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FOMC Keeps Rates Low Citing “”Depressed”” Housing Sector

Echoing the statement issued following the January meeting, the ""Federal Open Market Committee"":http://www.federalreserve.gov/monetarypolicy/fomc.htm said Tuesday that though ""the economy has been expanding moderately"" in the last two months, the housing sector ""remains depressed."" The FOMC made the comments after announcing its decision, established by a 9-1 vote, to keep the Federal funds rate at historically low levels.


The committee said ""labor market conditions have improved further├â┬ó├óÔÇÜ┬¼├é┬ªthe unemployment rate has declined notably in recent months but remains elevated.""

The FOMC went on to add that it ""anticipates that economic conditions - including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely


to warrant exceptionally low levels for the federal funds rate at least through late 2014.""

President of the ""Federal Reserve Bank of Richmond"":www.richmondfed.org/, Jeffrey Lacker, cast the sole dissenting vote because, the FOMC statement said, he ""does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.""

""Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook,"" the FOMC noted. ""The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate"" of price stability and maximum employment.

The FOMC also said it would continue a ""highly accommodative stance"" for monetary policy: low interest rates. Despite the low rates housing ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô arguably the sector most affected by low rates ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô remains mired in a slump.

Additionally, the FOMC decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.