FOMC Minutes: Economy Still Far From Targets

The latest meeting of the United States Federal Reserve saw members of the Federal Open Market Committee (FOMC) maintaining their commitment to the monetary easing policies.

The meeting minutes, which were released on Wednesday, showed commitment towards maintaining interest rates near 0%, as well as the current pace of the asset-purchasing program at $120 billion per month.

FOMC 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 meeting that was held on January 26-27 saw the FOMC deciding to maintain policies unchanged during the first meeting of 2021 as the economy showed some signs of recovery from the Coronavirus pandemic.

However, the minutes showed that the economy remains far from the Fed’s targets, despite that quantitative easing materially eased financial conditions and was providing substantial support to the economy.

“Participants noted that economic conditions were currently far from the Committee’s longer-run goals and that the stance for policy would need to remain accommodative until those goals were achieved,” the meeting summary said. “Consequently, all participants supported maintaining the Committee’s current settings and outcome-based guidance for the federal funds rate and the pace of asset purchases.”

“With the economy still far from those goals, participants judged that it was likely to take some time for substantial further progress to be achieved.”

The easing policies are expected to be maintained until the 2% target for the inflation rate and a return to full employment are achieved.

The FOMC is tolerating inflation moderately exceeding the 2% target for some time to reach the target on a sustainable basis.