FOMC Meeting: Key Takeaways
December FOMC meeting | December 16, 2020
The Federal Open Market Committee (FOMC) decided to leave the federal funds rate unchanged at 0.00%–0.25%. The Federal Reserve (Fed) also announced that it will continue to purchase at least $80 billion in Treasury securities and at least $40 billion in agency mortgage-backed securities until substantial further progress has been made toward the Committee’s goals.
COVID-19 is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have continued to recover, but they remain well below levels at the beginning of this year.
Overall financial conditions remain accommodative.
The path of the economy will depend significantly on the course of the coronavirus.
The FOMC expects to maintain this target range (0.00%-0.25%) until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.
The FOMC will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks to the Committee’s goals emerge.
The Fed did not change its cautious tone in today’s release.
The new summary of economic projections shows that FOMC members do not expect inflation will exceed the 2% target through 2023 or over the longer run. The median forecast for short-term rates show no hikes through 2023, although 5 of 17 members did project a rate hike in 2023.
The FOMC did not make any changes to the makeup of Treasury purchases. Some had expected the Fed to shift buying towards longer-term maturities.
The vote for the policy statement was unanimous.
|Upcoming Meeting Schedule||January 27 | March 17* | April 28 | June 16*
*Indicates the meeting is associated with a summary of economic projections. In addition, every meeting will be accompanied by a press conference.
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