In a statement issued by the central bank's Federal Open Market Committee (FOMC), the continued weakness in the economy is the key concern behind the continuation of the MBS purchasing.
‘To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the committee will continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month,’ says the FOMC. ‘The committee also will purchase longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed at the end of the year, initially at a pace of $45 billion per month.
‘The committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities [back into] agency mortgage-backed securities,’ the FOMC continued. ‘In January, [the committee] will resume rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.’
The FOMC also voted to ‘keep the target range for the federal funds rate at zero percent to 0.25 percent, and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee's two percent longer-run goal, and longer-term inflation expectations continue to be well anchored.’