The Federal Open Market Committee voted unanimously Wednesday to continue to buy Treasury and other debt instruments but eliminated references to its efforts to ease household credit.

“Conditions in financial markets have generally improved in recent months, the FOMC said in the statement issued after the two-day meeting. “Household spending has shown further signs of stabilizing but remains constrained.”

At the same time, the FOMC voted to keep its target Fed Funds rate at 0.0% to 0.25%. reiterated other steps to increase liquidity in the hope of increasing bank lending which has effectively stopped.

While in April, the FOMC said it “is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs,” those efforts were not mentioned in the June statement.

The specific rate decision means the prime lending rate – the rate banks charge their best customers and the rate which is the basis for credit card and home equity lines of credit – will remain at 3.25%. As rates have fallen, personal interest paid by consumers has dropped to $235.5 billion in January from $267.9 billion one year. In January 2008, the FOMC cut the target Fed Funds rates from 4.25% to 3.00% in two separate actions.

The FOMC faced a number of hurdles leading up to Wednesday's decision. The economic forecasts offered earlier this year were too optimistic before the ink dried while the relapse in financial conditions and problems with rescue programs stymied hopes for gaining further policy traction.

The Committee statement made no reference to plans offered by the Obama Administration to expand the Federal Reserve’s powers.

The FOMC’s option, given the “zero-bound” on interest rates were limited with prospects the Committee would act to increase purchases of longer-term Treasury securities as suggested in its January statement or expanding purchases of Mortgage Backed Securities.

Here’s how the FOMC statement today compares with the statement issued following the April 28-29 meeting at which the Committee tightened somewhat the criteria for purchasing debt instruments and also held the target Fed Funds rate at the 0.0%-0.25% range.

Today's Fed Statement

Information received since the Federal Open Market Committee met in April suggests that the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

Statement from April 28-29 Meeting

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

Commentary

The FOMC was somewhat more optimistic about the economy altering its language slightly by saying “the pace of economic contraction is slowing” and that “household spending has show further signs of stabilizing.” It acknowledged reduced business investment but repeated its belief “economic activity is likely to remain weak for a time.”

Today's Fed Statement

The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and the Committee expects that inflation will remain subdued for some time.

Statement from April 28-29 Meeting

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

Commentary

FOMC offered an optimistic assessment of inflation in the longer term, hinting it will not take any action on rates or to otherwise tighten monetary policy.

Today's Fed Statement

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.

Statement from April 28-29 Meeting

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of financial and economic developments.

Commentary

FOMC eliminated any reference to facilitating the extension of credit to households.

Today's Fed Statement

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Statement from April 28-29 Meeting

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

Commentary

The vote was again unanimous.

Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.