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3 Big Points From The Fed’s Last Meeting In 2020 & What To Expect For 2021

The Federal Reserve held its final meeting of 2020 and made it very clear that easy money is here to stay for the foreseeable future.

Remember, a few months ago the Fed made a major shift and said that it wants to see the average inflation rate near 2%, which means it can keep rates lower, for longer. Here are three key points from from the Fed’s last meeting of 2020.

The Federal Reserve building in Washington. Picture: Reuters

Easy Money Is Here To Stay:

The Federal Reserve made it very clear that it will continue to support the economic recovery by keeping monetary policy favorable for the foreseeable future. That is a nice way of saying that rates can stay very low for a very long amount of time. The idea is to help support the economic recovery as we move back to normal.

Inflation Is Still Below 2%:

Keep in mind, the Fed has a dual mandate: Keep unemployment low and keep inflation near 2%. The Fed made it very clear that inflation is still below 2%. In fact, Fed Chairman Jerome Powell said in his post meeting press conference, “there are significant disinflation pressures” and that is a major concern for the Fed. The Fed wants to whatever it can to help keep inflation near 2%, including its asset purchase program and keeping rates very low.

Economy Should Rebound In 2021:

Jay Powell made it clear that he expects the economy to rebound sharply in 2021 as the vaccine rolls out and we return to “normal.” Remember, next year, Janet Yellen, the Former Fed Chair, will become Treasury Secretary which will be very interesting dynamic.

Bottom Line:

The Fed made it clear that easy money is here to stay for the foreseeable future which should be bullish for both Wall Street and Main Street.

Source: Forbes


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