Federal Reserve officials said Wednesday they would hold U.S. interest rates at close to zero and work to push inflation above 2% âfor some time.â
- Federal Open Market Committee keeps interest rates unchanged close to zero, according to its statement.
- Panel agrees to maintain accommodative monetary policy until inflation climbs above 2% âfor some time.â
- The central bank will increase holdings of U.S. Treasury securities and mortgage-backed securities âat least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions.â
- Projection materials released with the statement show officials, on average, expect rates to remain close to zero through 2023.
- On average, officials donât expect 2% inflation until 2023.
- Robert Kaplan, president of the Federal Reserve Bank of Dallas and a voting member of the panel, voted against the plan. He âprefers that the Committee retain greater policy rate flexibility.â
- Neal Kashkari, president of the Federal Reserve Bank of Minneapolis, also cast a dissenting vote. He prefers that interest rates stay on hold âuntil core inflation has reached 2% on a sustained basis,â according to the statement.
- Economists weren’t expecting Fed officials to make any changes to U.S. interest rates â which in March were cut close to zero on an emergency basis â as the devastating economic toll of the coronavirus started to become clear.
- Last month, Fed Chair Jerome Powell said in a speech that officials plan to let inflation rise above 2% and stay there for a while to keep borrowing conditions easy for a longer time and allow the economy to heal.
- âThe Fed kind of kicked the door open at their last meeting by indicating a more aggressive approach to inflation,â Mati Greenspan, founder of the cryptocurrency and foreign-exchange firm Quantum Economics, told subscribers in an email on Tuesday, a day before the Fed announcement. âOf course, now that they have everyoneâs attention, followup will be critical.â
- Bitcoinâs price was trading at around $11,022.90 at press time, up 2.4% in the past 24 hours. The price moved temporarily to $11,071.33 right after the Fedâs release.
- The S&P 500 Index was up 0.35%.
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