Updated: Sep 27, 2021
FED in Review
On Wednesday, the Fed left the federal funds rate unchanged at 0-0.25%. Monetary policy remains accommodative with $80bn/month in treasury and $40bn/month in MBS purchases. While the environment will stay accommodative until “substantial further progress has been made toward maximum employment and price stability”, the Fed acknowledges that “the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings.” The most adversely affected parts of the economy “have not fully recovered” (instead of “remain weak” — language from the prior policy meeting.) The Fed’s stance on the economy “continues to depend” - “will depend significantly” at the prior meeting - on the path of the virus. The central bank maintains its 2% average inflation goal, which means the committee is willing to see some above-average inflation figures “for some time” and continue an “accommodative stance”.