The third FOMC meeting of the year finished this afternoon with a release of the policy statement. Unlike the March 20th meeting, there was no press conference and no new release of economic projections. As expected, no policy changes were announced. In fact, the statement was very close to the March statement. There were just two minor changes. One was its negative view of fiscal policy:
fiscal policy has become somewhat more restrictive
fiscal policy is restraining economic growth
The other change was the addition of a sentence regarding its pace of its asset purchases:
The Committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.
Everything else in the FOMC statement remained the same.
These changes make it appear that the Fed is slowing moving toward an increase in its asset purchases (i.e. more QE) if the economy shows any new weakness. It’s another indication that higher rates continue to be a long ways off, similar to what Japan has experienced for the last two decades.
In a repeat from January and March, only Esther George dissented in the vote. The statement provided the reason for her dissent:
who was concerned that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.
Future FOMC Meetings
The next two FOMC meetings are scheduled for June 18-19 and July 30-31 The June meeting will include the summary of economic projections and a press conference by Chairman Bernanke.