The Federal Reserve held its first meeting of 2021 and announced that it will maintain its accommodative posture toward monetary policy and keep interest rates near-zero. The Fed’s statement had some significant language changes including noting that the economic and employment activity had significantly moderated.

The Fed also noted that those sectors most adversely effected by social distancing and the pandemic are struggling the most. Chairman Powell also noted that unemployment rate, when calculated to include those who have also left the workforce is near 10%.

The tone of this announcement was largely the same as previous meetings. Again, the Fed highlighted that there are still considerable and plentiful downside risks to the economy as we proceed through a deadly and uncertain winter. The language of this statement was also similarly tweaked with a focus on the monitoring of vaccines. The other big language change, which could be taken as a positive, was the Fed replacing taking out the ‘medium-term’ of the period where the virus poses the most risks. Powell expanded on the change, clarifying that due to vaccine developments, “The risks are in the near-term, frankly.’

Of course, what made more headlines during this wild week on Wall Street was Powell’...
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