FOMC Votes 9-1 to Keep Rates Low, Housing Sector Still "Depressed"

Echoing the statement it issued following its January meeting, the Federal Open Market Committee said Tuesday “the economy has been expanding moderately” in the last two months, but the housing sector “remains depressed” in deciding, by a 9-1 vote, to keep the Fed Funds rate at historic low levels.

The Committee said “labor market conditions have improved further…the unemployment rate has declined notably in recent months but remains elevated.”

The FOMC said it “anticipates that economic conditions – including low rates of resource utilization and a subdued

outlook for inflation over the medium run – are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.”

Richmond Fed President Jeffrey Lacker cast the sole dissenting vote because he “does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014,” according to an FOMC statement.

“Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook,” the FOMC said. “The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate” of price stability and maximum employment.

The FOMC said it would continue a “highly accommodative stance” for monetary policy: low interest rates. Despite the low rates, housing – arguably the sector most affected by low rates – remains mired in a slump.

The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.