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Full FOMC statement:
With progress in vaccination and strong policy support, indicators of economic activity and employment have continued to strengthen.
The sectors that have been most affected by the epidemic have recovered in recent months, but are still affected by COVID-19.
Job growth has been good in recent months and the unemployment rate has decreased significantly.
Supply and demand imbalances related to the pandemic and the reopening of the economy continue to contribute to rising inflation levels.
Overall financial conditions remain favorable, partly reflecting policy measures to support the economy and the flow of credit to US households and businesses.
The path of the economy still depends on the course of the virus.
Progress on vaccinations and the easing of supply constraints are expected to support continued gains in economic activity and employment, as well as lower inflation.
Risks to the economic outlook remain, including new strains of the virus.
The committee seeks to achieve maximum employment and inflation at a rate of 2 percent in the long run.
In support of these objectives, the Committee decided to maintain the target range for the federal funds rate at 0 to 0.25 percent.
Given that inflation has exceeded 2 percent for some time, the Committee expects that maintaining this target range will be appropriate until labor market conditions return to levels consistent with the Committee’s assessment of maximum employment.
Given developments in inflation and further improvement in the labor market, the Committee decided to reduce the monthly pace of its net asset purchases by $20 billion for Treasuries and $10 billion for mortgage-backed securities.
Beginning in January, the Committee will increase its holdings of Treasury securities by at least $40 billion per month and the agency’s mortgage-backed securities by at least $20 billion per month.
The Committee decided that similar reductions in the pace of net asset purchases would likely be appropriate each month, but was prepared to adjust the pace of purchases as changes in the economic outlook warranted.
Continued purchases and holdings of securities by the Federal Reserve will continue to foster smooth market functioning and favorable financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook.
The Committee will be ready to adjust the monetary policy stance appropriately if risks arise that could prevent the achievement of the Committee’s objectives.
The Committee’s assessments consider a wide range of information, including studies of public health, labor market conditions, inflationary pressures and inflationary expectations, and financial and international developments.
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This post is written by Deltas2021