United States: No change to the Fed's policy stance
April 27, 2011
At its 27 March meeting, the Federal Open Market Committee (FOMC) decided to continue with its current policy stance. Despite rumours that the Fed was about to adopt a more hawkish tone in this meeting, given the recent acceleration in headline inflation, the statement that the Fed will ?continue expanding its holdings of securities as announced in November? was maintained, thus reaffirming its pledge to purchase USD 600 billion of longer-term Treasury bonds through to June. Moreover, the FOMC unanimously decided to keep the federal funds rate within the historically low range of 0% to 0.25% set in December 2008. Following the meeting, Federal Reserve chairman Ben Bernanke gave a press conference, the first in the Fed's 98-year history. With the press conference, U.S. monetary authorities aim to increase transparency, following the example of other central banks. In the press conference , Bernanke acknowledged that ?economic conditions, including low rates of resource utilization, subdued inflation trends and stable inflation expectations are likely to warrant exceptionally low levels for the federal funds rate for an extended period, which suggests that there will be a couple of meetings before action?. The Fed also reiterated its view that surging commodity prices are likely to have only a transitory effect on inflation, and that the Committee will maintain the stimulus until the recovery is robust enough to withstand tighter credit.