Of particular note to lenders: the committee will keep the federal funds rate at 0 to 0.25 percent. It was also noted that it expects a low federal funds rate to be warranted through the second quarter of 2015.
San Francisco, CA (PRWEB) November 02, 2012
Each month the Federal Open Market Committee (FOMC) meets to determine what actions might be necessary to meet its mandate, which is to foster maximum employment and price stability. At the October 24th meeting the committee reviewed the information made available to it since the September meeting and came to the following conclusions:
- Economic activity continues to expand in the U.S., albeit at a moderate pace.
- The unemployment rate continues to remain too high, and growth in employment has been slow.
- While household consumer spending is increasing, fixed investment spending among companies is declining.
- The U.S. housing market continues to show improvement, though it still remains somewhat lackluster.
- Inflation in the U.S. has remained low and stable.
As it has for much of the past several years, the FOMC is concerned that without some type of policy accommodations, economic growth is insufficient to generate improvement in the employment market. In addition, the current global financial crisis is posing serious risks to a recovering, but far from healthy, U.S. economy. The committee also determined that inflation should remain steady in the medium term, and continue to run below its 2 percent objective.
As a measure against rising inflation, and to help the economy recover, the FOMC voted to continue with the purchases of mortgage backed securities at the rate of $40 billion per month. In addition, it is continuing to extend the average maturity of Treasury securities which it holds, and will also continue to reinvest principle payments of agency debt and agency mortgage backed securities in agency mortgage-backed securities. In sum, these actions will increase holdings of longer term paper by some $85 billion per month, with a goal of lowering long term interest rates, supporting the mortgage markets, and improving broader economic conditions.
The committee has said it will keep a close eye on economic conditions over the coming months, and if employment does not improve it will continue with the current stimulus as well as considering the use of other tools at its disposal. The committee is anticipating that its current accommodating stance will be appropriate until well after the economy in the U.S. strengthens. Of particular note to lenders: the committee will keep the federal funds rate at 0 to 0.25 percent. It was also noted that it expects a low federal funds rate to be warranted through the second quarter of 2015.
About The Lending Circle
The Lending Circle, a division of Sunovis Financial, works to address the great pent-up need for financing nationwide, and will help borrowers with their needs whatever they may be.