US Federal Reserve officials on Wednesday voted to keep monetary conditions at historically loose levels while waiting for the economy to recover.
Chairman Jerome Powell said he did not want to set a timeline for reducing the US Federal Reserve’s monthly asset purchases by $ 120 billion.
“It’s just premature in terms of taper,” Powell said. “We said we would like to see significant further progress toward our goals before we change our asset buying guidelines.” It’s just too early to talk about dates. We have to see the real progress. ”
A bit of inflation in 2021 would be welcome news for the Federal Reserve if it means fewer permanent jobs are lost, Powell added.
“I’m much more concerned that I haven’t fully recovered and lost the careers and lives of the people who built them because they couldn’t get back to work on time,” Powell said. “I’m much more concerned about that than about the possibility of higher inflation … Frankly, we’d appreciate higher inflation.”
This could be welcome news for the true believers in Bitcoin.
The Federal Open Market Committee (FOMC) will keep the target rate for federal funds in a range of 0% to 0.25%, and the Fed plans to continue adding $ 80 billion in US Treasuries and $ 80 billion in mortgage-backed securities each month $ 40 billion to buy.
The committee noted that “the pace of economic recovery and employment has slowed in recent months” but that it would continue accommodative monetary policy until inflation averages 2% over time.
The market didn’t budge on the news. The S&P 500 has been on a steady downtrend for most of the day, down more than 2%. Bitcoin has only increased 1% since Powell’s comments.
“With inflation persistently below 2%, we want it to have been moderately above 2% for some time,” said Powell. “We have not adopted a formula, we will not adopt a formula. … We will keep an element of judgment.”
The only time Bitcoin surfaced during the meeting was a question from CNBC’s senior economic reporter Steve Liesman, who asked the chairman whether low interest rates would drive asset prices up and create a bubble that could have economic repercussions. Powell responded by saying that “the overall weaknesses in terms of financial stability are moderate”.