US Federal Reserve officials broadly agreed that the Fed’s easy monetary policy will remain in place for some time, according to the minutes of the Fed’s recent policy meeting released.
“Participants noted that economic conditions were currently far from the Committee’s longer-run goals and that the stance for policy would need to remain accommodative until those goals were achieved,” the Fed said in the minutes of its January 26-27 meeting on Wednesday, referring to the Fed’s policy-making committee, Xinhua news agency reported.
“Various participants noted the importance of the Committee clearly communicating its assessment of progress toward its longer-run goals well in advance of the time when it could be judged substantial enough to warrant a change in the pace of purchases,” the minutes said, adding it was “likely to take some time” for substantial further progress to be achieved.
The minutes also noted that the Covid-19 pandemic continued to “pose considerable risks” to US economic outlook, including risks associated with new virus strains, and potential difficulties in the production and distribution of vaccines.
“(The) committee clearly went out of its way to damp talk of tapering. It’s not going to happen this year,” Joseph Brusuelas, chief economist at accounting and consulting firm RSM US LLP, tweeted after the release of the minutes.
Last week, Fed Chair Jerome Powell stressed the importance of maintaining “a patiently accommodative monetary policy stance,” pushing back market speculation that the Fed could taper asset purchases as soon as this year.
“Despite the surprising speed of recovery early on, we are still very far from a strong labor market whose benefits are broadly shared,” Powell said in prepared remarks delivered to The Economic Club of New York via webcast.
The Fed cut interest rates to near zero at two unscheduled meetings in March 2020 and began purchasing massive quantities of US treasuries and agency mortgage-backed securities to repair financial markets.
Fed officials agreed last month to continue its asset purchase program at least at the current pace of $120 billion per month until it sees “substantial further progress” in employment and inflation.