Fed Maintains Policy Stance in April FOMC Statement

The United States Federal Reserve on Wednesday decided to maintain its current monetary policy, with massive quantitative easing measurements to help the economy on the way to recovery from the coronavirus pandemic.

Interest rates remain near 0% at a historically low level, with a large asset purchase program that includes around $120 billion worth of bond buying every month.

Following a two-day meeting, the Federal Open Market Committee (FOMC) acknowledged the improving economic indicators with a recovery that remains uneven and far from complete, as well as the rise in inflation, which is expected to temporarily rise but is yet to achieve the sustainable 2% target.

FOMC members pointed to the progress on vaccinations and strong policy support, noting that “indicators of economic activity and employment have strengthened.”

“The sectors most adversely affected by the pandemic remain weak but have shown improvement.”

“Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”

The Fed still believes that the state of the economy remains linked to progress in the fight against to coronavirus pandemic, with a decline in new cases and wider vaccination expected to help improve the recovery.

“The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain.”

In a statement following the meeting, the Fed Chair Jerome Powell said that “it will take some time before we see substantial further progress.”

Powell said that “some of the asset prices are high. You are seeing things in the capital markets that are a bit frothy. That is a fact. I won’t say it has nothing to do with monetary policy, but it also tremendous amount to do with vaccination and reopening of the economy,”

“That’s really what has been moving markets a lot in the past few months, this turn away from what was a pretty dark winter to now a much faster vaccination process and a faster reopening, so that’s part of what is going on.”