The Federal Open Market Committee (FOMC) says since its September meeting, economic growth has "strengthened somewhat," reflecting a reversal of the temporary factors that weighed on growth earlier in the year. However, it still cautions that unemployment remains elevated and there is "significant downside risk" to the economy outlook, including strains in global financial markets.
Link to Federal Reserve's Economic Projections.
"The Committee continues to expect a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate," it states, adding it also anticipates that inflation will settle, over coming quarters, "at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations."
The FOMC said it voted to continue its program to extend the average maturity of its holdings of securities as announced in September. "The Committee is maintaining 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," it states. "The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate."
As expected, the FOMC decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects to keep rates at "exceptionally low levels for the federal funds rate at least through mid-2013."