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Minutes from the Federal Open Market Committee's (FOMC) March videoconference meeting revealed building economic optimism, but cautioned the path of the economy would depend significantly on the course of the virus – including progress on vaccinations – and that the ongoing public health crisis would continue to weigh on economic activity, employment, and inflation and posed considerable risks to the economic outlook.

"The FOMC is attuned to the building economic optimism, but the majority of the committee appears committed to holding rates at zero through 2023," said NAFCU Chief Economist and Vice President of Research Curt Long.

A number of participants observed that the pace of the economic recovery had picked up recently and that the economy continued to show resilience in the face of the pandemic. Participants noted encouraging developments regarding the pandemic, including significant declines in the number of new cases, hospitalizations, and deaths over the intermeeting period, as well as a pickup in the pace of vaccinations.

In light of these developments as well as the extent of the recent fiscal policy support, participants significantly revised up their projections for real GDP growth this year compared with the projections they submitted in December.

Other key findings from the minutes released Wednesday include:

• participants observed that household spending had risen notably so far this year and participated that further gains in consumer spending would contribute significantly to the economic recovery;
• participants anticipated consumer spending would be bolstered by the recently enacted fiscal stimulus packages as well as by accommodative monetary policy; and
• participants noted that surveys of business activity had picked up recently and that many district contacts were growing increasingly optimistic about business prospects given ongoing progress on vaccinations.

The FOMC is expected to next meet April 27-28.