Federal Reserve Chair Jerome Powell said the economic recovery has not improved enough to start scaling back on the economic support, while cautioning that inflation will remain high in upcoming months.
- In the first half of 2021, the ongoing vaccinations helped with the reopening of the economy and improved economic growth, backed by accommodative fiscal and monetary policy.
- Inflation increased significantly and is likely to remain high in coming months before moderating. Prices for services have also jumped in recent months as demand for services increased.
- FOMC’s monetary policy framework seeks to set the long-term inflation expectations at 2% to avoid prolonged periods of unusually high inflation rates.
- The Federal Reserve will maintain the current monetary policy, keeping federal funds rate close to zero and maintaining the pace of asset purchases.
The monetary policies alongside strong guidance on interest rates will provide support to the economy until the recovery is complete.
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Source: Federal Reserve.