The policy-making arm of the Federal Reserve pledged, as expected, to continue to help the economy rebound from the pandemic, keeping its bond-buying program and other monetary policy status quo despite a more bullish outlook for economic growth and higher inflation expectations for the year.
The Federal Open Market Committee (FOMC) also indicated Wednesday it would raise its benchmark interest rate from virtually zero by 2023, sooner than it had anticipated in March.
While acknowledging that overall inflation has been faster than anticipated, Federal Reserve Chairman Jerome Powell said it has been driven by what will likely prove to be temporary bottlenecks and shortages.
“The prices that are driving that higher inflation are from categories that are being directly affected by the recovery from the pandemic and the reopening of the economy,” Powell said at a press conference following a two-day FOMC meeting. “It seems like these very specific things that are driving up inflation will be temporary.”