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Fed holds rates, readopts strategy framework to reflect economic changes
The Federal Open Market Committee (FOMC) voted via videoconference Wednesday to maintain the federal funds target rate at its current range of 0 to 0.25 percent as the economy works to recover from the effects of the ongoing pandemic. NAFCU Chief Economist and Vice President of Research Curt Long detailed insights from the first meeting of the year in a new Macro Data Flash report.
"The FOMC acknowledged that the economic recovery stalled in recent months due to the rise in COVID-19 cases," said NAFCU Chief Economist and Vice President of Research Curt Long. "While there was a reference to the progress on vaccine distribution and its potential to alter the path of economy, there was no indication that a change in asset purchase volume is anywhere in view."
In a post meeting statement, the FOMC indicated that the Fed is "committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals."
During the meeting, the committee also unanimously reaffirmed its "Statement of Longer-Run Goals and Monetary Policy Strategy," originally adopted in August 2020 following a review of monetary policy strategy, tools, and communications practices.
The new strategy framework seeks to better reflect economic changes and monetary policy approaches. Throughout the coronavirus pandemic, the Fed has made clear its intention to use its tools to their fullest potential until the economic recovery is well underway and Long previously said the statement "looks to avoid the mistakes of the past."
The FOMC is expected to next meet Mar. 16-17; its tentative meeting schedule for 2021 can be viewed here.