FOMC Holds Rates and Keeps “Extended Period”

The U.S. Federal Reserve opted to hold rates at 0 to 0.25% and said rates will stay “exceptionally low” for an “extended period”. They said the U.S. recovery will be “moderate for a time”. They said employers “remain reluctant to add to payrolls” but that the labor market is “stabilizing.” They also confirmed that MBS and Agency debt purchases will end on March 31. They say economic activity has “continued to strengthen.” Overall, very little change in this report. Interestingly Hoenig once again dissented. He “believed that continuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to the buildup of financial imbalances and increase risks to longer-run macroeconomic and financial stability.”