FOMC Demonstrates National Economy is Expanding

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financeThe meeting of the Federal Open Market Committee (FOMC) and December 2011 revealed data suggesting that the national economy is expanding at a moderate pace, despite slowed global growth. Despite the recent improvement in labor market conditions, the national unemployment rate remains high, business fixed investment have declined and the housing market continues to lag. Other positive signs include a recently slowed rate of inflation with expectations of long-term stability.

The Committee predicts that economic growth over the foreseeable future will remain modest suggesting only a gradually declining unemployment rate.  One of the primary risks to the economic outlook is severe financial strain within the global markets. Given the current global and domestic factors affecting the U.S. economy and financial markets, the Committee has decided to keep the federal funds rate between 0 and 0.25 percent through at least 2014. This stance was deemed appropriate due to the expectations that medium-term inflation will remain subdued and rates of resource utilization will remain low.

Moreover, the Committee also chose to extend the maturity of its security holdings. FOMC policies will continue to support the reinvesting of principal payments of agency debt and securities and of rolling over maturing Treasury securities at auction. Security holdings may be adjusted in order to promote stronger economic recovery. FOMC members casting a supporting vote for December’s monetary policy action included: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Janet L. Yellen; John C. Williams; Daniel K. Tarullo; Sarah Bloom Raskin; Sandra Pianalto;; Dennis P. Lockhart; and Elizabeth A. Duke. One member, Jeffrey M. Lacker, voted against the action due to a preference for the omission of a time period in which economic conditions may necessitate a low federal funds rate.

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Rachel, writer for, has graduate level work in literature and currently works in university administration.