As the country begins to reopen and recover from the COVID-19 pandemic, the Federal Reserve is committed to fully supporting the economy and working towards its goals of maximum employment and price stability.
According to the Federal Open Market Committee’s June meeting statement, the Fed will continue to help support the flow of credit to households and businesses by keeping interest rates near zero and expanding purchases of U.S. Treasury and mortgage-backed securities.
The statement also noted that the rise in inflation is temporary, due to transitory factors. What does that mean for you? Let’s rewind.
June 2021 FOMC Rewind
Quick explainer for the June FOMC decision (video, 1:20 minutes)
Transcript
Ellen: I noticed the Fed is trending – what’s up with that?
Renuka: They kept interest rates low, around 0%
Ellen: What does that do?
Renuka: It supports the economy as businesses start to reopen
Ellen: That’s good news!
Renuka: Yeah, they see things are getting better. And they said a lot of that is because people are getting COVID vaccines
Ellen: I just got mine!
Renuka: I did too! I’m ready to celebrate!
Ellen: I heard something about rising prices, though. Is that bad?
Renuka: Oh right, the Fed said the inflation increase we’re seeing is temporary. It partly has to do with the drop in prices last year, when people weren’t spending much. And with everybody rushing out to spend now, businesses are having trouble keeping up
Ellen: Will that last?
Renuka No, once businesses catch up, the price increases should go away
Ellen: When will that be?
Renuka: Hard to say, it could take a bit longer to return to normal
Ellen: Okay. In the meantime, wanna grab food?
Renuka: Sounds great—my treat!
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The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.