The U.S. Federal Reserve left its benchmark interest rate unchanged near zero and said the American economic recovery is now "moderating."
The central bank said it will continue using all available tools at its disposal to support the U.S. economy during the pandemic. The Fed also repeated that it would maintain its bond-buying program at the current pace of $120 billion U.S. of purchases per month until "substantial further progress" toward its employment and inflation goals has been made.
"The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic," the Federal Open Market Committee said in its written statement Wednesday.
The revised central bank language followed reports that U.S. employment fell in December for the first time since April, and retail sales tumbled for a third straight month, amid resurgent COVID-19 outbreaks across the country.
The Fed also added a mention of vaccinations to its statement, saying the economy’s path forward will depend significantly on progress with COVID-19 inoculations.
The committee unanimously voted to keep the federal funds target rate in a range of zero to 0.25%, where it’s been since last March.
The committee’s decision marked the conclusion of the Fed’s first policy meeting since Democrats took control of the Senate in early January -- a development which was widely seen as brightening the outlook for the economy in 2021 by boosting the odds of additional fiscal stimulus.
That sunnier outlook had sent U.S. stocks to record levels and yields on 10-year U.S. Treasury notes above 1% for the first time since March, helped along by President Joe Biden’s proposed $1.9-trillion relief package, amid speculation the Fed may begin withdrawing support sooner than expected.
Some Fed officials have suggested in recent weeks that tapering of the bond-buying program could begin as soon as late 2021, although Federal Reserve Chairman Jerome Powell said on January 14 that "now is not the time to be talking about exit."
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