What You Need to Know About Fed Chair Powell’s Latest Statements

The U.S. Federal Reserve chose to keep policy rates unchanged in its meeting this week but noted that economic activity is growing, according to CNBC.

• Chair Jerome Powell said the Fed will wait for inflation to rise to the 2% target before reconsidering the target range of 0 to 0.25%, which remains “appropriate.”
• It will take some time for inflation to move up persistently, as this would need “strong labor markets” for this to happen.
• Inflation is unlikely to accelerate while there is a “significant slack” in the labor market.
• The Fed will lower its $120 billion bond-buying program before it starts raising interest rates.
• The accommodative policy stance will be maintained as the economy is a “long way” from the Fed’s goals.
• There is no rush for a central bank digital currency, as it is more important to do it right than fast.
• Capital markets are a “bit frothy” given vaccination efforts against COVID-19 and the reopening of the economy. Some prices are also high.