Fed keeps rates unchanged in First Meeting of 2021

After reconvening for its first meeting of the year, the Federal Reserve kept its interest rates and bond buying pace steady on Wednesday.

The Federal Open Market Committee held on to its current benchmark rate in a range of 0% to 0.25% and also retained its $120 billion monthly pace of bond purchases. The move comes as the near-term economic backdrop has softened.

Moreover, the Federal Open Market Committee has also signaled during its previous meeting that it was not increasing its benchmark rate until 2023.

Moving forward, the central bank implied further that the recovery path would highly depend on the development of containing the coronavirus, including progress on inoculations and its distribution.

However, the central bank could be forced to decrease its $120 billion bond buying monthly pace or quantitative easing, sooner than planned to mitigate inflationary pressures driven by curbed consumer demand.