The Fed keeps rates unchanged at the last meeting of the year and accelerates the reduction of the bond purchase program

The United States Federal Reserve has decided to leave its interest rates unchanged in the range of 0.0% to 0.25% for the fifteenth consecutive meeting, as expected.

The Fed has reported that the rate of reduction of the bank’s bond purchase program will increase to $ 30 billion per month from the current 15 billion a month. That means net asset purchases will drop to zero before the end of March 2022.

FOMC statement

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 targets for employment and price stability.

With advances in vaccination and strong political support, economic activity and employment indicators have continued to strengthen. The sectors most affected by the pandemic have improved in recent months but continue to be affected by COVID-19. Labor earnings have been strong in recent months and the unemployment rate has dropped substantially. Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to high levels of inflation. 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 and reducing supply constraints are expected to support continued gains in economic activity and employment, as well as a reduction in inflation. Risks to the economic outlook remain, including new variants of the virus.

The Committee seeks to achieve the maximum level of employment and an inflation rate of 2% in the long term. In support of these goals, the Committee decided to keep the target range for the federal funds rate between 0 and 0.2%. Given that inflation has exceeded 2% for some time, the Committee 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. In light of the evolution of inflation and further improvement in the labor market, the Committee decided to reduce the monthly rate of its net asset purchases by $ 20 billion for Treasury securities and $ 10 billion for Treasury securities. backed by mortgages. Starting in January, the Committee will increase its holdings of Treasury securities by at least $ 40 billion per month and of mortgage-backed securities by at least $ 20 billion per month. The Committee believes that similar reductions in the pace of net asset purchases each month are likely to be appropriate.But you are prepared to adjust the pace of your purchases if changes in the economic outlook warrant it. Ongoing purchases and holdings of securities by the Federal Reserve will continue to promote smooth market operation 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.