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Economy in Brief

FOMC Holds Funds Rate Near Zero; Upgrades Growth Projection for 2021
by Tom Moeller  March 17, 2021

The Federal Reserve left the target for the Fed funds rate in a range of 0.00% to 0.25% at today's meeting of the FOMC. The Fed continued to assert, "The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world."

The Fed indicated again that, "The path of the economy will depend significantly on the course of the virus including progress on vaccinations. The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook."

The statement went on to say that "economic activity and employment have turned up, although the sectors most adversely affected by the pandemic remain weak." With that said, the Fed lifted its projected GDP growth this year to 6.5% from 4.2% and lowered the projected rate of unemployment at year-end to 4.5% from 5.0%.

As stated at the last meeting, it will "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."

The statement issued following today's meeting can be found here.

Today's action was supported by all Committee members.

Current Last 2020 2019 2018 2017
Federal Funds Rate Target 0.0% - 0.25% 0.0% - 0.25% 0.38% 2.17% 1.82% 1.00%

At today's meeting, the Fed updated its economic projections. The notable changes were, for 2021, more growth and more price inflation than previously expected.


2020 2021 2022 2023
Real GDP (Q4/Q4) -2.4% 6.5% (previously 4.2%) 3.3% (previously 3.2%) 2.2% (previously 2.4%)
PCE Inflation (Q4/Q4) 1.2% 2.4% (previously 1.8%) 2.0% (previously 1.9%) 2.1% (previously 2.0%)
Core PCE Inflation (Q4/Q4) 1.4% 2.2% (previously 1.8%) 2.0% (previously 1.9%) 2.1% (previously 2.0%)
Unemployment Rate (year-end) 6.7% 4.5% (previously 5.0%) 3.9% (previously 4.2%) 3.5% (previously 3.7%)
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