FOMC Statement for April – MarketWatch

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The Federal Reserve is committed to using its full range of tools to support the US economy at this challenging time, thereby promoting its maximum goals for employment and price stability. The COVID-19 pandemic is causing enormous human and economic hardship in the United States and around the world. Amid advances in vaccination and strong political support, economic activity and employment indicators have strengthened. The sectors most affected by the pandemic remain weak, but have improved. Inflation has risen, due in large part to transitory factors.

Overall financial conditions remain accommodative, partly reflecting policy measures to support the economy and the flow of credit to US households and businesses. The path of the economy will depend significantly on the course of the virus, including progress on vaccines. The current public health crisis continues to weigh on the economy and risks to the economic outlook persist. The Committee seeks to achieve maximum employment and inflation at a rate of 2 percent in the long term. With inflation persistently below this long-term target, the Committee will try to achieve inflation moderately above 2 percent for some time, with inflation averaging 2 percent over time and inflation expectations in the longer term they remain firmly anchored at 2 percent. The Committee hopes to maintain an accommodative monetary policy stance until these results are achieved. The Committee decided to keep the target range for the federal funds rate from 0 to 1/4 percent and hopes that it is appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s evaluations of maximum employment and inflation has increased. 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $ 80 billion per month and of agency mortgage-backed securities by at least $ 40 billion per month until substantial progress has been made towards the maximum. price stability and employment of the Committee. goals. These asset purchases help promote smooth market performance and accommodative financial conditions, supporting the flow of credit to households and businesses. In evaluating the appropriate monetary policy stance, the Committee will continue to monitor the implications of the incoming information for the economic outlook. The Committee would be willing to adjust the monetary policy stance as appropriate if risks arise that could impede the achievement of the Committee’s goals. The Committee’s evaluations will take into account a wide range of information, including readings on public health, labor market conditions, inflationary pressures and inflation expectations, and financial and international developments. The voters in favor of the monetary policy action were Jerome H. Powell, president; John C. Williams, vice president; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller. *** Decisions on the implementation of monetary policy The Federal Reserve has made the following decisions to implement the monetary policy stance announced by the Federal Open Market Committee in its statement of April 28, 2021: • The Board of Governors of the Federal Reserve System voted unanimously to keep the interest rate paid on required and excess reserve balances at 0.10 percent, effective April 29, 2021. • As part of its policy decision , the Federal Open Market Committee voted to authorize and direct the Open Market Board of the Federal Reserve Bank of New York. , until instructed otherwise, execute transactions in the System’s Open Market Account in accordance with the following national policy directive: “As of April 29, 2021, the Federal Open Market Committee instructs the Office to : • Undertake open market operations as necessary to keep the fund rate in a target range of 0 to 1/4 percent. • Increase holdings of Treasury securities of the System’s Open Market Account by $ 80 billion per month and of agency mortgage-backed securities (MBS) by $ 40 billion per month. • Increase holdings of agency Treasury and MBS securities by additional amounts and purchase commercial mortgage-backed securities (CMBS) from agencies as necessary to keep the markets for these securities functioning smoothly. • Carry out repurchase agreements to support the effective implementation of policies and the proper functioning of the short-term financing markets in US dollars. • Carry out next-day reverse repurchase agreements at an offer rate of 0.00 percent and with a counterparty limit of $ 80 billion per day; the limit per counterparty may be temporarily increased at the discretion of the President. • Reinvest all principal payments on Federal Reserve Treasury securities holdings at auction and reinvest all principal payments on Federal Reserve agency debt and agency MBS holdings in AgencyMBS. • Allow small deviations from established amounts for purchases and reinvestments, if necessary for operational reasons. • Participate in dollar renewal and coupon exchange transactions as necessary to facilitate the settlement of MBS transactions of the Federal Reserve agency ”. • In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 0.25 percent. This information will be updated as appropriate to reflect the decisions of the Federal Open Market Committee or the Board of Governors regarding the details. This information will be updated as appropriate to reflect the decisions of the Federal Open Market Committee or the Board of Governors regarding the details of the Federal Reserve’s operating tools and the approach used to implement monetary policy. You can find more information about open market operations and reinvestments on the Federal Reserve Bank of New York website.