The US Federal Reserve (Fed) said it 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% and is on track to moderately exceed 2 percent for some time.
Meanwhile, their quarterly projections showed that 13 of 18 officials favored at least one rate increase by the end of 2023, versus seven in March. 11 officials saw at least two hikes by the end of 2023, while seven saw a move as early as 2022, up from four.
“Inflation has risen, largely reflecting transitory factors,” they said.
“Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened,” the central bank said, adding that the sectors most adversely affected by the pandemic remain weak but have shown improvement.
According to them, the path of the economy will depend significantly on the course of the virus.
“Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,” the Fed said.
Also, the Fed added that it will continue to increase its holdings of Treasury securities by at least USD 80bn per month and of agency mortgage‑backed securities by at least USD 40bn per month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”
At 18:30 UTC, Chairman Jerome Powell will hold a press briefing, where he might provide more clues about the next steps of one of the most powerful central banks in the world.
Prior to the event, Mati Greenspan, Founder of Quantum Economics, opined that “it would seem that inaction from central bank officials could very well send bitcoin and other cryptocurrencies straight to the moon.” Meanwhile, hedge fund billionaire Paul Tudor Jones also said that if the Fed continues to talk down inflation and fails to take action, it will be “a green light to bet heavily on every inflation trade.”
Greenspan further noted that Jones “teas[ed] out” the (in)famous WallStreetBets subreddit group by “hinting that commodities would be a killer investment should the Fed allow inflation to run rampant.”
(This article is being constantly updated.)