WASHINGTON–As expected, the Federal Open Market Committee (FOMC) has adjourned its June meeting by leaving rates unchanged.
As a result, the Fed has kept the target range for the federal funds rate at 0%-.25%, which a target range it said it expects will be appropriate until labor market conditions have reached levels consistent with the FOMC’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.
It is the question of where inflation is headed that has had some analysts predicting the Fed may move faster than it has previously indicated and raise rates. Fed officials have stated in the past they do not expect to move on rates until at least 2022, at the earliest. A "dot plot" showing FOMC members' forecasts is shown below.
“Progress on vaccinations has reduced the spread of COVID-19 in the United States,” the FOMC said following its meeting. “Amid this progress and strong policy support, 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 path of the economy will depend significantly on the course of the virus,” the Fed statement continued. “Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.”
Treasury Holdings
In addition, the Federal Reserve said it 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 further progress has been made toward the FOMC’s maximum employment and price stability goals.
“These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses,” the Fed said.
The FOMC released a number of tables and charts following its meetings that summarize the economic projections made. Those can be found here.