The Federal Reserve on Wednesday said it doesn’t expect to raise rates until the end of 2023 at the earliest and it set out new economic conditions that must be met before it will raise them.
In a statement, the Fed said it decided to keep its policy interest rate at near zero and expects this will be appropriate until two things happen: labor market conditions return to the “maximum employment” and inflation has risen to 2 percent and “is on track to moderately exceed 2 percent for some time.”
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Greg McBride, chief financial analyst at Bankrate.com, said this language means investors should “get used to the low rates because they are here to stay.”
However, Seth Carpenter, economist at UBS, said the Fed guidance was “vague.”
“The guidance means they need their own forecast for inflation to be above 2 percent, but they are not tying it to the realized level of inflation,” Carpenter said.
Powell defended the guidance as “powerful” and “durable.”