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the latest SECONDARY MARKET spending and business fixed investment advanced, and the housing sector has strengthened further, but fiscal policy has become somewhat more restrictive. Inflation has been running somewhat below the committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable." At the same time, the committee released its latest series of economic projections by board members and Federal Reserve Bank presidents, which were slightly more optimistic The M Report | 75 se c on da r y m a r k e t similar action in January, cast the lone dissenting vote. In announcing its decision at the conclusion of a two-day meeting, the FOMC offered a somewhat upbeat assessment of the economy. "Information received since the Federal Open Market Committee met in January suggests a return to moderate economic growth following a pause late last year," the committee said in its post-meeting statement. "Labor market conditions have shown signs of improvement in recent months, but the unemployment rate remains elevated. Household A na ly t ic s W ith an upbeat assessment of the economy, the Federal Open Market Committee (FOMC) voted 11-1 to leave interest rates unchanged and to continue its program of purchasing agency mortgage-backed securities (MBS) and longer-term Treasury securities to "maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative." Kansas City Fed President Esther George, who opposed a s e r v ic i ng The FOMC will continue to purchase mortgage-backed securities in an effort to steady the economy. Or ig i nat ion Fed Proceeds with Drastic Measure to Ensure Stability regarding employment than the last round of projections issued in December, but showed slower near-term growth than in December. The projections suggest the economy, as measured by gross domestic product, will grow at between 2.3 percent and 2.8 percent this year, compared with the December forecast range of 2.3 percent to 3 percent. For 2014, the projection shows a growth range of 2.9 percent to 3.4 percent, down slightly from December's forecast of 3 percent to 3.5 percent. The unemployment rate, according to the projections, will range from 7.3 percent to 7.5 percent this year, lower than the 7.4 percent to 7.7 percent range in the December projections. The new projections put the unemployment rate in a 6.7 percent to 7 percent range in 2014, down from the 6.8 percent to 7.3 percent range forecast for 2014 last December. The committee made no change to its plans to keep the target federal funds rate at 0 to 1/4 percent in effect "at least as long as the unemployment rate remains above 6 1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored." The projections suggest the unemployment rate could reach as low as 6.5 percent—triggering an end to low interest rates and the continuation of a downward trajectory in the longer run. The FOMC said it will continue to purchase $40 billion a month of agency MBS and $45 billion per month of longer-term Treasury securities while reinvesting principal payments from its holdings of agency debt and agency MBS into agency MBS and roll 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 committee said.

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