Fed leaves rates unchanged with no changes to QE, as expected

Author: Adam Button | Category: Central Banks

Highlights of the FOMC statement on March 17, 2021:

Highlights of the FOMC statement on March 17, 2021:
  • Lower bound on Fed funds 0.00% as expected
  • Upper bound on Fed funds 0.25% as expected
  • Fed to continue to buy $80B/month in Treasuries
  • Fed to continue to buy $40B/month in MBS
  • Repeats that bond buys will continue to until 'substantial further progress' is made
  • Unanimous vote
  • Repeats language saying that policy will remain accommodative until inflation runs moderately above 2% for some time
  • Says indicators of economic activity and employment have turned up recently following a moderation in activity
  • Repeats that path of economy will depend significantly on course of virus and vaccinations
  • Full statement
  • Dot plot
Median dot plot for 2023 still shows no hike. Bit of a surprise. Just 7 of 18 dots show a hike in 2023. Most thought we'd see a majority put a dot there.

How the market looked moments before the FOMC decision:
FX ratesThe S&P 500 was down 20 points and Nasdaq down 1.1%.

Afterwards the US dollar dropped and risk trades surged. USD/CAD fell to 1.2431, for instance.

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