Fed holds rates, Twist, pledge by 9-to-1 vote

Fed holds rates, Twist, pledge by 9-to-1 vote

By Steve Goldstein

WASHINGTON (MarketWatch) -- By a 9-to-1 vote, the Federal Reserve voted to keep the target Fed funds rate at a level between 0% and 0.25%, to continue its "Twist" program of shifting $400 billion in its bond portfolio toward longer maturities and continue reinvesting maturing principal payments into mortgage-backed securities. The Fed kept its pledge that "exceptionally low levels" of rates are warranted at least through mid-2013. "Economic growth strengthened somewhat," the Fed statement said, but the unemployment rate will decline only gradually toward levels that the Federal Open Market Committee judges to be consistent with its dual mandate and there are "significant downside risks" to the economic outlook. The three Fed members who dissented from the prior two decisions, Richard Fisher, Narayana Kocherlakota and Charles Plosser, voted with the majority, while Chicago Fed President Charles Evans dissented as he called for additional policy accommodation.