WASHINGTON–As expected, the Federal Reserve’s Open Market Committee has adjourned its two-day meeting without making any changes to rates—but it did indicate it sees brighter economic days ahead.
“The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. 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 Fed said. “Inflation continues to run below 2%. 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 path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the FOMC statement continued. “The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”
As it has following recent meetings, the Fed said that with inflation below its 2% goal it will endeavor to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer‑term inflation expectations remain well anchored at 2%.
“The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” it said.
Target Range Unchanged
As a result, the FOMC said it is keeping the target range for the federal funds rate at 0% to .25% and 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% and is on track to moderately exceed 2% for some time.
In addition, the Federal Reserve said it will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month 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 Fed said.
Grant Sheehan CCUE | CCUP | CEO, NCOFCU The B reach Between Purpose and Experience Just recently, I came across a story that has stayed with me. It wasn’t dramatic in the traditional sense. There was no scandal, no crisis, no headline-grabbing failure. In fact, it was something much quieter than that. It was simply the story of an eighteen-year-old leaving his credit union. On the surface, that might not sound remarkable. Young people move their money frequently. They open new accounts, experiment with apps, follow trends, and often make financial decisions influenced by the digital tools at their disposal. But this story was different. This young man had been a credit union member since he was a few weeks old, as many credit unions do. His mother has spent her career working inside the credit union movement as an executive. For eighteen years, his financial life was connected to a credit union. If anyone might be expected to remain a lifelong member, it wou...
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