The Federal Open Market Committee (FOMC) voted to maintain its policy of exceptionally low interest rates, keeping the target for the federal funds rate at 0.0% - 0.25%.   In addition to maintaining its target rate range, the FOMC noted that economic conditions “are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”  In its prior policy statement issued following its meeting in mid-December, the committee noted that exceptionally low rates through “at least mid-2013.”

The FOMC also signaled directly that it “expects to maintain a highly accommodative stance for monetary policy.”  Further, the committee announced that it would continue its program of extending the maturity of Treasury securities it holds as well as “reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.” 

Following  its previous meeting, the FOMC indicated it would continue to “regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.”  In today’s statement the committee added the phrase “to promote a stronger economic recovery in a context of price stability.”   This statement may be viewed as an indication that the committee has moved a step closer to additional quantitative easing measures.