While the FOMC statement acknowledged some moderation in recovery and weaker labour market progress as of late, this deterioration in data alongside the resurgence of the virus has not been sufficient for the Fed to increase policy accommodation at this stage. The incredible easing in financial conditions seen since the start of the pandemic - which, on a number of measures are now at their easiest levels ever - is clearly giving the Fed much confidence in the appropriateness of the current stance. In addition, as the Chairman Powell noted, the combination of continued support from fiscal policy and the rollout of vaccination programmes point to a better outlook later in the year. Despite the expectation of a re-opening induced bounce later in the year, the Fed is expected to keep the extremely accommodative policy stance in coming months in order to prove the credibility of its new FAIT framework. But, with markets already focusing on the "policy exit risk" and anticipating a taper tantrum, the Fed is facing a very tight balancing act in communicating any policy changes over the next few months and years
Anna Stupnytska, Global Macro Economist
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