- Vaccine distribution and “strong policy support” helped boost the US economic recovery, the Fed said.
- The central bank decided on Wednesday to hold its benchmark interest rate near zero, as expected.
- Sectors hit hardest by the pandemic “remain weak but have shown improvement,” the Fed said in a statement.
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Widespread vaccination and “strong policy support” have fueled a considerable pick-up in the pace of economic recovery, Federal Reserve Chair Jerome Powell said.
The Federal Open Market Committee concluded its two-day April meeting on Wednesday and ruled to maintain its ultra-accommodative policy stance. Policymakers held the Fed’s benchmark interest rate near zero and maintained the pace of asset purchases of at least $120 billion per month.
Additions to the Fed’s post-meeting statement shed light on the central bank’s increasingly bullish outlook. Progress on vaccination and support from fiscal policy – a nod to Biden’s $1.9 trillion stimulus plan – led indicators for economic activity and employment to “strengthen,” the central bank said.
Sectors hit hardest by the pandemic’s economic fallout “remain weak but have shown improvement” since the FOMC’s last meeting in mid-March, the Fed added.
The central bank noted that inflation had firmed up in recent weeks, but attributed the stronger price growth to “transitory factors.” Powell has repeatedly said that reopening would likely drive a strong but temporary jump in inflation.
The Fed still warned that the path toward a full recovery remains uncertain as virus cases remain elevated across the country.
“The ongoing public health crisis continues to weigh on the economy, and risks to the economic outlook remain,” the central bank said.
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