Federal Reserve Now Targets Inflation Above 2%, Bitcoin Breaks $11K
Federal Reserve officials said Wednesday they would hold U.S. interest rates at close to zero and work to push inflation above 2% "for some time."
Sep 16, 2020 at 6:19 p.m. UTCUpdated Aug 19, 2021 at 4:23 a.m. UTC
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Federal Reserve officials said Wednesday they would hold U.S. interest rates at close to zero and work to push inflation above 2% "for some time."
STORY CONTINUES BELOW
- Federal Open Market Committee keeps interest rates unchanged close to zero, according to its statement.
- Panel agrees to maintain accommodative monetary policy until inflation climbs above 2% "for some time."
- The central bank will increase holdings of U.S. Treasury securities and mortgage-backed securities "at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions."
- Projection materials released with the statement show officials, on average, expect rates to remain close to zero through 2023.
- On average, officials don't expect 2% inflation until 2023.
- Robert Kaplan, president of the Federal Reserve Bank of Dallas and a voting member of the panel, voted against the plan. He "prefers that the Committee retain greater policy rate flexibility."
- Neal Kashkari, president of the Federal Reserve Bank of Minneapolis, also cast a dissenting vote. He prefers that interest rates stay on hold "until core inflation has reached 2% on a sustained basis," according to the statement.
- Economists weren't expecting Fed officials to make any changes to U.S. interest rates – which in March were cut close to zero on an emergency basis – as the devastating economic toll of the coronavirus started to become clear.
- Last month, Fed Chair Jerome Powell said in a speech that officials plan to let inflation rise above 2% and stay there for a while to keep borrowing conditions easy for a longer time and allow the economy to heal.
- “The Fed kind of kicked the door open at their last meeting by indicating a more aggressive approach to inflation,” Mati Greenspan, founder of the cryptocurrency and foreign-exchange firm Quantum Economics, told subscribers in an email on Tuesday, a day before the Fed announcement. “Of course, now that they have everyone’s attention, followup will be critical.”
- Bitcoin’s price was trading at around $11,022.90 at press time, up 2.4% in the past 24 hours. The price moved temporarily to $11,071.33 right after the Fed’s release.
- The S&P 500 Index was up 0.35%.
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