Minutes of the Federal Reserve of the March meeting

Federal Reserve officials said at their last meeting that the pace of asset purchases is unlikely to change any time soon as the central bank pursues its economic goals.

On Wednesday, the Federal Open Market Committee released minutes of the March 16-17 meeting as investors looked for clues as to where the policy might be headed in the future.

The summary of the meeting indicated that while officials saw the economy gaining substantially, they see that much more progress is needed before extremely easy policy changes are made.

Members said the $ 120 billion a month in bond purchases “provided substantial support to the economy.”

“Participants noted that it would probably take some time for substantial progress to be made towards the Committee’s maximum employment and price stability targets and that, in accordance with the Committee’s results-based guidelines, asset purchases they would continue at least at the current pace until then. “

Adherence to the “results-based guidelines” is the commitment the Fed will wait until the economy shows “substantial progress” toward the two targets of full employment and inflation hovering around 2%.

The orientation is a policy change for the Fed, in which it would previously adjust policy in anticipation of inflation. The minutes said members agreed that policy changes “should be based primarily on observed outcomes rather than forecasts.”

At the meeting, the Fed’s political arm voted to keep short-term lending rates anchored close to zero and continue to buy at least $ 120 billion in bonds each month.

In addition, the committee raised its prospects for economic growth and inflation. The median outlook for GDP in 2021 stood at 6.5%, a big improvement over the 4.2% expectation for December.

Officials also indicated that the unemployment rate could fall to 4.5% by the end of the year and that inflation could reach 2.2%, slightly above the Fed’s traditional 2% target .

Although inflation appears 64 times in the minutes, Fed officials expressed little concern that it could become a problem soon. A notion in the minutes said inflation forecasts were accurate around where FOMC members expected.

During a meeting with the media a few hours before the minutes were released, Chicago Fed Chairman Charles Evans said it would take “months and months” to raise inflation “even, even I will not have an opinion on whether this is sustainable or not. “

Ahead of the March FOMC meeting, some market experts had hoped the Fed could at least alter the duration of the bonds it has been buying to curb a sharp rise this year in longer Treasury yields.

However, President Jerome Powell and other central bank leaders have said they see the rate hike as a reflection of stronger growth expectations than uncomfortable inflationary pressure.

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