FOMC maintains ZIRP in unanimous vote
Once again, the Federal Open Market Committee kept the federal funds rate at next to nothing and maintained the Federal Reserve's commitment to reinvesting maturing securities into longer-term Treasury securities, in what's become known as QE2. The Fed said the economic recovery continues, but still not at a pace that would make a dent in an unemployment rate that is still flirting with 10%, and "employers remain reluctant to add to payrolls." "Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the committee judges to be consistent, over the longer run, with its dual mandate," the FOMC said in its statement. "Although the committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow." The federal funds rate has been 0% to 0.25% since December 2008. The FOMC reiterated its belief "that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period." The Fed undertook its program of purchasing up to $600 billion in billion of longer-term Treasury securities by the end of the second quarter "to promote a stronger pace of economic recovery and help ensure that inflation, over time, is at levels consistent with its mandate." "The tone of the Fed's latest policy statement suggests that neither the most recent pick up in economic growth nor the continued surge in commodity prices have had much of an impact on officials," said Paul Ashworth, chief U.S. economist at Capital Economics. Wednesday's FOMC vote was unanimous. With the new make up of the FOMC, as some members rolled off and other Fed chiefs from around the country became voting members, how members voted was closely watched by many market particiapants . Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, voted against every FOMC policy decision last year because of his belief that the current monetary policy isn't working. Hoenig also thinks the bond buying program increases the risks of "future economic and financial imbalances," and eventually increase long-term inflation and possible destabilize the economy. He longer casts a vote. Write to Jason Philyaw.