The last scheduled FOMC meeting for 2010 ended today with no changes from November's meeting. Today's FOMC statement is very similar to last month's. The $600 billion in Treasury security purchases (QE2) continues without change:
To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. The Committee will maintain its existing policy of reinvesting principal payments from its securities holdings. In addition, the Committee intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month.
As everyone expected, the same ultra low interest rate policy continues with no end it sight:
The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate 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.
Just as he has done all through this year, Thomas Hoenig was the only one to vote against this policy:
Voting against the policy was Thomas M. Hoenig. In light of the improving economy, Mr. Hoenig was concerned that a continued high level of monetary accommodation would increase the risks of future economic and financial imbalances and, over time, would cause an increase in long-term inflation expectations that could destabilize the economy.
This is Thomas Hoenig's last FOMC meeting as a voting member. The presidents of the Reserve Banks serve one-year terms on a rotating basis. So next year Thomas Hoenig and three other current voting members are being replaced. This CNN article has a good review of the new voting members. According to the article:
three of the four new voting positions will go to so-called inflation hawks who have been outspoken with their criticism of the Fed's latest stimulus plan.
So we may see more votes against Bernanke's policies next year. However, that may still not result in much change since the committee has 12 members.
Future FOMC Meetings
If you want an idea about what the market thinks regarding when the Fed will start hiking rates, check out this CME Group FedWatch tool (came back sometime after Saturday). It shows the probability of rate hikes in the future FOMC meetings based on the 30-Day Fed Funds futures prices. The probability of a higher Fed funds rate by next June is shown to be 17.2%. That's up from 3.2% after last FOMC meeting in November. The chance of a rate hike by next November is 59.8% which is up from 18.6% after the last meeting.
The first and second FOMC meetings of 2011 are scheduled for January 25-26 and March 15.