Sun State Savings

Tues­day, the Fed­eral Open Mar­ket Com­mit­tee voted to leave the Fed Funds Rate unchanged within its cur­rent tar­get range of 0.000–0.250 percent.

For the fourth con­sec­u­tive month, the Fed Funds Rate vote was nearly unan­i­mous. Just one FOMC mem­ber dis­sented in the 9–1 vote.

The Fed Funds Rate has been near zero per­cent since Decem­ber 2008. It is expected to remain near-zero through 2014, at least.

In its press release, the Fed­eral Reserve noted that the the U.S. econ­omy has “expanded mod­er­ately” since the FOMC’s Jan­u­ary 2012 meet­ing, adding that growth is occur­ring despite “strains in the global finan­cial mar­kets” that pose “sig­nif­i­cant down­side risks” to long-term outlooks.

The Fed­eral Reserve now expects mod­er­ate eco­nomic expan­sion through the next few quar­ters and a grad­ual eas­ing in the national Unem­ploy­ment Rate.

The Fed also noted that :

1. The hous­ing sec­tor remains “depressed”
2. Labor con­di­tions have “improved further”
3. House­hold spend­ing has “con­tin­ued to advance”

With respect to infla­tion, the Fed said that ris­ing oil and gaso­line prices will “push up” infla­tion tem­porar­ily, but not over the long-term.

At its meet­ing, the Fed­eral Reserve nei­ther intro­duced new eco­nomic stim­u­lus, nor dis­con­tin­ued exist­ing mar­ket pro­grams. The Fed re-affirmed its inten­tions to hold the Fed Funds Rate at “excep­tion­ally low” lev­els through late-2014, and to buy mortgage-backed bonds in the open market.

Imme­di­ately fol­low­ing the FOMC’s state­ment, mort­gage mar­kets wors­ened slightly, pres­sur­ing mort­gage rates higher. 

The FOMC’s next sched­uled meet­ing is a two-day event slated for April 24–25, 2012.

The Fed­eral Reserve has released the min­utes from its 2-day meet­ing Jan­u­ary 24–25, 2012.

The Fed Min­utes is a sum­mary of the con­ver­sa­tions and debates that shape our nation’s mon­e­tary pol­icy. It receives less atten­tion than the Fed’s more well-known, post-meeting press release, but the Fed Min­utes is every bit as important.

To rate shop­pers , for exam­ple, the Fed Min­utes can pro­vide clues about whether mort­gage rates will gen­er­ally rise or fall in the com­ing months.

The most recent Fed Min­utes reveals a cen­tral bank divided on the future of the U.S. econ­omy. The min­utes show some Fed mem­bers in favor of new, imme­di­ate mar­ket stim­u­lus. It shows oth­ers in favor of ter­mi­nat­ing the stim­u­lus that’s already in place.

The Fed’s debate cen­tered on the topic of infla­tion, and the pres­sures that a pro­longed, near-zero Fed Funds Rate can place on the economy. Ultimately, the Fed did noth­ing, nei­ther adding new stim­u­lus nor remov­ing that which is already in place.

It did, how­ever, com­mu­ni­cate a plan to keep the bench­mark Fed Funds Rate rate “excep­tion­ally low” through late-2014, at least.

The Fed Min­utes included the fol­low­ing notes, too :

• On employ­ment : Unem­ploy­ment rates will “decline only grad­u­ally” in 2012
• On hous­ing : The mar­ket is “held down” by the “large over­hang” of dis­tressed homes
• On infla­tion : Con­sumer prices have remained “flat”

Fur­ther­more, the Fed expressed opti­mism regard­ing Euro­pean finan­cial mar­kets, not­ing that mar­ket sen­ti­ment “appeared to brighten a bit”. Nonethe­less, “spillovers” remain pos­si­ble and the threat con­tin­ues to weigh on markets. 

Mort­gage rates are slightly worse since the Fed Min­utes were released. 

The Fed­eral Reserve’s next sched­uled meet­ing is March 13, 2012 — its sec­ond of 8 sched­uled meet­ings this year.