The Fed maintains its interest rates

U.S. – The Federal Reserve (Fed) committed to using its full range of tools to support the United States economy, in what it saw as a challenging time, thus promoting its maximum targets for employment and price stability.

The agency explained that with advances in vaccination and strong political support, economic activity and employment indicators have continued to strengthen. He also indicated that although the sectors most affected by the pandemic have improved in recent months, the increase in Covid-19 cases during the summer have slowed down their recovery.

The Fed affirmed that inflation has been high in recent months, 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 significant price increases in some sectors.

On the other hand, general financial conditions remain flexible, partly reflecting policy measures to support the economy and the flow of credit to US households and businesses.

Also informed that advances in vaccinations and the reduction of supply limitations are expected to support continued advances in economic activity and employment, as well as a reduction in inflation, however, he reiterated that risks persist for the economic outlook.

The Committee seeks to achieve maximum employment and inflation at a rate of 2 percent in the long term. Given that inflation has persistently remained below this target. In addition, it is expected to maintain an accommodative monetary policy stance until these results are achieved.

The Fed decided to keep the target range for the federal funds rate at 0 to 0.25 percent and hopes that it is appropriate to maintain this target range until labor market conditions have reached consistent levels.

Also reported that since last December, the Committee decided to start reducing the monthly rate of its net asset purchases by US$10 billion for Treasury securities and US$5 billion for agency mortgage-backed securities.

Starting later this month, the Committee will increase its holdings of Treasury securities by at least US$70 billion per month and of agency mortgage-backed securities by at least US$35 billion per month.

While starting in December, it will increase its holdings of Treasury securities by at least US$60 billion per month and of agency mortgage-backed securities by at least US$30 billion per month.

Ongoing purchases and holdings of securities by the Federal Reserve will continue to promote smooth market operation and accommodative financial conditions, supporting the flow of credit to households and businesses.

Source: MEXICO-NOW Staff