Fed Holds Rate, Bond-buying Program Unchanged

The Federal Open Market Committee, which concluded its two-day monetary policy meeting Wednesday afternoon, left the target range for its federal funds rate unchanged at 0 to 0.25 percent, and said it will continue with its $120 billion-a-month bond-buying program.

The move by the central bank is in line with expectations. The bank, which said the economy is strengthening despite concerns over the spread of the coronavirus, stressed that progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy. However, it added that risks to the economic outlook remain.

"The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered" noted the central bank's post-meeting statement. "Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses."

Noting that there has been progress towards the central bank's goals on employment and inflation, the bank's statement says changes to policy with regard to monthly bond purchases could be on the way.

The central bank's policymakers have approved the creation of a standing repo facility for the bond market where institutions go to exchange high-quality collateral for cash.

The Fed said the open market committee will continue to assess progress in coming meetings.

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