Federal Reserve Keeps Interest Rates near zero, Anticipates Faster Growth and Higher Inflation


The Federal Reserve on Wednesday made no changes in its easy money policy, although it acknowledged that an economy is showing signs of inflation.

The U.S central bank kept interest rates near zero, and it is continuing to buy $120 billion of bonds every month.

Despite noting the economic strength and rising inflation, the Federal Open Market Committee unanimously agreed to make no changes in its policy approach. It gave no signs that things will change anytime soon.

Fed Chairman Jerome Powell expressed that the recovery from the pandemic is uneven and still far from complete. Jerome said, “Inflation pressures will rise in the next few months, but increase in prices likely to only have transitory effects on inflation.”

He added, “It’s still not time to talk about reducing policy accommodation, including the asset purchases. It will take some time before we see substantial further progress.”

The committee expressed, “Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.”

The committee also expressed that economic progress is highly dependent on the situation of the pandemic.

Markets currently are growing with 2.5% inflation; the inflation level was less than 0.8% a year ago.

The Federal Reserve is committed to allowing inflation to run quite more than its traditional 2% goal, as it is pursuing full and inclusive employment.

U.S. stock futures were mixed on Thursday morning after the Fed Reserve concluded its two-day meeting by making no move on asset purchases and holding interest rates on near zero.


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