March 17, 2021
January 27, 2021
Jerome H. Powell
March 17, 2021 FOMC Statement
FOMC statement
Federal Reserve issues FOMC statement
For release at 2:00 p.m. EST EDT
The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.
The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. The Following a moderation in the pace of the recovery in recovery, indicators of economic activity and employment has moderated in recent months, with weakness concentrated in have turned up recently, although the sectors most adversely affected by the pandemic. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. pandemic remain weak. Inflation continues to run below 2 percent. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.
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 Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running 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 Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to 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. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.
In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.
Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.
Implementation Note issued January 27, March 17, 2021
Our summary
What changed
- The FOMC upgraded its economic assessment, noting that indicators of economic activity and employment have turned up recently after a moderation in the recovery pace, while the most affected sectors remain weak.
- The statement removed language attributing low inflation to weaker demand and earlier oil price declines, instead simply stating that inflation continues to run below 2 percent.
- The federal funds rate target range remains at 0 to 1/4 percent, with the same forward guidance on maintaining the range until maximum employment and inflation goals are met.
- Asset purchases continue at the same pace—at least $80 billion per month in Treasuries and $40 billion in agency mortgage-backed securities—until substantial further progress is made.
- The vote was unanimous, with the same 11 members voting for the action as in the previous statement.
Implications
The upgraded language on activity and employment suggests the FOMC sees the economy improving, but the continued emphasis on weak sectors and below-2 percent inflation indicates no near-term shift in policy stance.
By dropping the oil price reference, the FOMC may be signaling that inflation dynamics are less tied to transitory factors, keeping the focus on achieving its goals before any tightening.
The unchanged forward guidance and asset purchase language imply the FOMC is maintaining its patient approach, with markets likely to interpret the statement as a modestly more optimistic but still accommodative stance.
Summary generated automatically from the statements. Not investment advice.
Projections
| 2021 | 2022 | 2023 | Longer run | |
|---|---|---|---|---|
| Real GDP growth | 6.5 was 4.2 | 3.3 was 3.2 | 2.2 was 2.4 | 1.8 |
| Unemployment rate | 4.5 was 5.0 | 3.9 was 4.2 | 3.5 was 3.7 | 4.0 was 4.1 |
| PCE inflation | 2.4 was 1.8 | 2.0 was 1.9 | 2.1 was 2.0 | 2.0 |
| Core PCE inflation | 2.2 was 1.8 | 2.0 was 1.9 | 2.1 was 2.0 | |
| Federal funds rate | 0.1 | 0.1 | 0.1 | 2.5 |
Median projections of FOMC participants; previous: December.
Each dot is one participant's projection of the federal funds rate (%) at the end of each year and in the longer run.
March December median December median
Scroll the chart sideways for the later years.
Implementation Note
The settings that put the decision into effect: the interest rate paid on reserves, the FOMC's instructions to the New York Fed's trading desk, and the discount rate. Changes are marked the same way as in the statement.
- The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on required and excess reserve balances at 0.10 percent, effective
January 28,March 18, 2021. - As part of its policy decision, the Federal Open Market Committee voted to authorize and direct the Open Market Desk at the Federal Reserve Bank of New York, until instructed otherwise, to execute transactions in the System Open Market Account in accordance with the following domestic policy directive: "Effective
January 28,March 18, 2021, the Federal Open Market Committee directs the Desk to: - Undertake open market operations as necessary to maintain the federal funds rate in a target range of 0 to 1/4 percent.
- Increase the System Open Market Account holdings of Treasury securities by $80 billion per month and of agency mortgage-backed securities (MBS) by $40 billion per month.
- Increase holdings of Treasury securities and agency MBS by additional amounts and purchase agency commercial mortgage-backed securities (CMBS) as needed to sustain smooth functioning of markets for these securities.
- Conduct repurchase agreement operations to support effective policy implementation and the smooth functioning of short-term U.S. dollar funding markets.
- Conduct overnight reverse repurchase agreement operations at an offering rate of 0.00 percent and with a per-counterparty limit of
$30$80 billion per day; the per-counterparty limit can be temporarily increased at the discretion of the Chair. - Roll over at auction all principal payments from the Federal Reserve's holdings of Treasury securities and reinvest all principal payments from the Federal Reserve's holdings of agency debt and agency MBS in agency MBS.
- Allow modest deviations from stated amounts for purchases and reinvestments, if needed for operational reasons.
- Engage in dollar roll and coupon swap transactions as necessary to facilitate settlement of the Federal Reserve's agency MBS transactions."
- In a related action, the Board of Governors of the Federal Reserve System voted unanimously to approve the establishment of the primary credit rate at the existing level of 0.25 percent.
Press conference
March 17, 2021, 2:30 p.m. ET · Read the transcript
What Powell said that the statement didn't
- The chair noted that it has been a full year since the pandemic arrived with force on U.S. shores, and that Congress provided the fastest and largest fiscal response to any postwar economic downturn.
- The chair said that employment in the leisure and hospitality sector is more than 3 million below its level at the onset of the pandemic, and that overall employment is 9.5 million below its pre-pandemic level.
- The chair stated that a transitory rise in inflation above 2 percent, as seems likely to occur this year, would not meet the standard for raising interest rates, and that the Fed will wait to see actual data rather than forecasts before tapering asset purchases.
- The chair said that the Fed will have something to announce on the supplementary leverage ratio in coming days, but declined to elaborate on whether the leverage ratio poses problems for implementing monetary policy with large reserve supply.
Summary generated automatically from the transcript and the statement.