Yellen: Taper continues, monetary policy and interest rates unchanged

FOMC down on housing industry's prospects

The following are the most salient highlights, directly cited, for the housing industry from today's Federal Open Markets Committee statement.

(For the full text of the FOMC statement, click here.) 

1) The FOMC is optimistic about the economy, but not housing

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 Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions.

  • Economic activity has rebounded in recent months.
  • Recovery in the housing sector remains slow.
  • Labor market indicators generally showed further improvement. The unemployment rate, though lower, remains elevated.
  • Household spending appears to be rising moderately and business fixed investment resumed its advance
  • Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.

2) Tapering will continue

Beginning in July, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $15 billion per month rather than $20 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $20 billion per month rather than $25 billion per month.

The Committee will closely monitor incoming information on economic and financial developments in coming months and will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability.

3) Monetary policy unchanged

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate. In determining how long to maintain the current 0-0.25% target range for the federal funds rate, the Committee will assess progress – both realized and expected – toward its objectives of maximum employment and 2% inflation.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Narayana Kocherlakota; Loretta J. Mester; Charles I. Plosser; Jerome H. Powell; and Daniel K. Tarullo.

3d rendering of a row of luxury townhouses along a street

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