Fed Maintains Zero-Rate Outlook, Says Inflation Will Be Short-Lived

Officials left interest rates near-zero though 2023, at least, and pledged continued support of businesses and consumers, despite the vaccine and stimulus-fueled recovery.

article-image

Jerome Powell, chair, Federal Reserve, Blockworks Exclusive Art by Axel Rangel

share

key takeaways

  • 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.

Learn more about today’s news: sign up for our daily newsletter by Tyler Neville and understand the crypto market in 5 minutes

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png

Research

ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.

article-image

The crypto asset manager lowered its planned fee from 0.25% to 0.15%, undercutting its competitors

article-image

Plus, a look at planned ETH ETF fees and how they differ from their BTC counterparts

article-image

North Korea suspected in breach of Indian exchange’s multisig wallet

article-image

Plus, Sanctum’s CLOUD token has officially launched — but not without problems

article-image

It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.