The Federal Reserve, as expected, left the target for the Fed funds rate in a range of 0.0% to 0.25% at today's meeting of the FOMC. The statement accompanying the meeting indicated, "With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen." The basis for this statement is GDP growth of 4.3% in Q4'20 and 6.4% in Q1'21. Growth of 8.5% is widely expected for Q2'21.

Suggesting room for further economic improvement, it was reiterated, "The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered."

The Fed sees little upward pressure on inflation. "Inflation has risen, largely reflecting transitory factors." At the last meeting, the Fed raised its expectation for PCE price inflation this year to 3.4% from 2.4% projected earlier. Its expectation for next year was roughly unchanged at 2.1%.

As indicated at the last meeting, the Fed 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.