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The Federal Open Market Committee (FOMC) Wednesday maintained the federal funds target rate near its current range of 0 to 0.25 percent. The committee noted it will run the economy above 2 percent inflation, stating they "aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent."

During his post-meeting press conference, Fed Chairman Jerome Powell stressed that the committee is not likely to taper or otherwise alter the mix of asset purchases for the foreseeable future.

“The FOMC’s March statement was nearly unchanged from the prior iteration and contained no indication that tighter policy is on the committee’s radar," said NAFCU Chief Economist and Vice President of Research Curt Long in a new Macro Data Flash report. “Despite a markedly better forecast, highlighted by 6.5 percent real GDP growth this year, the majority of FOMC participants still do not expect liftoff prior to 2024.

“This is consistent with the committee’s new average inflation target (AIT) framework and serves to support the commitment to allow inflation to run hot for a time prior to any rate hikes,” added Long.

Of note, the committee’s Summary of Economic Projections (SEP) showed seven of 18 members anticipate raising rates by 2023, up from five in December. Only four members expect liftoff to occur in 2022.

“Despite conditions that, under the old framework, would have at least introduced the possibility of rate hikes in 2022 or early 2023, the committee is intent on conditioning markets to align their expectations with the new AIT framework,” Long concluded. “As a result, NAFCU still does not expect a rate hike prior to 2024.”

More insights from the meeting can be found in the new Macro Data Flash report. The FOMC is expected to meet next April 27-28; its tentative meeting schedule for 2020 can be viewed here.