March 22, 2021 — The Fed is Committed to Hold Interest Rates at Zero

MARCH 22, 2021 – THE FED IS COMMITTED TO HOLD INTEREST RATES AT ZERO

Last Wednesday the Federal Reserve held their regularly scheduled two-day policy meeting. They said they do not anticipate any interest rate hikes through 2023, and it will let inflation run higher than usual to ensure a full economic recovery. The central bank upgraded their economic outlook to reflect expectations for a stronger recovery from the pandemic triggered recession.  The GDP is expected to grow 6.5 percent in 2021; the fastest since 1983 and up from a December forecast of 4.2 percent; before cooling in 2022. Expectations for core inflation also moved higher, with the committee looking for 2.2 percent gain this year as measured by PCE.  Before considering changes in its easy money policy, the Fed will need to see sustained and a material move in inflation above the 2 percent level. 

“We do expect that we’ll begin to make faster progress on both labor markets and inflation as the year goes on because of progress with vaccines, because of fiscal support were getting.  We expect that to happen, but we need to see it first,” said Fed Chairman Jerome Powell.

Leave a Reply

Your email address will not be published. Required fields are marked *