Full Fed statement from March 18, 2015

The Federal Reserve building.

Information received since the Federal Open Market Committee met in January shows that economic growth has moderated somewhat. Labor market conditions have improved further, with strong job gains along with a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources is constantly on the diminish. Household expenses are rising moderately; declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow and export growth has weakened. Inflation has declined further underneath the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.

Consistent using its statutory mandate, the Committee seeks to foster maximum employment and value stability. The Committee expects that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to maneuver toward levels the Committee judges in line with its dual mandate. The Committee is constantly on the see the risks towards the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low-level in the near term, however the Committee expects inflation to rise gradually toward 2 percent within the medium term as the labor market improves further and the transitory effects of energy price declines along with other factors dissipate. The Committee is constantly on the monitor inflation developments closely.

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view the current 0 to 1/4 percent target range for that federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and a pair of percent inflation. This assessment will require into account a wide range of information, including measures at work market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In line with its previous statement, the Committee judges that an increase in the prospective range for that federal funds rate remains unlikely in the April FOMC meeting. The Committee anticipates that it will be appropriate to boost the target range for the federal funds rate when it has seen further improvement within the labor market and it is reasonably certain that inflation will move back to its 2 percent objective within the medium term. This transformation in the forward guidance doesn\’t indicate that the Committee has decided on the timing from the initial increase in the target range.

The Committee is maintaining its existing policy of reinvesting principal payments from the holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This insurance policy, by keeping the Committee’s holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions.

When the Committee decides to begin to remove policy accommodation, it will require a balanced approach consistent with its longer-run goals of maximum employment and inflation of two percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the prospective federal funds rate below levels the Committee views normally in the longer run.

Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams.

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