Time.news – The Fed is “ready to adjust the monetary policy stance should risks arise that could hinder the achievement of the objectives” of inflation. This is what we read in the minutes on the meeting of 16-17 March last.
The rapid pace of the vaccination campaign in the US is driving greater optimism and confidence in the economic recovery, but uncertainties remain high on the outlook linked to the variants of the virus.
FOMC members noted “that the pace of economic recovery has increased recently and the economy has continued to show resilience in the face of the pandemic ” and noted “encouraging developments” with a significant decline in the number of new infections as well as an increase in the pace of vaccinations. The board agreed that the path of the economy will significantly depend on the course of the virus, including progress
on vaccinations.
In light of these developments and the extent of recent support from fiscal policy, growth estimates have been revised upwards. Not only that, but the unemployment rate, the central bank predicts, will return to below all-time lows. In March, the growth estimates for the US economy had been revised upwards, ie to 6.5% in 2021 and 3.3% in 2022. In December, the Fed had forecast a GDP increase of 4.2. %.
Finally, inflation, after this year’s transitional increase, is expected to remain slightly below 2% again next year and then reach 2% by 2023.
After the release of the minutes, the Wall Street indices improved slightly but the reaction was contained because the minutes did not offer indications on possible restrictive turns but rather suggested that the current monetary policy is destined to persist. Wall Street closed weakly after the release of the minutes of the Federal Reserve which do not portend a change of course in monetary policy. The American stock market opened little move and immediately after the publication of the Fed minutes the indices rose but then the Dow Jones ended the session at 33,447.81 points with + 0.05%, the Nasdaq fell by 0.07% at 13,688.78 points and the S&P gained 0.15% to 4,080.0 points.
The central bank said that, while showing signs of progress, the economic recovery remains far from complete. The rapid pace of the vaccination campaign in the US pushes for greater optimism and confidence in the economic recovery, but the outlook remains high uncertainties linked to the variants of the virus. For the Fed, substantial progress on maximum employment targets and stable prices will likely take “some time”.