According to the Federal Open Market Committee’s July meeting statement, the Federal Reserve 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 continues to be due to transitory factors and is temporary.
The Fed is committed to fully supporting the economy and working towards its goals of maximum employment and price stability during the COVID-19 pandemic. The FOMC will continue monitoring public health, labor market conditions, inflation, and financial and international developments.
What does that mean for you? Let’s rewind.
July 2021 FOMC Rewind
Quick explainer for the July FOMC decision (video, 1:11 minutes)
Transcript
Sean: Hey Lily, any Fed news?
Lily: They’re keeping interest rates close to 0% to help the economy bounce back from COVID.
Sean: Nice!
Lily: Yeah, things are getting better with more people getting vaccinated.
Sean: Giving the economy a shot in the arm!
Lily: I know, right? People want to feel safer so they can go out again.
Sean: Speaking of going out, have you noticed prices going up?
Lily: Yeah, some of that is because companies are running behind to meet demand—when supplies are short, prices go up. But the Fed said it’s temporary.
Sean: Why’s that?
Lily: Once businesses catch up, price increases should slow.
Sean: Ohhh got it. Will it help to hire more people?
Lily: Yeah, that should help them catch up. And since so many people lost jobs last year, they need to hire a lot more to get back to where we were.
Sean: Like how many?
Lily: Like millions—tons of people are still out of work. And it’s important to make sure communities that were hurt most don’t get left behind
Sean: For sure—I totally hear that! Thx for the update.
Lily: 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.