FOMC Press Conference, December 16, 2020 | Summary and Q&A

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December 16, 2020
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Federal Reserve
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FOMC Press Conference, December 16, 2020

TL;DR

The Federal Reserve remains strongly committed to achieving maximum employment and price stability, and will continue to provide support to the economy until the recovery is complete.

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Key Insights

  • ❓ The Fed's primary focus is on achieving maximum employment and price stability.
  • 🖐️ Fiscal policy plays a crucial role in supporting the economy, particularly for sectors disproportionately impacted by the pandemic, such as small businesses and state and local governments.
  • 📪 Financial stability is closely monitored, but there are no immediate red flags in terms of asset prices, leverage in the nonfinancial sector, or funding markets.
  • 🌉 The Fed's actions aim to provide robust support to the economy and help bridge the economic challenges created by the pandemic.

Transcript

CHAIR POWELL. Good afternoon. At the Federal Reserve, we are strongly committed to achieving the monetary policy goals that Congress has given us-maximum employment and price stability. Since the beginning of the pandemic, we have taken forceful actions to provide relief and stability, to ensure that the recovery will be as strong as possible, and ... Read More

Questions & Answers

Q: What are the Federal Reserve's monetary policy goals?

The Federal Reserve is strongly committed to achieving maximum employment and price stability, as mandated by Congress.

Q: How has the economy fared during the pandemic?

The economy experienced a sharp decline in the second quarter, but has since rebounded. However, economic activity remains well below pre-pandemic levels and the recovery path ahead is highly uncertain.

Q: What challenges does the labor market face?

While progress has been made in regaining lost jobs, the pace of improvement has slowed. Unemployment rates remain elevated, with significant job losses for lower-wage workers and minority groups.

Q: What are the projections for inflation?

Inflation remains below the Fed's 2 percent target, but is projected to rise gradually in the coming years. However, uncertainties remain regarding the timing and impact of the COVID-19 vaccines on the economy.

Summary & Key Takeaways

  • The Fed is committed to achieving its monetary policy goals of maximum employment and price stability.

  • The pace of economic improvement has slowed in recent months, especially in sectors that require close gathering, such as travel and hospitality.

  • The labor market has made progress, but the unemployment rate remains elevated, particularly among lower-wage workers and minority groups.

  • Inflation remains below the Fed's 2 percent target, but is projected to rise gradually over the next few years.

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