Federal Reserve officials were warily eyeing a surge in coronavirus cases at their Dec. 15-16 meeting, but they hoped that vaccine breakthroughs might set the stage for a strong economic rebound in 2021.<\/p>\n
\u201cWith the pandemic worsening across the country, the expansion was expected to slow even further in coming months,\u201d according to minutes from the gathering of the Federal Open Market Committee, released Wednesday. \u201cNevertheless, the positive vaccine news\u201d was \u201cviewed as favorable for the medium-term economic outlook.\u201d<\/p>\n
Central bank officials held interest rates steady at near zero at the meeting, and committed to buying up $120 billion in bonds each month \u201cuntil substantial further progress has been made toward the committee\u2019s maximum employment and price stability goals.\u201d They have been rapidly expanding their holdings of government and mortgage-backed debt since March to keep markets calm and many types of credit cheap.<\/p>\n
The Fed essentially sets the price of borrowed money to help to guide demand in the economy, goosing conditions when times are tough to help bolster growth and hiring. The central bank also tries to keep price increases stable at around 2 percent, though officials formally updated their policy-setting approach last year to emphasize that they would welcome slightly faster increases after years and years of weaker ones.<\/p>\n
Minutes showed that the Fed discussed the balance sheet guidance in depth at the meeting, with \u201ca few\u201d remarking that the new wording signaled that the Fed could ramp up bond buying \u201cif progress toward the committee\u2019s goals proved slower than anticipated.\u201d<\/p>\n
Many analysts had expected that the Fed would shift its bond purchases toward longer-dated debt to try to eke out a bigger bang per buck, given that short-term rates are already very low, but the minutes suggest that there was little appetite for such a change. Only \u201ca couple of participants indicated that they were open to\u201d shaking up the composition of purchases.<\/p>\n
The Fed\u2019s December meeting took place as virus cases surged after Thanksgiving. Since then, the number of new cases moderated at first but then resumed their increase.<\/p>\n
With distribution of a coronavirus vaccine beginning in the U.S., here are answers to some questions you may be wondering about:<\/p>\n