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The Federal Open Market Committee (FOMC) concluded its meeting on Wednesday with an additional $10 billion reduction of asset purchases. The Fed stands to buy $45 billion of Treasuries and mortgage-backed securities until the next meeting in June. There were no dissents.
Key points from todays statement:
- FOMC members were not swayed by a stalled economy in the first quarter. Weather was cited as a partial cause for the 0.1% increase in real gross domestic product in the first three months of the year.
- The Fed is confident about a pickup in economic activity. In light of the largely positive nature of recent economic reports, the statement noted that growth in economic activity "has picked up recently."
- The Fed abstained from using strong adjectives to modify its depiction of housing market conditions despite the disappointing string of housing market reports in recent weeks.
- The Fed is optimistic about consumer spending as it noted that it appears to be rising more quickly. Consumer spending has recorded two consecutive quarters of at least 3.0% growth, a first for the current expansion.
- Business spending was seen to have "edged down," which is a nod to the decline in equipment spending during the first quarter.
- Looking ahead, we expect the Fed will complete its asset purchase program in the final months of the year. Labor market developments will drive the course of monetary policy during the months thereafter. Currently, the Fed views labor market conditions as mixed but improving on balance.