Fed leaves interest rates unchanged, says US economy is improving

Fed policymakers gently telegraphed that they are prepared to consider withdrawing some monetary support should economic conditions warrant.

Policymakers at the United States Federal Reserve voted unanimously to leave interest rates unchanged at the end of their two-day meeting on Wednesday. The Fed will also continue to support the nation’s economic recovery by buying bonds at a clip of $120bn a month. The continuation of monetary policy status quo came as no surprise, given the Fed has long signaled it will keep its benchmark rate near zero until the US labour market is fully healed from last year’s COVID blow. But Fed officials did signal they would be prepared to reconsider current monetary policy should risks to the economic recovery emerge. The Fed noted that strong policy support along with progress on vaccinations has continued to propel improvements in the nation’s economy and jobs market. The big question though is when will the Fed become concerned enough about rising inflation to start dialing back these easy-money policies?