A look at the Fed’s evolving thoughts on the economy and interest rates

A look at the Fed’s August, September statements

A comparison of the Federal Reserve’s statements from its last meeting on Aug. 10 and the meeting Tuesday.

TREASURY SECURITIES

August: The Fed said it would purchase Treasury bonds with the proceeds from its maturing holdings of mortgage-backed securities issued by Fannie Mae and Freddie Mac. The Fed said the action would keep steady the level of support it was providing to the economy.

September: The Fed says it will continue its policy of reinvesting the proceeds from its securities holdings and says it is prepared “to provide additional accommodation if needed” to support the recovery and keep prices stable.

RECOVERY SPEED

August: “The pace of recovery in output and employment has slowed in recent months.”

September: “The pace of recovery in output and employment has slowed in recent months.”

INFLATION

August: “Measures of underlying inflation have trended lower in recent quarters and … inflation is likely to be subdued for some time.”

September: “Inflation is likely to remain subdued for some time before rising to levels the committee considers consistent with its mandate.”

INTEREST RATES

August: Leaves federal funds rate target unchanged at a record low of zero to 0.25 percent, where it has been since December 2008, and repeats pledge to keep rates “exceptionally low” for “an extended period.”

September: Leaves federal funds rate target unchanged and once again repeats pledge to keep rates “exceptionally low” for “an extended period.”

ECONOMIC CONDITIONS

August: “Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit.”

September: “Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth and tight credit.”

HOUSING

August: “Housing starts remain at a depressed level.”

September: “Housing starts are at a depressed level.”

DISSENT:

August: Kansas City Federal Reserve Bank President Thomas Hoenig dissents for a fifth consecutive meeting, arguing that the pledge to keep rates low for an extended period is no longer warranted because it could lead to a build-up of future imbalances. He also registers his dissent at the decision to prevent the size of the Fed’s holdings of longer-term securities from shrinking.

September: Hoenig dissents for a sixth consecutive meeting, objecting both to the pledge to keep interest rates low and the reinvestment of the proceeds from the Fed’s holdings of mortgage-backed securities.