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Fed chair Jerome Powell. Photo: Susan Walsh-Pool/Getty Images

The Federal Reserve kept rates unchanged at 0%–0.25% at its latest policy meeting, but changed its statement to include a promise to continue to buy at least $120 billion of bonds each month "until substantial further progress has been made toward the Committee’s maximum employment and price stability goals."

Why it matters: Fed chair Jerome Powell consistently stressed during his press conference that the Fed was nowhere close to reducing its massive bond-buying program, even though its evaluation of the economy had improved and would continue to provide monetary policy support.

  • That's great news for stock traders because it means the central bank will continue to push investors out of less risky assets like government bonds and money will keep flowing into riskier investments like equities.

Driving the news: Stock prices initially edged lower after the release of the statement, but turned higher during Powell's press conference as he doubled and tripled down on the Fed's commitment to keep monetary policy "highly accommodative" for "quite some time."

  • He also argued that there was more the Fed could do to support the economy (and financial markets).

What they're saying: "These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses," the Federal Open Market Committee said in a statement that gained unanimous approval.

Watch this space: Powell even weighed in on the debate over whether stock prices had reached unreasonable levels as many on Wall Street have warned in recent weeks, noting that while historic market metrics like companies' price-to-earnings ratios were high, "that's maybe not as relevant in a world where we think the 10-year Treasury is going to be lower than it's been historically from a return perspective."

  • The Fed is "not too concerned" about stock valuations, Powell added.
  • "We’re thinking this could be another long expansion and what we’re saying is we’re going to keep policy highly accommodative until inflation is well down the tracks."

The big picture: "The key to Fed policy is not what they do from meeting to meeting, but how the public and markets perceive they will act over time," Lou Brien, rates strategist at DRW Trading, said in a note to clients.

This post has been updated throughout.

Go deeper

Robinhood has a stacked policy team — and it's going to need it

Photo Illustration: Justin Sullivan/Getty Images

The stock-trading app Robinhood has an arsenal of political power brokers it can deploy on its behalf as it faces congressional inquiries over its role in an internet-fueled market manipulation frenzy.

Why it matters: The populist, discount trading platform is going to need that firepower because its decision to suspend trading of stock in GameStop and a number of other companies on Thursday has sparked criticism and promised inquiries from both sides of the aisle.

Dion Rabouin, author of Markets
Jan 29, 2021 - Economy & Business

Making sense of the GameStop circus

Illustration: Aïda Amer/Axios

It's probably fair to say that Thursday was one of the crazier days in the history of financial news.

What happened: Robinhood, which has become synonymous with retail trading and the parabolic rise of stocks like GameStop and Tesla, shut down the ability of its users to buy (but not to sell) some of the platform's most popular names.

Updated Jan 28, 2021 - Economy & Business

Senate panel to hold hearing after high-flying Reddit stocks cause Wall Street chaos

Major trading platforms including Robinhood, TD Ameritrade and Interactive Brokers are restricting — or cutting off entirely — trading on high-flying stocks like GameStop and AMC Entertainment.

The latest: Senate Banking Committee Chair Sherrod Brown (D-Ohio) announced Thursday that he plans to hold a hearing on "the current state of the stock market" in response to this week's volatility.

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