Federal Reserve maintains target range for federal funds rate

January 27, 2021

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals. Though the COVID-19 pandemic continues to cause tremendous hardship globally, economic activities and employment have moderated in recent months. The fall in demand and previous decline in oil prices continues to hold down consumer inflation, additionally overall financial conditions remain accommodative partly attributable to the support of policy measures to support the economy and the flow of credit to U.S. households and businesses.

The Federal Reserve cites, “The future of the economy will depend significantly on the course of the virus, including progress on vaccinations.” The Committee seeks to maintain employment and inflation at the rate of 2 percent over the longer run and plans to maintain an accommodative stance of the monetary policy until these goals are achieved. According to the Federal Reserve, “The committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labour market conditions have reached levels consistent with the Committee’s assessments.”

Furthermore, the Federal Reserve will continuously increase its holdings of Treasury securities and agency mortgage-backed securities over coming months to foster smooth market functioning and accommodative financial conditions, to support the flow of credit to households and businesses. The Committee will continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy if necessary.


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