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Fed keeps rates unchanged in September, stimulus reduction will soon be justified if economic progress continues

The United States Federal Reserve has announced that it maintains its interest rates in the range of 0%-0.25%, as expected. The entity has not changed its rates since March 2020, when it lowered them to the current historical minimum. The asset purchase program continues in $ 120 billion.

FOMC release

The Federal Reserve is committed to using its full range of tools to support the US economy at this challenging time, thereby promoting its maximum goals for employment and price stability.

With advances in vaccination and strong political support, the economic activity and employment indicators have continued to strengthen. The sectors most affected by the pandemic have improved in recent months, but the increase in COVID-19 cases has slowed their recovery. The inflation is high, largely reflecting transitory factors. Overall financial conditions remain accommodative, partly reflecting policy measures to support the economy and the flow of credit to US households and businesses.

The course of the economy continues to depend on the course of the virus. Advances in vaccinations are likely to continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

The Committee seeks to achieve maximum employment and inflation at a rate of 2% in the long term. Given that inflation has persistently remained below this long-term target, the Committee will try to achieve inflation moderately above this level for some time so that inflation averages 2% over time and inflation expectations to long-term remain well anchored at this 2%. The Committee hopes to maintain an accommodative monetary policy stance until these results are achieved. The Committee decided to keep the target range for the federal funds rate from 0 to 0.25% and hopes that it is appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s maximum employment assessments and inflation has reached. increased to 2% and is on track to moderately exceed 2% for some time. Last December, the Committee indicated that would 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 further substantial progress has been made towards your maximum employment and price stability goals. Since then, the economy has moved toward these goals. If progress continues overall as expected, the Committee believes that a moderation in the pace of asset purchases will soon be warranted. These asset purchases help promote smooth market performance and accommodative financial conditions, supporting the flow of credit to households and businesses.

In evaluating the appropriate monetary policy stance, the Committee will continue to monitor the implications of the incoming information for the economic outlook. The Committee would be willing to adjust the monetary policy stance as appropriate if risks arise that could impede the achievement of the Committee’s goals. The Committee’s evaluations will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and inflation expectations, and financial and international developments.

The voters in favor of the monetary policy action were Jerome H. Powell, president; John C. Williams, vice president; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.


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