The tone in the April FOMC meeting was almost the same as that of the March meeting and policy changes remained identical to that previously. The minutes of the meeting showed limited support for additional asset purchases in the near-term. However members collectively agreed that additional policy accommodation could be necessary "if the economic recovery lost momentum or the downside risks to the forecast became great enough."
Rajesh Sharma, CMD Money Matters Financial Services Ltd says “It was appropriate to maintain the existing highly accommodative stance of monetary policy”.
One out of the seventeen FOMC participant said in the April meet that additional balance sheet action in the near-term would be appropriate in order to mitigate downside risks to economic growth. This participant supported an expansion of the maturity extension program. The maturity extension program, or Operation Twist, is currently scheduled to be completed by the end of June.
In the discussion on monetary policy for the period ahead the members reached a collective decision that it was appropriate to maintain the existing accommodative stance. The target rate agreed on for federal funds rate was 0 to 0.25 percent and to continue the program of extending the average maturity of the federal reserve’s holdings of securities as announced last September, and to retain the existing policies regarding the reinvestment of principal payments from Federal Reserve holdings of securities.
The economic outlook was broadly similar to that of the March meeting. The labor market conditions had improved in recent months, unemployment rate had fallen but still it is in elevated levels posing a threat to the economy. Growth was expected to be moderate over coming quarters and then to pick up over time. Strains in global financial markets stemming from the sovereign debt and banking situation in Europe continued to pose significant downside risks to economic activity in the global world. The possibilities that US fiscal policy would be more contractionary than anticipated and that uncertainty about fiscal policy could lead to a deferral of hiring and investment were other downside risks.
The FOMC has tweaked its calendar for meetings in the rest of 2012 and in 2013. All meetings will now take place over two days, in order to provide more time for discussions. In addition, updated economic projections and the Chairman’s press conference will occur at every other meeting, in March, June, September, and December. This shift will result in an "extra" press briefing this year in December that was previously scheduled for January 2013. Input Rajesh Sharma CMD Money Matters Financial Services Ltd(MMFSL)
Disclaimer: I, Rajesh Sharma, hereby certify that the views expressed reflect my personal views about the subject. The information contained herein is from publicly available data or other sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for any investment decision.