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Wednesday, July 10, 2013

FOMC Members Discuss Announcing Plans to Slow QE Pace

In the FOMC minutes from the June 18th – 19th meeting, most members of the FOMC agreed that the labor market has improved since the economic downturn and discussed announcing future plans to slow the pace of its bond-buying program.

At the FOMC meeting, members continued their pledge to keep the target range for the federal funds rate at 0 to ¼ percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6½ percent.

Since the September meeting, some participants had become more confident of sustained improvement in the outlook for the labor market and so thought that a downward adjustment in asset purchases had or would likely soon become appropriate.

Most committee members, however, now anticipate that the Committee would not sell agency mortgage backed securities (MBS) as part of the normalization process, although some indicated that limited sales might be warranted in the longer run to reduce or eliminate residual holdings.

Since the FOMC’s meeting in June, a promising jobs report was released. Payroll employment grew by 195,000 in July and revised up April and May’s numbers.

Read the FOMC minutes.

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