- Interest rates will stay near-zero through 2023, at least
- Asset purchasing will continue at $120 billion/month
Federal Reserve Chairman Jerome Powell and colleagues met Wednesday, and as strides continue to be made toward recovery, the economy remains far from the Fed’s goal. Officials left interest rates near-zero though 2023, at least, and pledged their continued support of businesses and consumers, despite the vaccine and stimulus-fueled recovery.
“Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak,” the Federal Open Market Committee said in its Wednesday policy statement. “Inflation continues to run below 2%.”
Seven of 18 FOMC officials predicted rates will be higher by the end of 2023, compared with five of 18 at the December 2020 meeting, according to the quarterly economic projections released Wednesday.
Officials remain optimistic that an inflation bump later this year will be short-lived. Excluding food and energy, inflation is forecast to reach 2.2% this year before falling to 2% in 2022, according to projections.
Treasury yields remained close to their highest levels since before the pandemic, hitting a 13-month high of 1.685% Wednesday.
Policymakers decided to leave the target range of benchmark federal funds at 0% to 0.025%, where it has been since March 2020.
Asset purchases were also left unchanged at $120 billion a month. Officials stressed that this pace will be maintained until “substantial further progress” is made toward lowering unemployment and minimizing inflation.
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