Minutes of the Federal Reserve from March

Federal Reserve officials indicated at their last meeting that the rate of asset purchases is unlikely to change any time soon as the central bank pursues its economic goals.

The Federal Public Markets Committee on Wednesday released minutes of the March 16 – 17 meeting as investors seek indications of where policy may be heading in the future.

The summary indicated that while officials are seeing the economy grow significantly, they are seeing much more progress before ultra-easy policy changes take place.

Members said the $ 120 billion a month purchases provide significant support to the economy.

“Participants noted that it is likely to take some time until significant further progress towards the committee’s maximum employment and price stability objectives is realized, and that, in line with the committee’s outcome – based guidance, asset purchases are at least the current pace will continue until then. ‘

Adherence to ‘outcomes-based guidance’ is a promise that the Fed will wait until the economy shows ‘significant further progress’ towards the dual employment and inflation target of around 2%.

The guideline is a shift in policy for the Fed, in which it would previously adjust the policy in anticipation of inflation. The minutes said members agreed that policy changes “should be based primarily on observed results rather than forecasts.”

At the meeting, the Fed’s policy decision decided to keep short-term loans almost zero and to buy at least $ 120 billion in bonds each month.

In addition, the committee raised its outlook for economic growth and inflation going forward. The median outlook for the 2021 GDP look has risen to 6.5%, a big improvement from the 4.2% expectation in the December forecasts.

Officials also indicated that by the end of the year, the unemployment rate could fall to 4.5% and inflation to rise to 2.2%, slightly above the Fed’s traditional target of 2%.

Although inflation is up 64 times in minutes, Fed officials have shown little concern that it could soon become a problem. One idea in the minutes said that inflation forecasts were exactly where FOMC members expected.

During a meeting with the media a few hours before the minutes were announced, Charles Fed, President of Chicago, said that it would take “months and months” of higher inflation before I would first make an opinion on whether it was sustainable. then not. . “

During the FOMC meeting in March, some market experts expected the Fed to at least change the duration of the bonds it bought to reduce a sharp rise in longer-term Treasury yields this year.

However, Jerome Powell, chairman and other central bank leaders, said they saw the rise in rates as a reflection of stronger growth expectations rather than uncomfortable inflationary pressures.

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