GUIDANCE

The U.S. Fed Meeting Is Unlikely to Yield Policy Changes

MIN READJun 15, 2021 | 18:48 GMT

U.S. Federal Reserve Chair Jerome Powell speaks to the press after a policy meeting in January 2020.

(Samuel Corum/Getty Images)

As U.S. inflation rises, the Federal Reserve will seek a balance between saying that current inflation is temporary and sending the message that it’s ready and willing to fight price level increases if needed. But in doing so, the U.S. central bank risks a delayed response if inflation continues to surprise as it has the past two months, which could lead to it having to act more aggressively than it might otherwise. The Fed is unlikely to make policy changes during its next Federal Open Market Committee (FOMC) meeting on June 15-16. Instead, the bank will likely only indicate that it’s started the discussion of when to begin cutting back asset purchases known as quantitative easing (QE), and that short-term interest rates will probably stay near zero until at least 2023. Inflation in the U.S. economy is building at the same time there is “slack” in labor markets, with the...

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