The Federal Reserve’s policy makers agreed Tuesday to keep interest rates at historic lows and to maintain its policy announced a month ago of reinvesting principal payments from mortgage bonds into Treasuries.
The Federal Open Market Committee (FOMC) voted to maintain the target range for the federal funds rate at zero to 0.25%, saying in a statement: “Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit.”
Economists had widely expected the Fed’s policymakers to keep interest rates where they are. The FOMC, which holds eight regularly scheduled meetings during the year, has kept rates at historic lows near zero since December 2008.
“This is as expected. They didn’t take any action, but they have clearly paved the way for giving the economy another booster shot of stimulus at their next meeting in November,” said Jeff Kleintop, chief market strategist for independent broker-dealer LPL Financial in Boston.
Tim Courtney, CIO of Burns Advisory Group in Oklahoma City, who oversees about $425 million in assets at Burns and leads its investment committee’s research team, said there was not a lot of difference between the FOMC’s language on Tuesday and their official statement last month.