Federal Reserve's first Federal Open Market Committee (FOMC) meeting for 2012 was held January 24-25, 2012. On January 25, 2012, Fed issued the first of the four annual directions on the key Federal Funds rate. There are two components of the interest rate-related report:
* The first component illustrates how high each of 17 committee members think the rate will go up at the end of 2012, 2013 and 2014.
* The second component highlights how many members think the first rate hike will occur in each year from 2012 through 2016.
At the conclusion of the first FOMC meet (January 24-25, 2012), the direction on interest rate showed that the first rate hike might not even come before 2014.
FOMC Meeting in June 2012 (June 19-20, 2012)
Fed policymakers during the Open Market Committee meeting decided to extend the $400 billion "Operation Twist", first announced in September 2011 and scheduled to expire in June 2012, through the end of the year by selling $267 billion in shorter-term securities (both Treasury securities and mortgage-backed securities) and replacing them by purchasing equivalent longer-term bonds that would mature in six to 30 years and new mortgage-backed securities.
FOMC Meeting in July-August 2012 (July 31-August 1, 2012)
Fed policymakers adopted a stay-put approach during two-day open market committee meeting. At the end, Fed said that it would "closely monitor incoming information" and would "provide additional accommodation as needed" to stimulate the economy and job creation.
FOMC Meeting in September 2012 (September 12-13, 2012): Quantitative Easing III
Federal Reserve shifted its stand on monetary policy with an open-ended campaign of purchase of mortgage bonds, starting with $23 billion buying in September 2012. The September 2012 figure of $23 billion translates into $40 billion monthly bond purchase, and Fed announced that it would continue to do so until the labor market improved "substantially". Each month, it would set a new target for bond buying, implying that $40 billion monthly figure was not a pre-fixed target. Fed, mandated with crafting monetary policy to ensure price stability and near-full employment, also announced that it would maintain Federal Funds Rate to near zero through middle of 2015. Eleven members of FOMC voted for QEIII, while the lone dissenter was Richmond Fed President Jeffrey Lacker.
FOMC Meeting in October 2012 (October 23-24, 2012)
The Fed policymakers during its two-day (October 23-24, 2012) Federal Open Market Committee meeting held its position steady. It is on track of buying $40 billion monthly bond-buying that had been launched after the last Fed policymaking meeting September 12-13. Fed is also continuing another long-term bond-buying program started in 2011 and slated to end December 2012. However, Fed may extend that $45 billion bond-buying program beyond December 2012 if the situation warrants such action.
FOMC Meeting in December 2012 (December 11-12, 2012)
Federal Reserve policymakers left a key interest rate, Federal Funds Rate, untouched at the near zero percent level, the same level it has been since December 2008, during the last open market committee meeting of the year. Also, Fed clarified its controversial bond buying campaign by setting a threshold that it would continue doing so until the jobless rate fell below 6.5 percent. Fed also reiterated that it would continue with monthly purchase of $45 billion in long-term treasury securities and $40 billion in mortgage-backed bonds. Now, Fed has more than $2.8 triillion in long-term bonds in its balance sheet.
* The first component illustrates how high each of 17 committee members think the rate will go up at the end of 2012, 2013 and 2014.
* The second component highlights how many members think the first rate hike will occur in each year from 2012 through 2016.
At the conclusion of the first FOMC meet (January 24-25, 2012), the direction on interest rate showed that the first rate hike might not even come before 2014.
FOMC Meeting in June 2012 (June 19-20, 2012)
Fed policymakers during the Open Market Committee meeting decided to extend the $400 billion "Operation Twist", first announced in September 2011 and scheduled to expire in June 2012, through the end of the year by selling $267 billion in shorter-term securities (both Treasury securities and mortgage-backed securities) and replacing them by purchasing equivalent longer-term bonds that would mature in six to 30 years and new mortgage-backed securities.
FOMC Meeting in July-August 2012 (July 31-August 1, 2012)
Fed policymakers adopted a stay-put approach during two-day open market committee meeting. At the end, Fed said that it would "closely monitor incoming information" and would "provide additional accommodation as needed" to stimulate the economy and job creation.
FOMC Meeting in September 2012 (September 12-13, 2012): Quantitative Easing III
Federal Reserve shifted its stand on monetary policy with an open-ended campaign of purchase of mortgage bonds, starting with $23 billion buying in September 2012. The September 2012 figure of $23 billion translates into $40 billion monthly bond purchase, and Fed announced that it would continue to do so until the labor market improved "substantially". Each month, it would set a new target for bond buying, implying that $40 billion monthly figure was not a pre-fixed target. Fed, mandated with crafting monetary policy to ensure price stability and near-full employment, also announced that it would maintain Federal Funds Rate to near zero through middle of 2015. Eleven members of FOMC voted for QEIII, while the lone dissenter was Richmond Fed President Jeffrey Lacker.
FOMC Meeting in October 2012 (October 23-24, 2012)
The Fed policymakers during its two-day (October 23-24, 2012) Federal Open Market Committee meeting held its position steady. It is on track of buying $40 billion monthly bond-buying that had been launched after the last Fed policymaking meeting September 12-13. Fed is also continuing another long-term bond-buying program started in 2011 and slated to end December 2012. However, Fed may extend that $45 billion bond-buying program beyond December 2012 if the situation warrants such action.
FOMC Meeting in December 2012 (December 11-12, 2012)
Federal Reserve policymakers left a key interest rate, Federal Funds Rate, untouched at the near zero percent level, the same level it has been since December 2008, during the last open market committee meeting of the year. Also, Fed clarified its controversial bond buying campaign by setting a threshold that it would continue doing so until the jobless rate fell below 6.5 percent. Fed also reiterated that it would continue with monthly purchase of $45 billion in long-term treasury securities and $40 billion in mortgage-backed bonds. Now, Fed has more than $2.8 triillion in long-term bonds in its balance sheet.
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