Fed holds interest rates near zero, sees faster growth and higher inflation

Fed holds interest rates near zero, sees faster growth and higher inflation

The Federal Reserve on Wednesday declined to let up on its easy-money policy despite an economy that it acknowledged is accelerating.

As expected, the U.S. central bank decided to keep short-term interest rates anchored near zero as it buys at least $120 billion of bonds each month. The latter part of policy is a two-pronged effort to support an economy that grew strongly to start 2021 as well as to support market functioning at a time when 30-year mortgages still go for around 3%.

Despite noting the economic strength as well as inflation that is on the rise, if just temporarily, the policymaking Federal Open Market Committee unanimously decided to make no changes in its approach.

The post-meeting statement noted that efforts to combat the Covid-19 pandemic have helped boost the economy, though more needs to be done.

"Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened," the committee said.

"The sectors most adversely affected by the pandemic remain weak but have shown improvement," it added. "Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses."

The committee