Global| Mar 17 2021FOMC Holds Funds Rate Near Zero; Upgrades Growth Projection for 2021
by:Tom Moeller
|in:Economy in Brief
Summary
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 [...]
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%) |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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