JAKARTA (TheInsiderStories) – Federal Meeting Open Committee (FOMC) maintained the Fed Funds Rate (FFR) near to zero percent in their latest meeting, showed the minutes released on Feb. 17. In their discussion, the policymakers agreed that the COVID-19 pandemic was causing tremendous human and economic hardship across the United States (US) and around the world.
They noted that the pace of recovery in economic activity and employment had moderated in recent months, with weakness concentrated in sectors most adversely affected by the pandemic. Weaker demand and earlier declines in oil prices had been holding down consumer price inflation.
“Overall financial conditions remained accommodative, in part reflecting policy measures to support the economy and the flow of credit to US households and businesses. Members also stated that the path of the economy would depend significantly on the course of the virus, including progress on vaccinations,” wrote the statement.
In addition, the policymakers agreed that the ongoing public health crisis had continued to weigh on economic activity, employment, and inflation and was posing considerable risks to the economic outlook. They agreed that the pandemic continued to pose considerable risks to the outlook.
Nonetheless, in light of the expected progress on vaccinations and the change in the outlook for fiscal policy, the medium-term prospects for the economy had improved enough that members decided that the reference in previous post-meeting statements to risks to the economic outlook over the medium term was no longer warranted.
The policymakers agreed that the Fed was committed to using its full range of tools to support the US economy in this challenging time, thereby promoting its maximum-employment and price-stability goals. They reaffirmed to achieve maximum employment and inflation at the rate of 2 percent over the longer run.
And with inflation running persistently below this longer-run goal, they would aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The FOMC expected to maintain an accommodative stance of monetary policy until those outcomes were achieved.
In addition, the board agreed that it would be appropriate for the Fed to continue to increase its holdings of Treasury securities by at least US$80 billion per month and agency mortgage-backed securities by at least $40 billion per month until substantial further progress had been made toward the maximum-employment and price-stability goals.
These asset purchases would help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses, they adds. The policymakers agreed that, in assessing the appropriate stance of the policy, they would continue to monitor the implications of incoming information for the economic outlook and that they would be prepared to adjust the stance of monetary policy as appropriate in the event that risks emerged that could impede the attainment of the goals.
They also agreed that, in assessing the appropriate stance of monetary policy, they would take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
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