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Economy in Brief

FOMC Holds Interest Rates Steady and Plans to Reduce Securities Purchases
by Tom Moeller  November 3, 2021

At today's meeting of the Federal Open Market Committee (FOMC) the federal funds rate target was held in a range of 0.0% to 0.25%, where it has been since March 2020.

The Fed stated again, "With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen."

Concern regarding price inflation continued to be expressed. "Inflation is elevated, largely reflecting factors that are expected to be transitory. Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors."

A resolve to maintain an accommodative policy posture was expressed. "With inflation having run 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."

The Fed plans to pare back the degree of liquidity it has been providing. "In light of the substantial further progress the economy has made toward the Committee's goals since last December, the Committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities." The Fed further indicated that similar reductions in the pace of net purchases "will likely be appropriate each month, if warranted by changes in the economic outlook."

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

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%
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