Illustration: Eniola Odetunde/Axios

Today is a truly historic day in Fed history — one that will have a transformative effect on U.S. monetary policy for the foreseeable future.

Driving the news: For decades, the main job of central banks has been to keep inflation down. The Fed has now effectively changed that policy, to instead prioritize maximum employment.

  • What they're saying: "Following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time."

Between the lines: Fed attitudes towards inflation have been evolving steadily in recent years, as it has stubbornly refused to tick up even during periods of full employment.

  • Today's announcement marks the end of the Fed worrying that employment can sometimes be too high.
  • Before today, the Fed was charged with assessing "deviations" from maximum employment — either to the upside or to the downside. Now, the Fed will only look at "shortfalls" from that level.
  • It's an admission that an economy can never have too much employment.

The big picture: The biggest change is that if the Fed expects inflation, it now no longer needs to raise interest rates. Instead, it can wait and see whether inflation actually arrives, and act only then.

Go deeper: The Fed's messaging around this move is exemplary. There's a simple and clear press release, a major speech from Jay Powell, a detailed policy statement, and then a collection of a dozen different papers all filling out the details of the thinking that went into the new policy.

The bottom line: This news represents a radical change in how the Fed thinks about its job. It will provide powerful ammunition should ECB president Christine Lagarde want to start trying to make similar changes.

Go deeper

Dion Rabouin, author of Markets
Sep 17, 2020 - Economy & Business

An uncertain Fed for an uncertain time

Photo illustration: Eniola Odetunde/Axios. Photo: Zach Gibson/Stringer/Getty Images

The Fed policy meeting Wednesday that was designed to further clarify its new stance on "average inflation targeting" — a topic addressed by multiple policymakers on its rate-setting committee in the month since it was announced — left the market with more questions than answers.

What's happening: The Fed announced that not only was it keeping U.S. interest rates at essentially zero for now but it plans to keep them there until at least 2023, extending its forecast an additional year.

Updated 26 mins ago - Politics & Policy

Where key GOP senators stand on replacing Ruth Bader Ginsburg

Senate Majority Leader Mitch McConnell talks to reporters on Capitol Hill last Thursday. Photo: Chip Somodevilla/Getty Images

With President Trump planning to nominate his third Supreme Court justice nominee this week, key Republican senators are indicating their stance on replacing the late Justice Ruth Bader Ginsburg with less than 50 days until Election Day.

The state of play: Senate Majority Leader Mitch McConnell (Ky.) has vowed that "Trump’s nominee will receive a vote on the floor of the United States Senate." Two GOP senators — Sen. Lisa Murkowski (R-Alaska) and Sen. Susan Collins (R-Maine) — have said they oppose holding a vote before the election, meaning that two more defections would force McConnell to delay until at least the lame-duck session of Congress.

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 4 p.m. ET: 30,873,714 — Total deaths: 958,383— Total recoveries: 21,103,559Map.
  2. U.S.: Total confirmed cases as of 4 p.m. ET: 6,788,343 — Total deaths: 199,421 — Total recoveries: 2,577,446 — Total tests: 94,211,463Map.
  3. Politics: Testing czar on Trump's CDC contradictions: "Everybody is right" Ex-FDA chief: Career scientists won't be "easily cowed" by political vaccine pressure
  4. Education: What we overlooked in the switch to remote learning
  5. Health: The dwindling chances of eliminating COVID-19.
  6. World: England sets £10,000 fine for breaking self-isolation rules — The countries painting their pandemic recoveries green.