Members of the Federal Open Market Committee, at the most recent meeting, reaffirmed that the central bank will keep politics free until the future, according to the minutes of the meeting published on Wednesday.
As the economy continues to shake off the effects of the Covid-19 pandemic, the committee, which sets monetary policy for the Federal Reserve, has kept the policy unchanged.
This meant keeping short-term loan rates close to zero and keeping asset purchases of at least $ 120 billion each month.
In a discussion of the Fed’s asset purchase program and interest rate policy, the minutes indicated little chance of a change soon.
“Participants noted that economic conditions are currently far from the Committee’s long-term objectives and that the policy position will have to remain accommodative until these objectives are met,” the meeting summarized. “Consequently, all participants supported maintaining the Committee’s current settings and results-based guidelines for the federal funds rate and the pace of asset acquisitions.”
At the meeting, investors looked for talks on when the FOMC could start slowing down its bond buying or quantitative easing. The post-meeting statement did not mention the talks, and Fed Chairman Jerome Powell later said the Fed will maintain a favorable policy.
Members noted that the QE program, which brought the Fed’s balance sheet to nearly $ 7.5 trillion, “materially eased financial conditions and provided substantial support to the economy.”
Deliberations are taking place amid concerns that central bank officials are struggling to recover. The goal of a “broad and inclusive” recovery of the labor market is particularly focused on racial, gender and income lines.
The post-meeting statement noted that the pace of economic activity and improvements in the labor market have “moderated in recent months”. The minutes helped amplify the Fed’s sentiment in this regard.
“With the economy still far from these targets, the participants considered that it may take some substantial time for further progress,” the summary said.
Since the meeting, Fed officials have been virtually unanimous, saying they do not expect significant policy changes until further progress is made toward the central bank’s strengthened labor market target. Powell and others have pointed out that they will not start raising interest rates to reduce inflation, but rather wait for real price pressures to appear before tightening policy.
“In terms of reducing content, it’s just premature. We just created the guide. We said we want to see substantial progress toward our goals before we change our asset buying guide,” Powell said at his news conference. post-meeting.
The minutes noted that asset prices are “high” and said the vulnerabilities associated with household and business loan levels are “notable”. Officials also said that some money markets and open-ended mutual funds face “significant vulnerabilities associated with the transformation of liquidity”.