Information received
since the Federal Open Market Committee met in September suggests that economic
activity has been expanding at a moderate pace. Household spending and business
fixed investment have been increasing at solid rates in recent months, and the
housing sector has improved further; however, net exports have been soft. The
pace of job gains slowed and the unemployment rate held steady. Nonetheless,
labor market indicators, on balance, show that underutilization of labor
resources has diminished since early this year. Inflation has continued to run
below the Committee's longer-run objective, partly reflecting declines in
energy prices and in prices of non-energy imports. Market-based measures of
inflation compensation moved slightly lower; survey-based measures of
longer-term inflation expectations 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,
economic activity will expand at a moderate pace, with labor market indicators
continuing to move toward levels the Committee judges consistent with its dual
mandate. The Committee continues to see the risks to the outlook for economic
activity and the labor market as nearly balanced but is monitoring global
economic and financial developments. Inflation is anticipated to remain near
its recent low level in the near term but the Committee expects inflation to
rise gradually toward 2 percent over the medium term as the labor market
improves further and the transitory effects of declines in energy and import
prices dissipate. The Committee continues to monitor inflation developments
closely.
To support continued
progress toward maximum employment and price stability, the Committee today
reaffirmed its view that the current 0 to 1/4 percent target range for the
federal funds rate remains appropriate. In
determining whether it will be appropriate to raise the target range at its
next meeting, the Committee will assess progress--both realized and
expected--toward its objectives of maximum employment and 2 percent inflation.
This assessment will take into account a wide range of information, including
measures of labor market conditions, indicators of inflation pressures and
inflation expectations, and readings on financial and international
developments. The Committee anticipates that it will be appropriate to raise
the target range for the federal funds rate when it has seen some further
improvement in the labor market and is reasonably confident that inflation will
move back to its 2 percent objective over the medium term.
The Committee is
maintaining its existing policy 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. This policy, by keeping the Committee's holdings of longer-term
securities at sizable levels, should help maintain accommodative financial
conditions.
When the Committee
decides to begin to remove policy accommodation, it will take a balanced
approach consistent with its longer-run goals of maximum employment and
inflation of 2 percent. The Committee currently anticipates that, even after
employment and inflation are near mandate-consistent levels, economic
conditions may, for some time, warrant keeping the target federal funds rate
below levels the Committee views as normal in the longer run.
http://www.federalreserve.gov/newsevents/press/monetary/20151028a.htm