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Today was the conclusion of the Federal Open Market Committee (FOMC) meeting.  Many were hoping for changes in policy to help foster and stimulate economic growth.

If you were betting on big changes, needless to say, you just got robbed.

The Fed decided to keep the policy where it is and did not announce any major changes.  This includes holding rates close to zero until at least mid-2013.

A potential reason for this is that economic data in the last month was fairly positive.  The gross domestic product grew at a rate of 2.5 percent over the third quarter, which is the fastest pace in over a year.  Household spending has also increased at a faster pace than expected, and business investment in equipment and software is still expanding.  Inflation has also been stabilized to an extent, so why would they make a major change?

The Fed insists that the economy is strengthening even though the job market is still weak.  On Friday we will know exactly how weak the job market is as the official statement on the unemployment rate is scheduled to be released.  Whether or not the unemployment rate will decrease or increase has yet to be determined, but many analysts predict it will float around the 9 percent range where it has been stuck since 2009.

In the official statement released by the Federal Reserve, it was established pretty adamantly that the Fed is still committed to foster maximum employment and price stability.

It stated, “The Committee continues to expect a moderate pace of economic growth over the coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.”

Returning to the status of Operation Twist, the Fed explained, “To support a stronger economic recovery and to help ensure that inflation, over time, is at levels consistent with the dual mandate, the Committee decided today 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 in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.”

So more or less, the status quo remains unchanged.  The Fed stays committed to fostering economic activity, yet the only change that they have made was the implementation of Operation Twist.

What changes will be made to combat unemployment and improve the housing sector?  These are questions that need to be addressed in the coming months.

To read the full press release from the Federal Reserve, click here. 

Eric Mally is a contributor for Quicken Loans’ Zing Blog.  Stay connected with us on our Facebook page and our Twitter page to find out all the ways we’re Engineered to Amaze.

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