Wednesday, January 27, 2021

BREAKING: Fed Holds Interest Rates Steady

As expected, the Federal Reserve Board at its just-ended two-day monetary policy committee meeting has decided to maintain the interest rates it controls at current levels.

The current Board directed rate for Fed funds is the target range of 0.0% and 0.25%.

Here is a look at the Effective Fed Funds rate over time:

Click for larger view.

This is a developing story return to this post for updates.


This from the Fed statement which indicates the Federal Reserve continues to plan to allow price inflation to run "hot":

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. 

In other words, the Fed has no idea of how quickly price inflation can get away from them. In the EPJ Daily Alert, I am advising that the Fed by the end of 2021 might have to raise rates to the 5.0% range to successfully battle oncoming inflation and they are not going to do that.


The continuation of the current reckless mad money printing was approved by all voting members of the Federal Reserve Open Market Committee: 

The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 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 further progress has been made toward the Committee's maximum employment and price stability goals...

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; 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.


1 comment:

  1. The title of this post made me laugh just a little. With most stories, the headline: "BREAKING NEWS: Nothing happened" wouldn't inspire much interest. The Fed is a different animal altogether