The Federal Reserve left the key interest rate unchanged near zero. As they could stay so through 2023, the FED chairman announced, here are the key statements from yesterday’s post rate decision conference:

– The FED is monitoring the appearance of economic bubbles and the last market recovery was a lack of them. Economy will recover quickly, but with a slack in leisure and travel.

– By moving towards the maximum employment, inflation rate will increase and the target of inflation is “moderately above 2%” which means it should be slightly above 2%, Jerome Powell “explains”.  

– Financial stability does not come solely with impeccable monetary policy, but fiscal support is also needed. Lack of fiscal aid will eventually impair the economy in order to get back to a strong labour market as 11 million people are still unemployed since the pandemic. 

-In regard to CMBS, Congress should be active as further actions will be required.

-It is difficult to reduce maximum employment like inflation, as it includes the wage rate as well.

-Asset purchases are equipping people with accommodative financial conditions and will continue to monitor developments and adjust as needed. 

-The trend of Main Street lending facilities is increasing. Figures are close to $2B in loans as a part of this program and several banks are worried about the underwriting requirements. That’s why the Fed is paying attention to important aspects. 

-It is more likely that expansion will continue. However, the travel and leisure sector will suffer for some time. The Federal Reserve can’t predict how long that period will be but this sector employs millions of workers.

-The authorities will not lift off on rates until the economy is on the track again. Even after liftoff, FED will remain accommodative.