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Fed Maintains Monetary Policy Unchanged But Raises Inflation Expectations

Mary Liu

Summary: According to Bloomberg News, the Federal Reserve said on Wednesday that it will maintain the benchmark interest rate unchanged to a level close to zero, and plans to continue to purchase $80 billion in US Treasury bonds and $40 billion in mortgage-backed securities (MBS) every month. But Fed officials hinted that it is expected to ...

According to Bloomberg News, the Federal Reserve said on Wednesday that it will maintain the benchmark interest rate unchanged to a level close to zero, and plans to continue to purchase $80 billion in US Treasury bonds and $40 billion in mortgage-backed securities (MBS) every month.

But Fed officials hinted that it is expected to raise interest rates twice by the end of 2023. 

In addition, the Fed raised its headline inflation forecast to 3.4%, which is a full percentage point higher than its March forecast, while reiterating that inflationary pressures are temporary.

This year's GDP forecast is raised to 7% from the previous 6.5%, and the unemployment rate is estimated to remain unchanged at 4.5%.

By Mary Liu

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