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Comparing the Fed's Views on the Economy


August 9, 2011 (Associated Press) WASHINGTON - A comparison of the Federal Reserve's statements from its June 21-22 meeting and the meeting on Tuesday.



ECONOMY:

August: Fed policymakers took a much gloomier tone than in previous statements. "Economic growth so far this year has been considerably slower than the committee had expected. ... The committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually."

June: "The economic recovery is continuing at a modest pace, though somewhat more slowly than the committee had expected. ... The committee expects the pace of recovery to pick up over coming quarters and the unemployment rate to resume its gradual decline."

TEMPORARY FACTORS

August: Fed policymakers implied that the economy's recent weakness is more likely to persist. It said that temporary factors, such as high gas and food prices and supply chain disruptions stemming from Japan's March 11 earthquake, "appear to account for only some of the recent weakness."

June: "The slower pace of the recovery reflects in part factors that are likely to be temporary."

INTEREST RATES:

August: The Fed left the short-term benchmark rate it controls at a record low of nearly zero, where it has been since December 2008. The Fed also pledged to keep the rate at "exceptionally low levels ... at least through mid-2013."

June: The Fed left the short-term rate at nearly zero and pledged to keep rates "exceptionally low ... for an extended period," language that has been in place since March 2009.

TREASURY SECURITIES:

August: The Fed said it will "maintain its existing policy of reinvesting principal payments from its securities holdings." That will keep its portfolio from shrinking and act to reduce interest rates.

June: The Fed said it would complete its $600 billion bond-buying program by the end of June, as planned. It also said it would "maintain its existing policy of reinvesting principal payments from its securities holdings."

INFLATION:

August: "Inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable."

June: "Inflation has picked up in recent months, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term inflation expectations have remained stable."

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