The Federal Reserve said late Wednesday that the US economic growth "paused" in recent months, mainly due to "weather-related disruptions and other transitory factors." The Federal Open Market Committee said in a statement that "growth in economic activity paused in recent months, in a large part because of weather-related disruptions and other transitory factors." It added that employment continued to "expand at a moderate pace but the unemployment rate remains elevated." "Inflation has been running somewhat below the Committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices," the statement stressed.
It noted that "longer-term inflation expectations have remained stable." The Committee expects that "with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline." It stressed that "although strains in global financial markets have eased somewhat, the Committee continues to see downside risks to the economic outlook." The Committee also anticipates that inflation over the medium term likely will run at or below its two percent objective. "To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee will continue purchasing additional agency mortgage-backed securities at a pace of USD 40 billion per month and longer-term Treasury securities at a pace of USD 45 billion per month," according to the statement.
Also, "to support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens." In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 0.25 percent and "currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's two percent longer-run goal, and longer-term inflation expectations continue to be well anchored." The statement affirmed that "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 two percent."