Fed policymakers also said they expect inflation will likely rise in the next few months because of supply bottlenecks, but they believe it will remain near their 2% target over the longer run.
“It would likely be some time until substantial further progress toward” the Fed's goals of maximum employment and inflation at 2% are reached, and “asset purchases would continue at least at the current pace until then,” the Fed said in minutes taken during its
Economists and market analysts are closely tracking the question of when the Fed might begin to reduce its
Some analysts expect the Fed will start tapering its bond buys next January, and to take roughly a year to do so, before then considering a rate hike. The bond purchases are intended to keep longer-term borrowing costs low.
The Fed’s policy making committee voted 11-0 at the March meeting to continue the bond purchases and keep its short-term rate at near zero.
Fed officials “generally expected strong job gains to continue over coming months and into the medium term,” supported by low interest rates, the Biden administration’s
Last month, Fed officials sharply raised their forecasts, projecting that the
“However,” the minutes said, “the economy was far from achieving (the Fed’s) broad-based and inclusive goal of maximum employment.”
Policymakers also underscored the importance of the Fed's new policy framework, adopted late last summer, which calls for the Fed to make changes in policy “based primarily on observed outcomes, rather than forecasts,” the minutes said.
That means the Fed's brighter outlook, by itself, doesn't necessarily change the timetable of when it will begin to pull back on its stimulus. That's a sharp break from the past, when the Fed often would raise rates on the anticipation of rapid growth, which it feared would push inflation higher.
The meeting came before last week's March jobs report, which showed a surprisingly strong 916,000 positions were added that month, the most since August, and the unemployment rate fell to 6% from 6.2%.
Still, some Fed bank presidents have stuck to the same message in the minutes. They argue that the economy still needs to improve further before the central bank will pull back on its support for the economy.
“All told, even though the economy is recovering, we still have a long way to go before economic activity returns to its pre-pandemic vibrancy,”