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FOMC meeting June 16: results

On June 16, a meeting of the US Federal Open Market Committee (FOMC) took place.
Key decisions and conclusions: 

  • The path of economic development is highly dependent on the COVID-19 spread. Vaccine progress is likely to diminish the economic impact of the pandemic. 
  • The committee aims to achieve maximum employment and inflation of 2% in the long term.
  • The forecast for inflation in the United States for 2021 was raised to 3.4% from 2.4%, for 2022 — to 2.1% from 2%.
  • The committee decided to keep the target range for the federal funds rate at 0% to 1/4% in 2021 and is forecasting an increase in 2023.
  • The forecast for unemployment in the United States for 2021 was kept at the level of 4.5%, for 2022 it was improved from 3.9% to 3.8%.
  • The Federal Reserve will continue to increase its holdings of Treasuries (at least $80 billion per month) and mortgage-backed securities (at least $40 billion per month) until significant progress is made towards peak employment.
  • The Committee will be ready, if necessary, to adjust the course of monetary policy if risks arise that may interfere with the achievement of the Committee’s objectives. 

Right after the meeting the dollar strengthened by almost 1%, precious metals, respectively, weakened. Gold and silver lost more than 2%. Yields on Treasury bonds increased: the 10-year rate climbed from 1.49% to 1.58%.