FOMC Leaves Monetary Policy Unchanged and Revise their Growth Projections Lower
Wednesday, November 2, 2011
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The Federal Open Market committee decided once again to leave its benchmark interest rates unchanged at the current target range between 0% and 0.25%, however, FOMC member Charles Evans dissented the decision as he called for more monetary easing, since that the current conjuncture of the superpower has not witness true change and the present economic conditions hardened this past period on a local and global scale, while that jobless levels remain high and crucial and growth is only expanding gradually regardless of improvement detected within the business activities of the country.
In fact the Federal Open Market Committee believes and strongly expects that the growth of the world's leading economy will continue on cheerfully expanding but only at a gradual pace throughout the coming quarters and confirmed that the present growth have gained some momentum supported basically by some slight enhancement witnessed within overall business conditions of the country and spending.
Therefore no surprise that the FOMC members attested that business investment in equipment and software has continued to expand and that business activities as a whole continue on supporting the slowed revival of the superpower with better retail sales and a higher consumption and purchasing of goods and services by Americans which is a factor already stated out throughout the last recent FOMC minutes meeting and attested by the Federal Reserve
As for the Operation Twist program, it has been decided by the FOMC members to keep it unchanged and the Committee will continue its program to extend the average maturity of its holdings of securities as announced this past September and will also maintain its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.
Now turning to overall prices pressures, they remain so far well subdued as already forecasted by the Fed and its chairman; Ben Bernanke, with the consumer price inflation showing some slight moderation since the beginning of this year and measures of long-run inflation expectations continuing on being stable while that these inflation levels are projected to settle and stabilize at levels at or below the ones already projected.
However the Committee sees significant downside risks to the economic outlook including collapses in global financial markets with the ongoing unsolved EU debt crisis and weaker data released from strong economies like the UK and China that will accordingly have a negative impact on the world's leading economy stock market as well and economic health.
And as always the labor market remain the major obstruction that the U.S economy is facing so far as it continues on weighting on overall sectors activities and on postponing a full recovery of the country and the Committee sees that these unending high jobless levels would not decline except at a intense steady pace.
Keeping in mind that the Federal Reserve Cahirman Ben Bernanke already said and affirmed this past period that the country is facing a crisis with the current jobless rate at or above 9 percent since actually April 2009, stating that " the jobs situation, is really a national crisis" and that last week the Fed publicly affirmed that “significant downside risk to the economic outlook"
Furthermore overall housing activities continue on being weak and the meeting pointed out once again this point and declared that the housing market continued actually to be depressed while that labor markets conditions remain weak regardless of the slight signs of improvement recently witnessed since that household spending has increased at a somewhat faster pace in recent months but weak investment in nonresidential.
However as an unpleasant surprise, the FOMC members released today their revised expectations for growth, employment and inflation, where the country's real GDP of this year was revised to 1.6%-1.7 % from 2.7%-2.9% in June, while the real GDP of 2012 was lowered to 2.5%-2.9% from 3.3%-3.7% in june, and for 2013 real GDP is expected to rise btween 3.0% and 3.5%.
As for the unemployment revised projections set by the FOMC members ,the unemployment for this year inclined to 9.0%-9.1% from 8.6%-8.9% in June and for next year they rose up to 8.5%-8.7% from 7.8%-8.2% in June, while that for the year 2013 they inclined to 7.8%-8.2% from 7.0%-7.5% in June.
Now turning to the inflation levels, the FOMC revised their forecasts of Core PCE inflation for this year to 1.8%-1.9% from 1.5%-1.8% in June and to 1.5%-2.0% in 2012, compared with 1.4%-2.0% in June, while that for the year 2013 it came in at 1.4%-1.9% versus 1.4%-2.0% in June.
Source : ecpulse.com
In fact the Federal Open Market Committee believes and strongly expects that the growth of the world's leading economy will continue on cheerfully expanding but only at a gradual pace throughout the coming quarters and confirmed that the present growth have gained some momentum supported basically by some slight enhancement witnessed within overall business conditions of the country and spending.
Therefore no surprise that the FOMC members attested that business investment in equipment and software has continued to expand and that business activities as a whole continue on supporting the slowed revival of the superpower with better retail sales and a higher consumption and purchasing of goods and services by Americans which is a factor already stated out throughout the last recent FOMC minutes meeting and attested by the Federal Reserve
As for the Operation Twist program, it has been decided by the FOMC members to keep it unchanged and the Committee will continue its program to extend the average maturity of its holdings of securities as announced this past September and will also maintain its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.
Now turning to overall prices pressures, they remain so far well subdued as already forecasted by the Fed and its chairman; Ben Bernanke, with the consumer price inflation showing some slight moderation since the beginning of this year and measures of long-run inflation expectations continuing on being stable while that these inflation levels are projected to settle and stabilize at levels at or below the ones already projected.
However the Committee sees significant downside risks to the economic outlook including collapses in global financial markets with the ongoing unsolved EU debt crisis and weaker data released from strong economies like the UK and China that will accordingly have a negative impact on the world's leading economy stock market as well and economic health.
And as always the labor market remain the major obstruction that the U.S economy is facing so far as it continues on weighting on overall sectors activities and on postponing a full recovery of the country and the Committee sees that these unending high jobless levels would not decline except at a intense steady pace.
Keeping in mind that the Federal Reserve Cahirman Ben Bernanke already said and affirmed this past period that the country is facing a crisis with the current jobless rate at or above 9 percent since actually April 2009, stating that " the jobs situation, is really a national crisis" and that last week the Fed publicly affirmed that “significant downside risk to the economic outlook"
Furthermore overall housing activities continue on being weak and the meeting pointed out once again this point and declared that the housing market continued actually to be depressed while that labor markets conditions remain weak regardless of the slight signs of improvement recently witnessed since that household spending has increased at a somewhat faster pace in recent months but weak investment in nonresidential.
However as an unpleasant surprise, the FOMC members released today their revised expectations for growth, employment and inflation, where the country's real GDP of this year was revised to 1.6%-1.7 % from 2.7%-2.9% in June, while the real GDP of 2012 was lowered to 2.5%-2.9% from 3.3%-3.7% in june, and for 2013 real GDP is expected to rise btween 3.0% and 3.5%.
As for the unemployment revised projections set by the FOMC members ,the unemployment for this year inclined to 9.0%-9.1% from 8.6%-8.9% in June and for next year they rose up to 8.5%-8.7% from 7.8%-8.2% in June, while that for the year 2013 they inclined to 7.8%-8.2% from 7.0%-7.5% in June.
Now turning to the inflation levels, the FOMC revised their forecasts of Core PCE inflation for this year to 1.8%-1.9% from 1.5%-1.8% in June and to 1.5%-2.0% in 2012, compared with 1.4%-2.0% in June, while that for the year 2013 it came in at 1.4%-1.9% versus 1.4%-2.0% in June.
Source : ecpulse.com
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