Members of the Federal Open Market Committee confirmed at their latest meeting that the central bank will maintain a well-distributed policy in the future, according to the minutes of a meeting published Wednesday.
With the economy continuing to react to the Covid-19 pandemics, the committee, which sets monetary policy for the Federal Reserve, maintained an unchanged policy.
That meant keeping short-term loan rates close to zero and maintaining the minimum $ 120 billion of asset purchases per month.
In a discussion of Fed’s asset purchase program and interest rate policy, the minutes showed little opportunity for change anytime soon.
“Participants noted that the current economic climate was far from the Committee’s long-term goals and that the policy stance would need to remain in place until those goals were to be achieved,” As a result, all partners supported the maintenance of the Committee ‘s current position and outcome – based guidance for the level of federal assets and the pace of asset purchases. “
Entering the January 26-27 meeting, investors had been looking for a discussion about when the FOMC might start reducing the pace of bond purchases, or a quantitative rebate. The statement after the meeting made no mention of the talks, and Fed Chairman Jerome Powell later said the central bank would tend to maintain an appropriate policy.
Members noted that the QE program, which has brought the Fed ‘s balance sheet to nearly $ 7.5 trillion, “has significantly reduced financial conditions and significantly supported the economy.”
The talks stem amid concerns from central bank officials about recovery speed. A particular focus is on ‘broad and inclusive’ labor market revitalization, across lines of race, gender and income.
The statement after the meeting noted that the pace of economic activity and developments in the labor market “has been changing in recent months.” The minutes helped to increase Fed sentiment in that regard.
“With the economy still far from these goals, participants felt that it was likely that it would take some time to achieve further progress,” the summary said.
Since the meeting, Fed officials have been almost unanimous in saying they do not expect major policy changes until further progress is made toward the central bank’s improved goal for the labor market. Powell and others have insisted they will not start raising interest rates to stop inflation, but will wait for price pressures to emerge before tightening the policy.
“In terms of tapering, it’s just too early. We created the direction. We said we wanted to see another major improvement towards our goals before we changed our asset buying direction,” he said. Powell at his press conference after the meeting.
The minutes noted that asset prices are “rising” and said that vulnerability associated with home and business lending rates is “special.” Officials also said there are some liquidity transformation risks associated with some cash and open funds.