The statement following the Federal Reserve Board’s FOMC meeting on November 1-2 contained no surprises, confirming that the monetary policy committee will continue with the current policies for the time being. The target rate for Fed funds will remain at the 0 to 25 basis points range through at least mid-2013; “Operation Twist” will continue, extending the maturity of securities holdings; and the Fed will continue reinvesting principal payments of agency debt and agency MBS in agency MBS, and rolling over maturing Treasury securities.
The statement noted that “economic growth strengthened somewhat in the third quarter” citing “the reversal of temporary factors” restraining earlier growth, but returned to the recent themes of weak labor market conditions and a depressed housing market.
An advance release of the latest economic projections (to be included with the release of the FOMC minutes), including the prior June projections, indicates the committee members have reduced their expectations of GDP growth in 2012 and 2013 by more than one half of one percentage point, from a 3.3 to 3.7 percent range to 2.5 to 2.9 in 2012, and from a 3.5 to 4.2 percent range to 3.0 to 3.5 in 2013. The unemployment rate was bumped up similarly to a range of 8.5 to 8.7 percent in 2012 and 7.8 to 8.2 in 2013. The inflation forecast was basically unchanged.
In contrast to recent divisions on the committee, the vote on this meeting’s policy action included only one dissent. Charles Evans, Chicago Federal Reserve Bank president, supported more aggressive policy accommodation.