Highlights of the January 27, 2021 FOMC statement
- Rates unchanged at 0.0-0.25%
- QE will continue at $80B in Treasuries and $40B in MBS per month and repeats it will continue "until substantial further progress has been made"
- Says pace of economic activity and employment has moderated in recent months
- Removes 'medium term' from line about 'considerable risks to economic outlook'
Says:
The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic
Versus in the prior statement:
Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year.
- Repeats that overall financial conditions remain accommodative
- Repeats that "would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals"
- Vote was unanimous
- Repeats that "Weaker demand and earlier declines in oil prices have been holding down consumer price inflation"
I don't see anything meaningful in the statement that was would jolt any kind of financial asset. There's nothing here to indicate any change in Fed plans or thinking. The more-negative assessment of the past few months is not a surprise but there's nothing on the more-positive outlook after the latest stimulus, which I suspect the Fed wanted to avoid because they didn't want to sound hawkish.
Powell will have a tough job today because he likes to sound upbeat and honest about improving prospects but there's a risk that sounds hawkish.
In a separate statement, the Fed said it will stop offering the regularly scheduled one-month term repo operations "in light of the sustained smooth functioning of short-term dollar funding markets."
