August 5, 2021

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Fed chair reveals rate decision

At the end of its board meeting today, the US Federal Reserve announced its most important interest rate decision. Fed chairman Jerome Powell also gave some pointers on where and when the Fed might act this year.

The Fed announced that the target for the federal funds rate would stay in a range of 0% to 0.25%, a move that has been widely predicted. The press release stated that with inflation consistently below the 2% target, the Fed will aim for inflation moderately above 2% for some time to averaging 2% over the long term. The announcement emphasized that full employment is a top priority for the Fed.

“[The Committee] expects that it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s estimates of Maximum Employment and Inflation and have risen to 2 percent and are on track, 2 percent for some time to be exceeded moderately “, it says in the press release.

In addition to keeping interest rates low and encouraging inflation, the Fed committed to quantitative easing of $ 80 billion per month for treasury bills and $ 40 billion per month for agency mortgage-backed securities. The press release noted that despite positive news, the country’s economic outlook remains uncertain as long as the pandemic continues.

“The way the economy goes will depend largely on the progress of the virus, including progress with vaccinations,” the press release said. “The ongoing public health crisis continues to weigh on economic activity, employment and inflation, and pose significant risks to the economic outlook.”