Although the first half of 2014 began with a slow start, there is still strength in the broader economy, the latest Federal Open Market Committee meeting minutes revealed.
Beginning in May, the committee chose to add to its holdings of agency mortgage-backed securities at a pace of only $20 billion per month, compared to $25 billion per month.
Also, the FOMC decided to add to its holdings of longer-term Treasury securities at a pace of only $25 billion per month — rather than $30 billion per month.
In determining how long to maintain the current 0 to 1/4% target range for the federal funds rate, the Committee said it will assess progress — both realized and expected — toward its objectives of maximum employment and 2% inflation.
“Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions,” the minutes stated.
“The committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually, moving toward those the committee judges consistent with its dual mandate,” the minutes also noted.
Looking ahead, the committee said it will likely reduce the pace of asset purchases in further measured steps at future meetings, but asset purchases are not on a preset course.
The pace of purchases still heavily relies on the outlook of the labor market and inflation as well as the likely efficacy and costs of such purchases.
As in the past, the FOMC keeps constant evaluations on the impact of weak economic reports and if that impact is grounds enough to change its outlook on America’s future.