Highlights of the Federal Reserve statement on April 28, 2021:
- Previous statement (March 17)
- Fed funds rate unchanged at 0.00% to 0.25% as universally expected
- “Amid progress on vaccinations and strong policy support, indicators of economic activity ad employment have strengthened”
- Inflation rise largely reflects transitory factors
- The sectors most adversely affected by the pandemic remain weak but have shown improvement
- The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain
- Repeats guidance that “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”
- QE will continue at $120B monthly pace
- Repeats that “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”
All the guidance is word-for-word from the prior statement. The only changes are in the economic outlook and on that front it’s not as strong as it could have been. There is very little to digest here.
The main change is that “indicators of economic activity and employment have strengthened” from “indicators of economic activity and employment have turned up recently.” That’s hardly a worrisome change.
Powell will begin his press conference at 1830 GMT (2:30 pm ET).