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Press Release

Release Date: July 30, 2014
For immediate release
Information received since the Federal Open Market Committee met in June indicates that growth in
economic activity rebounded in the second quarter. Labor market conditions improved, with the
unemployment rate declining further. However, a range of labor market indicators suggests that
there remains significant underutilization of labor resources. Household spending appears to be
rising moderately and business fixed investment is advancing, while the recovery in the housing
sector remains slow. Fiscal policy is restraining economic growth, although the extent of restraint is
diminishing. Inflation has moved somewhat closer to the Committee's longer-run objective. Longerterm inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and
price stability. The Committee expects that, with appropriate policy accommodation, economic
activity will expand at a moderate pace, with labor market indicators and inflation moving toward
levels the Committee judges consistent with its dual mandate. The Committee sees the risks to the
outlook for economic activity and the labor market as nearly balanced and judges that the likelihood
of inflation running persistently below 2 percent has diminished somewhat.
The Committee currently judges that there is sufficient underlying strength in the broader economy
to support ongoing improvement in labor market conditions. In light of the cumulative progress
toward maximum employment and the improvement in the outlook for labor market conditions
since the inception of the current asset purchase program, the Committee decided to make a further
measured reduction in the pace of its asset purchases. Beginning in August, the Committee will add
to its holdings of agency mortgage-backed securities at a pace of $10 billion per month rather than
$15 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of
$15 billion per month rather than $20 billion per month. The Committee is maintaining its existing
policy of reinvesting principal payments from its holdings of agency debt and agency mortgagebacked securities in agency mortgage-backed securities and of rolling over maturing Treasury
securities at auction. The Committee's sizable and still-increasing holdings of longer-term securities
should maintain downward pressure on longer-term interest rates, support mortgage markets, and
help to make broader financial conditions more accommodative, which in turn should promote a
stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent
with the Committee's dual mandate.
The Committee will closely monitor incoming information on economic and financial developments
in coming months and will continue its purchases of Treasury and agency mortgage-backed
securities, and employ its other policy tools as appropriate, until the outlook for the labor market has
improved substantially in a context of price stability. If incoming information broadly supports the
Committee's expectation of ongoing improvement in labor market conditions and inflation moving
back toward its longer-run objective, the Committee will likely reduce the pace of asset purchases in
further measured steps at future meetings. However, asset purchases are not on a preset course, and

the Committee's decisions about their pace will remain contingent on the Committee's outlook for
the labor market and inflation as well as its assessment of the likely efficacy and costs of such
purchases.
To support continued progress toward maximum employment and price stability, the Committee
today reaffirmed its view that a highly accommodative stance of monetary policy remains
appropriate. In determining how long to maintain the current 0 to 1/4 percent target range for the
federal funds rate, the Committee will assess progress--both realized and expected--toward its
objectives of maximum employment and 2 percent inflation. This assessment will take into account
a wide range of information, including measures of labor market conditions, indicators of inflation
pressures and inflation expectations, and readings on financial developments. The Committee
continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to
maintain the current target range for the federal funds rate for a considerable time after the asset
purchase program ends, especially if projected inflation continues to run below the Committee's 2
percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.
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.
The Committee currently anticipates that, even after employment and inflation are near mandateconsistent levels, economic conditions may, for some time, warrant keeping the target federal funds
rate below levels the Committee views as normal in the longer run.
Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice
Chairman; Lael Brainard; Stanley Fischer; Richard W. Fisher; Narayana Kocherlakota; Loretta J.
Mester; Jerome H. Powell; and Daniel K. Tarullo. Voting against was Charles I. Plosser who
objected to the guidance indicating that it likely will be appropriate to maintain the current target
range for the federal funds rate for "a considerable time after the asset purchase program ends,"
because such language is time dependent and does not reflect the considerable economic progress
that has been made toward the Committee's goals.
Statement Regarding Purchases of Treasury Securities and Agency Mortgage-Backed Securities