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September FOMC Redline

September FOMC Redline

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Published by zerohedge
September FOMC Redline
September FOMC Redline

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Published by: zerohedge on Sep 18, 2013
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09/21/2013

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Information received since the Federal Open Market Committee met in Junelysuggests thateconomic activityexpandedhas been expandingat a modesratepaceduring the first half. Some indicatorsof the year. Laborlabor market conditions have shown further improvement in recent months, on balance, but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has been strengthening, butmortgage rates have risensomewhatfurther and fiscal policy is restraining economic growth.Partly reflecting transitory influencesApart from fluctuations due to changes in energy prices,inflation has been running below the Committee's longer-run objective, but longer-term inflationexpectations have remained stable.Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economicgrowth will pick up from its recent pace and the unemployment rate will gradually declinetoward levels the Committee judges consistent with its dual mandate. The Committee sees thedownside risks to the outlook for the economy and the labor market as having diminishedsincethe fall., on net, since last fall, but the tightening of financial conditions observed in recentmonths, if sustained, could slow the pace of improvement in the economy and labor market.TheCommittee recognizes that inflation persistently below its 2 percent objective could pose risks toeconomic performance, but it anticipates that inflation will move back toward its objective over the medium term.To support a stronger economic recovery and to help ensure that inflation, over time, is at therate most consistent with its dual mandateTaking into account the extent of federal fiscalretrenchment, the Committee sees the improvement in economic activity and labor marketconditions since it began its asset purchase program a year ago as consistent with growingunderlying strength in the broader economy. However, the Committee decided to await moreevidence that progress will be sustained before adjusting the pace of its purchases. Accordingly,the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments fromits holdings of agency debt and agency mortgage-backed securities in agency mortgage-backedsecurities and of rolling over maturing Treasury securities at auction. Taken together, theseactions should maintain downward pressure on longer-term interest rates, support mortgagemarkets, and help to make broader financial conditions more accommodative., which in turnshould promote a stronger economic recovery and help to ensure that inflation, over time, is atthe rate most consistent with the Committee's dual mandate. The Committee will closely monitor incoming information on economic and financialdevelopments in coming months. The Committee andwill continue its purchases of Treasury andagency mortgage-backed securities, and employ its other policy tools as appropriate, until theoutlook for the labor market has improved substantially in a context of price stability.TheCommittee is preparedIn judging whentoincrease or reducemoderatethe pace of asset  purchases, the Committee will, atits purchasescoming meetings, assess whether incominginformation continuestomaintain appropriate policy accommodation as the outlook forsupport  theCommittee's expectation of ongoing improvement inlabor marketor conditions andinflation changes. In determining the size, pace, and composition of its asset purchases, the Committee

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