FOMC spelt out clearly to keep ultra loose interest rate policy through mid-2013

The US Federal Open Market Committee (FOMC) held its scheduled meeting on 9 August and explicitly spelt out that the Fed will keep the Federal Funds Target Rate (FFTR) at 0-0.25% and “economic conditions … are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013” (instead of the usual phrase “for an extended period”). The other significant takeaway from the FOMC statement was that the economic outlook was significantly weaker than expected as “indicators suggest a deterioration in overall labor market conditions in recent months, and the unemployment rate has moved up. Household spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed.” Note that this policy decision was not a unanimous one, there were three dissenting votes (while 7 voted yes, passing the statement comfortably), something that is quite rare. The last time there were three voters that dissented was nearly 18 years ago.