The Federal Reserve has no intention to hike rates until at least 2023, as it kept short-term borrowing rates near zero, according to press release. Fed will continue its asset repurchase program in which the central bank buys at least $120 billion of bonds a month.
The decision not to hike rates comes amid an improving economic outlook in which GDP is expected to rise 6.5% in 2021, up from the anticipated 4.2% gain.
The economy is projected to grow by 3.3% and 2.2% in 2022 and 2023, respectively, before growth settles into a longer-term range of 2.3%.
Unemployment is projected to fall to 4.5% from its current 6.2% this year, down from a 5% December estimate.
Fed forecasts an unemployment rate of 4.2% and 3.7% in 2022 and 2023, respectively, before settling into a longer-run level of 4%.
Fed looks for an inflation gain of 2.2% this year, before falling to 2% in 2022 and rising to 2.1% in 2023, with the long-run expectation at 2%.
Markets were concerned that inflation pressures could pose a bigger danger, but Fed considers 2% inflation a healthy level for the economy.
If inflation gets out of control, Fed believes it has the tools to control it even as it continues to keep policy loose until full employment and price stability are maintained,
U.S stocks are currently declining as the dollar gains. SPY is down 0.65% on premarket, QQQ is down 1.56% on premarket, EURUSD is down 0.31%
