The U.S. central bank indicates that it will leave its current policies in place, saying that the recovery is on track
Anyone who wanted to see the Fed throw another life preserver to the anemic U.S. recovery will be disappointed this afternoon. The Federal Open Market Committee's November meeting statement indicated that it will maintain its current policies but adds no new stimulus measures. This comes after two straight months where the Fed took modest actions to try to get the economy growing faster. But the Fed remains willing to consider additional measures to boost the recovery in future months.
Substantively, little changed in the November statement from the September statement. In its economic assessment, the Fed appears slightly more upbeat, noting that growth strengthened in the third quarter. It attributes this in part to temporary factors having dissipated. Yet it says that "significant downside risks" persist. It also remains frustrated in the nation's weak hiring. It expects a moderate pace of growth in coming quarters, which will only reduce unemployment gradually.
It goes on to say that it will continue to keep interest rates very low through mid-2013. It will also move forward with its program to twist the maturity profile of its balance sheet by selling shorter-term securities and purchasing more longer-term securities. It will also continue to reinvest maturing securities to keep the size of its portfolio unchanged.