The post-meeting statement labeled the current state of growth as better than it was at the trough but still not up to par. “Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year,” the statement said. “Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”
Markets reacted little to the news, with stocks mostly holding earlier gains and government bond yields mixed. Officially, the FOMC kept its rate targeted in a range between 0%-0.25%, where it last was during the Great Recession. The statement said the rate would stay there until officials are “confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”
However, the committee did not provide any further indications of what it would take to change rates. Markets have been looking for enhanced “forward guidance” to indicate what unemployment and inflation metrics might trigger a change. Wall Street anticipates no changes and even is pricing in a chance of slightly negative rates ahead.
The move to keep the programs online, despite relatively low market demand, “is clearly reflective of the Committee’s deep commitment to recovering the hard won gains in jobs and growth, which the pandemic has since stripped away,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.