Fed chair makes rate announcement

The US Federal Reserve Bank has revealed its key interest rate decision at the end of its two-day meeting today. Fed chairman, Jerome Powell,

The Fed announced that the target for the federal funds rate would be kept in a range of 0%-0.25%, a largely expected move. In a press release announcing the decision, the Fed noted that their goal remains seeking maximum employment and keeping inflation at the target rate of 2%. As inflation is still running below this goal, the Fed stated they will aim to achieve inflation “moderately above 2 percent for some time.”

“Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened,” the statement reads. “The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

The Fed also 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 statement explained that they will continue these purchases until “substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”

“These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses,” the statement reads.



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