At the end of its board meeting today, The US Federal Reserve Bank has revealed its key interest rate decision. Fed chairman, Jerome Powell, also gave some indication of where and when the Fed might act through this year.
The Fed announced that the target for the federal funds rate would remain in a range of 0%-0.25%, a move that was widely predicted. The press release noted that with inflation running consistently below the 2% target, the Fed will aim to achieve inflation moderately above 2% for some time to achieve a 2% average over a longer term. The announcement emphasized that the goal of achieving full employment is the top priority for the Fed.
“[The Committee] expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time,” the release states.
In addition to maintaining a low rate and encouraging inflation, the Fed committed to quantitative easing policies at a rate of $80 billion per month of treasury securities and $40 billion per month of agency mortgage-backed securities. The release noted that despite positive news, the country’s economic outlook remains unsure while the pandemic persists.
“The path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the release reads. “The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”