FOMC Minutes: No change in the monetary conditions – UOB

Senior Economist at UOB Group Alvin Liew reviews the recently published FOMC Minutes of the March meeting.

Key Quotes

“There were no surprises in the minutes of the Federal Reserve’s 16/17 Mar 2021 FOMC policy meeting as the FOMC participants agreed that despite an improving economy, the US remained far from its objectives especially on the employment front. The FOMC also pledged that its asset purchases would continue at least at the current pace for some time until substantial further progress towards the Committee’s maximum-employment and pricestability goals.”

“The FOMC continued to assure it will not react pre-emptively (in line with the Fed’s fundamental change in monetary framework, Average Inflation Targeting, AIT) and it will provide clear communication well in advance of any bond-buying taper.”

“The latest minutes did not move the needle on Fed tightening expectations. Going forward, our base case remains for the Fed to stay on hold for most of 2021, at least, and the taper discussion will only start in late 2021/early 2022. This is premised on the continued successful rollout of vaccinations across the US, additional fiscal stimulus (American Rescue Plan which have come to pass), and the return to economic/social normalcy as COVID-19 infections and deaths come off in the foreseeable future. We continue to hold the view that the Fed will keep policy rates at the current 0.0-0.25% region at least until 2023.”