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Information received since the Federal Open Market Committee met in DecemberJanuary suggests thata return to moderate economic growth in economic activity pausedfollowing a pause late last year. Labor market conditions have shown signs of improvement in recent months, in large part because of weather-related disruptions and other transitory factors. Employment has continued to expand at a moderate pacemonths but the unemployment rate remains elevated. Household Household spending and business fixed investment advanced, and the housing sector has shown further improvement. Inflationstrengthened further, but fiscal policy has become somewhat more restrictive. Inflation has been running somewhat below the Committee'sCommittee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. TheThe Committee expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate. Although strains in global financial markets have eased somewhat, theThe Committee continues to see downside risks to the economic outlook. The The Committee also anticipates that inflation over the medium term likely will run at or below its 2 percent objective.

To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee willdecided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month.The The Committee is maintaining its existing policy of 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. Taken Taken together, these actions should maintain downward pressure on longer-termlonger-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.

The Committee will closely monitor incoming information on economic and financial developments in coming months.If the outlook for the labor market does not improve substantially, the The Committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ its other policy tools as appropriate, until such improvement is achievedthe outlook for the labor market has improved substantially in a context of price stability. In Indetermining the size, pace, and composition of its asset purchases, the Committee will, as always,will continue to take appropriate account of the likely efficacy and costs of such purchases.purchases as well as the extent of progress toward its economic objectives.

To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens. In In particular, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate 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 theCommittee'sCommittee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored. In In determining how long to maintain a highly accommodative stance of monetary policy, the Committee will also consider other information, including additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. When When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent.