The Federal Open Market Committee (FOMC) on Tuesday confirmed that the Federal Reserve's purchases of agency mortgage-backed securities (MBS) and agency debt are nearing completion, with the remaining transactions to be executed by the end of the month.
The committee also said it will maintain the federal funds rate's target range at 0% to 0.25%, anticipating exceptionally low levels will be warranted for an extended period of time.
To provide support to mortgage lending and housing markets, and to improve overall conditions in private credit markets, the Fed has been purchasing $1.25 trillion of agency MBS and about $175 billion of agency debt. The FOMC says it will continue to monitor financial developments and will employ its monetary policy tools as necessary.
The FOMC also noted that in light of financial market improvements, the Federal Reserve has been closing the special liquidity facilities that it created to support markets during the crisis. The only remaining such program, the Term Asset-Backed Securities Loan Facility, is scheduled to close on June 30 for loans backed by new-issue commercial mortgage-backed securities and on March 31 for loans backed by all other types of collateral.
Since it last met in January, the FOMC has observed stabilization in the labor market, moderate growth in household spending and increased business spending, while also noting that housing starts remain at a depressed level and remployers remain reluctant to add to payrolls.
With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time, the FOMC says.
SOURCE: Federal Reserve