Federal Reserve Holds Rates, Asset Purchases Steady as Economic Activity Moderates
The U.S. central bank said interest rates will remain close to zero.
Jan 27, 2021 at 7:14 p.m. UTCUpdated Aug 19, 2021 at 6:52 a.m. UTC
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The Federal Reserve said Wednesday it would keep U.S. interest rates close to zero and continue its $120 billion-a-month bond-buying program.
“The pace of the recovery in economic activity and employment has moderated in recent months,” the committee said in a statement released after the meeting of the Federal Open Market Committee (FOMC). “The path of the economy will depend significantly on the course of the virus, including progress on vaccinations.”
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Other key points from the statement:
- Key target rate for federal funds to stay in a range of 0% to 0.25%.
- The Fed plans to keep buying $80 billion of U.S. Treasury bonds and $40 billion of agency mortgage-backed securities every month.
- The panel agreed to continue accommodative monetary policy until inflation averages 2% over time. On average, the Fed doesn’t expect 2% inflation until 2023.
- Declines in oil prices and weaker demand across the board have held down inflation, the committee noted.
- Economists weren’t expecting any change in monetary policy this meeting, as answers to the question of when the COVID-19 pandemic will stop wreaking havoc on the economy remain elusive.
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The low-interest-rate environment is thought to be a boon for bitcoin and other high-yield investments that can offer the market alternatives to bonds.
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