At the Federal Reserve’s March Federal Open Market Committee
(FOMC) meeting the FOMC reported it would continue to taper asset purchases in
its QE3 program. The FOMC reduced long-term Treasury purchases and mortgage-backed
securities purchases by $5 billion each per month. New Federal Reserve Chairman
Janet Yellen also indicated an increase to the federal funds rate could be in
store in 2015.
The FOMC continues to focus on two main goals for monetary
policy decisions, price stabilization and maximum employment.
Price stabilization centers around a focus on the Bureau of
Economic Analysis’ PCE Price Index report. The most recent report released
on March 28 showed a decrease in the 12-month rate for the PCE Price Index. In
February the 12-month PCE Price Index showed an inflation rate of 0.9%, down
from 1.2% in January. The Core PCE Price Index which excludes food and energy
remained at 1.1%.
The Core PCE Price Index showed continued stabilization in
inflation in the U.S. economy while the PCE Price Index overall declined slightly
to 0.9% and fell farther from the FOMC’s target inflation rate goal of 2.0%.
On Wednesday, April 9 the FOMC will release its March FOMC Meeting Minutes which may provide additional insight into the FOMC’s perspective and outlook for the two U.S. economic indicators that help guide its decisions on monetary policy.
On Wednesday, April 9 the FOMC will release its March FOMC Meeting Minutes which may provide additional insight into the FOMC’s perspective and outlook for the two U.S. economic indicators that help guide its decisions on monetary policy.
