Members of the Federal Open Market Committee confirmed during their recent meeting that the central bank will release the policy into the future, according to the minutes of the meeting released on Wednesday.
As the economy continued to shake off the effects of the Covid-19 pandemic, the committee, which sets the monetary policy for the Federal Reserve, kept the policy unchanged.
This means that standard rates are kept close to zero in the short term and that the minimum asset purchases of $ 120 billion are maintained every month.
In a discussion on the Fed’s asset purchase program and interest rate policy, the minutes soon indicated little chance for a change.
“Participants noted that economic conditions are currently far from the Committee’s long-term goals and that the policy stance will have to remain accommodative until the goals are achieved,” the meeting concludes. “Consequently, all participants support the maintenance of the committee’s current institutions and the outcome-based guidance for the federal fund rate and the rate of asset purchases.”
In the meeting, investors were looking for discussion on when the FOMC could start slowing down the rate of buying bonds, or quantitative easing. In the statement after the meeting, the talks are not mentioned, and Jerome Powell, chairman of the Fed, said afterwards that the Fed would probably keep the policy accommodating.
Members noted that the QE program, which raised the Fed’s balance to nearly $ 7.5 billion, “significantly eased financial conditions and significantly supported the economy.”
The deliberations come amid concerns from central bank officials about the pace of recovery. Specific focus is the goal of a ‘broad and inclusive’ recovery of the labor market, across racial, gender and income boundaries.
The statement after the meeting noted that the pace of economic activity and improvements in the labor market had moderated ‘over the past few months’. “The minutes helped boost Fed sentiment in this regard.
“With the economy still far from these goals, participants have judged that it is likely to take some time before significant further progress is achieved,” the summary reads.
Since the meeting, Fed officials have virtually unanimously said they do not expect significant policy changes until more progress is made with the central bank’s improved goal for the labor market. Powell and others have stressed that they will not raise interest rates to curb inflation, but will rather wait until the real price pressure appears before tightening the policy.
“As far as the decline is concerned, it is only premature. We have just created the guidelines. We have said that we want to see significant further progress towards our goals before we change our guidelines for buying assets,” Powell said. his news conference said.
The minutes note that asset prices have ‘increased’ and that vulnerabilities related to lending levels for households and businesses are ‘noticeable’. Officials also said some money market and open mutual funds ‘have serious vulnerabilities related to liquidity transformation’.