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Jerome Powell. Photo: Al Drago/Bloomberg via Getty Images

The Federal Reserve said Wednesday that the economy has made progress, but reiterated its commitment to keep monetary policy loose and stimulative.

Why it matters: The rapid economic recovery has caused the prices for some goods and services to jump, causing measures like the core PCE price index to rise above the Fed’s target for an average of 2%.

The big picture: Employment in America remains 6.7 million jobs below pre-pandemic levels, and so the economy still has a long way to go before it can be seen as having made "substantial further progress" as defined by the Fed.

State of play: The Fed is keeping interest rates low, leaving its benchmark short-term rate at 0% to 0.25%.

  • In its ongoing efforts to keep financial conditions easy, the Fed is continuing its monthly purchases $80 billion worth of Treasury securities and $40 billion worth of mortgage-backed securities.

What they’re saying: "The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered," the Fed said in a statement. "Inflation has risen, largely reflecting transitory factors."

  • The central bank noted that when it launched its monthly purchases of $120 billion worth of assets in December, it said the program would be in place until the economy made "substantial further progress."
  • "Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings."

Between the lines: The Fed is telling the market that it recognizes the economy has been improving. But even still, there's further to go before it'll start tapering its asset purchases.

  • "I’d say we have some ground to cover on the labor market side," Federal Reserve chair Jerome Powell said during a press conference.

What to watch: The Fed’s next major update is likely to come on Aug. 26 to 28 when central bankers and economists meet in Jackson Hole, Wyoming for the Kansas City Fed’s Economic Policy Symposium.

The bottom line: Despite the current bout of inflation, the Fed will continue to keep monetary policy loose as long as unemployment remains as high as it is.

Editor’s note: This story was updated to add comments from Fed chair Jerome Powell.

Go deeper

Nov 5, 2021 - Politics & Policy

Scoop: Senate senses Powell pick

Federal Reserve chair Jerome Powell. Photo: Kevin Dietsch/Getty Images/Bloomberg via Getty Images

The White House is asking Democratic senators to meet with Federal Reserve chair Jerome Powell before Thanksgiving — leading some to believe President Biden will renominate him this month, people familiar with the matter tell Axios.

Why it matters: The choice of Fed chairman is one of the most consequential in the U.S. and world economic systems. Senators from both parties also are preparing for the confirmation hearing to become a proxy battle over inflation.

Kate Marino, author of Markets
Nov 4, 2021 - Economy & Business

Fed chair Jerome Powell on the meaning of transitory inflation

Federal Reserve chair Jerome Powell. Photo: Kevin Dietsch/Getty Images

“Transitory” officially reached buzzword status midyear — when it exited the realm of financial wonks and seeped into the outside world where everyday people were talking about inflation.

The latest: Even so, no one knew exactly what it meant in the context of inflation — because the Federal Reserve has never really defined it. On Wednesday, though, Fed chair Jerome Powell went further than he has before in explaining how he interprets the term.

Scoop: Trump's new social network quietly courting influencers

Illustration: Lazaro Gamio/Axios

Former President Trump’s elusive new social media network Truth Social — which plans to go public — is reaching out to internet influencers asking them to “reserve their spots” for when it launches in February or March.

Why it matters: The outreach doesn’t mention Trump’s name or affiliation. Some influencers suggest that could be a ploy to enlist their support without realizing the affiliation.