The Federal Open Market Committee has begun discussing its next steps as the U.S. economy continues to strengthen. In the September 2021 meeting statement, the Federal Reserve said that strong policy support and progress on vaccinations have benefited the economy, and the sectors most adversely affected by the pandemic have improved in recent months.
The path of the economy continues to depend on the course of the virus. If the economy’s progress continues broadly as expected, the Fed said that a moderation in the pace of asset purchases may soon be warranted.
The Committee kept the target range for short-term interest rates near zero and expects it will be appropriate to maintain this target until it meets the goals of maximum employment and price stability. The FOMC will continue to monitor implications of new information on the economy and adjust their stance on monetary policy should it be necessary.
What does this mean for you? Let’s rewind.
September 2021 FOMC Rewind
Quick explainer for the September 2021 FOMC decision (video, 1:13 minutes).
Transcript
Curtis: Olivia! Looks like the Fed popped up in my feed—what’s going on?
Olivia: Hey! Yeah, big change—the Fed said the economy has improved enough to talk about next steps
Curtis: What’s that about?
Olivia: At the start of the pandemic, the Fed dropped short-term interest rates and also began buying a lot of bonds. The bonds lowered long-term rates (like mortgage rates) further and helped families/businesses get the money they needed. This helped revive the economy after COVID slowed everything down.
So now the Fed is talking about winding down their bond buying aka “tapering”
Curtis: Ah, got it! So did they say when?
Olivia: Not yet, but they expect soon, if the economy keeps doing better. And they’re still holding their main interest rate at rock bottom to provide support for a while longer
Curtis: How long do they plan to do that?
Olivia: Until they basically meet their goals, especially for jobs
Curtis: What’s the goal for jobs?
Olivia: They want to get lots more people back to work—to make sure workers who were hurt most last year don’t get left behind
Curtis: Good to know—thx for the update!
Olivia: Any time!
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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.