FOMC to Raise Federal Funds Rate ‘Soon’
The Federal Open Market Committee (FOMC) suggested increases in the federal funds rate could happen soon, confirming market expectations that a March rate increase is on the table, according to its post-meeting statement Wednesday.
“With inflation well above 2 per cent and a strong labour market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the committee said in the statement.
The FOMC maintained its pace of asset purchase tapering, which it still expects to be complete by early March, leaving open the possibility of a rate increase at the March 15-16 meeting.
“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 FOMC repeated, citing heightened COVID-19 cases and the possibility of new variants in the future that could impact growth.
There was no mention of how and when the FOMC intends to reduce the assets on its balance sheet so that markets will have to wait until Federal Reserve Chairman Jerome Powell’s press conference begins to see if more details will be provided.
There was no update to the Summary of Economic Projections at this meeting. #FOMC to Raise Federal Funds Rate ‘Soon’. Read: Dollar Trades Mixed Ahead of FOMC Meeting