Minutes of the Federal Reserve at the March meeting

Federal Reserve officials said at their last meeting that the pace of asset acquisitions is unlikely to change any time soon, as the central bank pursues its economic goals.

The Federal Open Market Committee launched minutes on Wednesday from the March 16-17 meeting, while investors were looking for indications on the direction of the policy in the future.

The summary of the meeting indicated that while officials have seen the economy gain substantially, they see much more progress needed before ultra-light policy changes.

Members said the $ 120 billion a month bond purchase “provides substantial support to the economy.”

“Participants noted that it will probably be some time before substantial progress is made towards the Committee’s maximum targets on employment and price stability and that, in line with the Committee’s results-based guidelines, asset acquisitions will continue at least at the current pace until then. “

Compliance with the “results-based guidelines” promises that the Fed will wait until the economy shows “substantial further progress” toward the dual targets of full employment and inflation, which stands at about 2%.

The guide is a change in Fed policy, in which it would have previously adjusted 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-making arm voted to keep short-term lending rates anchored close to zero and to continue to buy bonds worth at least $ 120 billion each month.

In addition, the committee raised its prospects for growth and inflation. The median outlook for GDP in 2021 is 6.5%, a significant increase from expectations of 4.2% in December

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

Although inflation appears 64 times in a few minutes, Fed officials have not expressed concern that it could become a problem soon. A notion in the minutes said that inflation forecasts were exactly where FOMC members expected.

During a media meeting a few hours before the minutes were released, Chicago Fed Chairman Charles Evans said it would take “months and months” of higher inflation “until I thought about whether this is sustainable or not. “

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

However, President Jerome Powell and other central bank leaders said they saw the rate hike as a reflection of stronger growth expectations than uncomfortable inflationary pressures.

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