FOMC: Rates to Stay Lowby Tim Manni
As expected, the Federal Open Market Committee (FOMC) announced that the target for the Federal funds rate will remain between 0-0.25% “for an extended period.” The FOMC also reiterated their commitment to spend up to $1.25 trillion on Fannie and Freddie mortgage-backed securities in order to keep conforming rates inside their current range.
Our “prediction” post this morning speculated on whether or not the FOMC would discuss a possible exit strategy. In exactly the same language as their release after the April meeting, today’s statement said, “The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.”
While that doesn’t directly address a clear-cut exit strategy, it goes begin to introduce the possibility that the Fed may not have to spend as much money on their programs as originally calculated — that’s a good thing.
We’ll really be able to digest the discussions that led to statements like these and the ones above when the minutes of this meeting come out in a few weeks.