Federal Reserve officials broadly agreed at their most recent policy meeting that very low interest rates and continued bond purchases will be necessa
Federal Reserve officials broadly agreed at their most recent policy meeting that very low interest rates and continued bond purchases will be necessary for the foreseeable future to aid the U.S. labor market’s recovery.
Minutes of the Fed’s Jan. 26-27 meeting, released Wednesday, showed policy makers expected that the federal stimulus package approved in December and progress toward widespread vaccination against Covid-19 would improve the outlook for the economy. While some officials believed inflation could pick up in coming months, they were skeptical that price pressures would be persistent enough to prompt tighter monetary policy.
Fed officials agreed at the meeting to hold interest rates near zero. They also elected to continue increasing the Fed’s holdings of Treasury bonds and mortgage-backed securities by at least $80 billion and $40 billion, respectively, a month.
The Fed’s policy statement released after the meeting noted that the recovery of the economy and labor market had softened amid a resurgence in Covid-19 cases. But Chairman Jerome Powell, at a news conference after the meeting, also pointed out that the economy had proven more resilient than expected, in part due to repeated injections of federal aid. The latest round, a $900 package signed into law in December, appeared to bolster policy makers’ hopes for the recovery.
“While we should not underestimate the challenges we currently face, several developments point to an improved outlook for later this year,” Mr. Powell said at the news conference.