On Wednesday, June 16, the FOMC kept its interest rate unchanged at 0.25%.
FOMC voted unanimously to preserve interest rate again
It follows from the accompanying statement that the Fed plans to continue buying assets from $ 120 billion per month until significant progress in meeting employment and inflation targets.
Economic activity and employment have improved, according to the Fed. The rise in inflation was driven by transition factors. Inflation, according to the expectations of the regulator, in 2021 will be 3.4% compared to the previous forecast of 2.4%.
All FOMC representatives expressed confidence that rates in 2021 will not change. At the same time, 7 members of the Committee predict a rate hike in 2022.
Jerome Powell: Fed will react if inflation rises unexpectedly
During a press conference, the head of the Fed, Jerome Powell, said that the economic recovery is not over, the risks remain high.
The Fed chief noted that inflation has risen markedly in recent months and may turn out to be higher and more stable than expected, although long-term inflation expectations are broadly in line with the targets.
Along with this, if the Fed saw signs that the trajectory of inflation is steadily moving above the target level, they would be ready to adjust the stance of monetary policy – said Powell.
When asked about the reduction of the financial stimulus program, the head of the FRS replied that they are still unknown. More can be said about them after more data arrives at the Fed. The regulator will definitely warn about this in advance.
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