The Federal Open Market Committee (FOMC) made no changes to its monetary policies, which brought a muted reaction in the marketplace. The committee said it will continue pumping $85 billion per month through its mortgage-backed and Treasury securities, as well as leave its "highly accommodative" target range for the federal funds rate unchanged at 0% to 0.25%. The FOMC said economic activity since its last meeting in September shows some improvement in the economy, but unemployment remains elevated.
"Fiscal policy is restraining economic growth. Apart from fluctuations due to changes in energy prices, inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable," states the FOMC.
Additionally, the FOMC said it sees the "downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall. The committee recognizes that inflation persistently below its 2% objective could pose risks to economic performance, but it anticipates that inflation will move back toward its objective over the medium term."
Regarding its asset purchase program, the FOMC said it believes it has provided some growing underlying strength to the broader economy. However, it said it will wait on more evidence that progress will be sustained before adjusting the pace of its purchases. "Asset purchases are not on a preset course, and the Committee's decisions about their pace will remain contingent on the Committee's economic outlook as well as its assessment of the likely efficacy and costs of such purchases," it adds.
Voting against the action was Ester L George, who was concerned about the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.