The pace of recovery is insufficient to bring about a significant improvement in labor market conditions, the Federal Open Market Committee said on Wednesday in a statement in Washington that won unanimous support for the first time in 13 months.
Theyre trying very hard in their statement to get people to stop jumping the gun with an expectation that the record stimulus will end before the planned conclusion in June, said Ethan Harris, head of developed-markets economic research at Bank of America Merrill Lynch in New York. The Fed is saying, were continuing our buying programme and were not going to move for a long time, he said. Harris put the odds of completing the purchases at 95%.
Chairman Ben S Bernanke and his colleagues are strengthening their commitment to the asset purchases as two new members, Philadelphia Fed President Charles Plosser and Dallas Fed chief Richard Fisher, joined the policy-setting panel. Both men, who earlier criticised the programme, supported the committee in saying the easing was needed to promote a stronger pace of economic recovery.
Plosser and Fisher were among four regional Fed presidents who rotated into voting slots for the year at this weeks meeting. They replaced officials including the Kansas City Feds Thomas Hoenig, who favoured tighter policy. Its much better for confidence for the markets when theyre putting up a united front, said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.
Stocks and commodities rose Wednesday as the dollar fell. The Standard & Poors 500 Index gained 0.4 % to close at 1,296.63.