to simplify one of its most popular messaging services in 2018.