Watch FOMC Rewind: What the Fed’s January 2021 Decision Means for You
The January Federal Open Market Committee meeting statement recognizes that “the path of the economy will depend significantly on the course of the virus, including progress on vaccinations.” As the public health and economic risks and hardships caused by the COVID-19 pandemic continue, the Fed has decided to keep interest rates near zero. What does that mean for you? Let’s rewind.
January 2021 FOMC Rewind
Ellen: Any news from the Fed, Shelby?
Shelby: They’re keeping interest rates close to 0%. And they said the economic recovery has “moderated”
Ellen: Wait – what does that mean?
Shelby: It means the Fed sees some businesses are having a hard time surviving
Ellen: Which ones?
Shelby: Like restaurants, hotels, and gyms – shops people go to in person. They all had to adjust due to the pandemic
Ellen: I guess it might take a while for them to get back in shape
Shelby: A lot will depend on getting the virus under control, which means getting people vaccinated
Ellen: Because they’ll be safer?
Shelby: Right – that’ll give them confidence to go out and support their favorite businesses again. Meanwhile, the Fed is doing what it can to help, by keeping interest rates low
Ellen: What does that do?
Shelby: Low interest rates make it cost less to borrow, which can help stores stay open, sell more, and hire more people
Ellen: How long will interest rates be low?
Shelby: Until the economy is back on its feet
Shelby: With plenty of jobs and prices rising gradually
Ellen: Sounds like another reason to keep an eye on the vaccine!
Shelby: Yes! And stay healthy!
You may also be interested in:
- FOMC Rewind: Fed Updates Long-run Employment and Inflation Goals
- FOMC Rewind: Interest Rates Explainer
The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.