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.