Federal Reserve maintains target range for federal funds rate

June 16, 2021

The Federal Reserve stated that it is committed to using its entire set of tools to assist the United States economy through this difficult period while supporting its maximum employment and price stability targets. Vaccination progress has slowed the spread of COVID-19 in the United States. Against the backdrop of this development and robust policy backing, measures of economic activity and employment have improved. The sectors most harmed by the virus are still weak, but they are improving. Inflation has risen, owing primarily to temporary factors. Furthermore, overall financial conditions remain accommodating, which is due in part to the support of policy measures to stimulate the economy and the supply of credit to US families and businesses.

The Federal Reserve cites, “the path of the economy will depend significantly on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.” The Committee’s long-term aim is to maintain employment and inflation at 2%, and it aims to keep monetary policy accommodative until these goals are reached. 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 labor market conditions have reached levels consistent with the Committee’s assessments.”

Furthermore, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion a month and agency mortgage-backed securities by at least $40 billion per month unless significant additional progress is made toward the Committee’s maximum employment and price stability goals. Furthermore, these asset purchases promote smooth market functioning and accommodative financial conditions, thus facilitating 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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