United States: Fed maintains policy stance despite surging commodity prices
March 15, 2011
At its 15 March meeting, the Federal Open Market Committee (FOMC) decided to proceed with its current policy stance. The statement that the Fed will ?continue expanding its holdings of securities as announced in November? was maintained, meaning that the Committee reaffirmed its pledge to purchase USD 600 billion of longer-term Treasury bonds until the first half of 2011. In a decision widely expected by the market, the FOMC also decided to keep the federal funds rate within the historically low range of 0% to 0.25% set in December 2008. Committee members confirmed that the recovery gained momentum since the January meeting, with labour market conditions improving gradually. Moreover, the FOMC acknowledged that commodity prices have risen significantly during recent months, although long-term inflation expectations remain low relative to levels that the FOMC judges to be consistent with its long-run dual mandate. Accordingly, the Committee decided to leave the federal funds rate at ?exceptionally low levels for an extended period?.