September’s FOMC meeting was clearly a dull affair. You can almost imagine the two dozen Fed officials sitting on a Zoom call, just asking one another, “So…what do you want to do?”

  • The Federal Reserve held steady its target for overnight rates to a range of 0 – 0.25%, unchanged for four meetings and many to come
  • Recent inflation prints have reduced the Fed’s incentive to add further stimulus to the economy at least for the moment
  • While Powell announced the adoption of “average inflation targeting” three weeks ago, there were no further details in today’s statement
  • The full policy framework review and its adoption remains the next checkpoint for monetary policy, but it’s still some weeks away

And, with the economy still digesting the Fed’s stimulus from the early stages of the pandemic-triggered recession, the obvious answer for most policymakers was, ”Not much.” Accordingly, the Fed held overnight interest rates unchanged at the lower bound of 0 – 0.25% and elected not to announce any new or (economically material) changes to any previously announced policy tools. Beneath the surface, the tradeoffs that drive long-term Fed decisions are shifting even while the short-term policy is going nowhere fast.

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About the author

Guy LeBas

Director, Custom Fixed Income Solutions

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