The Federal Reserve released the minutes of the September meeting of its Federal Open Market Committee (FOMC) on Wednesday afternoon. The big news is that the FOMC voted to end its monthly asset purchases — aka QE3 — by the end of October and pointed to an improving labor market, rising household spending and inflation running below the committee’s 2% target as indicators that U.S. economic activity is continuing to expand at a “moderate pace.”

The FOMC appears little concerned with deflation:

The Committee sees the risks to the outlook for economic activity and the labor market as nearly balanced. Although inflation in the near term will likely be held down by lower energy prices and other factors, the Committee judges that the likelihood of inflation running persistently below 2 percent has diminished somewhat since early this year.

The committee also expects to maintain its near-zero interest rate policy for some time to come:

The Committee anticipates, based on its current assessment, that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program this month, especially if projected inflation continues to run below the Committee’s 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored.

In addition to ending QE3, the FOMC has directed its trading desk to maintain the existing policy of reinvesting principal payments from the Fed’s holdings of agency debt and agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The FOMC expects this action to help maintain accommodative financial conditions.

The S&P 500 and the DJIA both recovered about half their downside movements for the day shortly after the FOMC minutes were released.

ALSO READ: Federal Reserve Showing Better Economic Picture at National Level

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