Federal Reserve officials left their benchmark interest rate unchanged near zero as they flagged a moderating U.S. recovery and reiterated a pledge to use all available tools to support the economy during the coronavirus pandemic.
The central bank’s policy-making body also repeated it would maintain its bond-buying program at the current pace of $120 billion of purchases per month until “substantial further progress” toward its employment and inflation goals has been made. It made no changes to the composition of purchases.
“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 statement Wednesday.
The revised language followed reports showing U.S. employment fell in December for the first time since April, and retail sales tumbled for a third straight month, amid resurgent coronavirus outbreaks across the country.
Treasuries maintained their gains following the statement, with the 10-year yield around 1.02%, while the dollar held its advance and the S&P 500 remained lower on the day.
The central bank also added a mention of vaccinations to its statement, saying the economy’s path will depend significantly not just on the coronavirus itself but also on progress with inoculations. The rollout has gotten off to a rocky start.
“The path of the economy will depend significantly on the course of the virus, including progress on vaccinations,” the statement said. “The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”