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Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

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Feb chair Jerome Powell. Photo: Susan Walsh/Getty Images

The Federal Reserve kept rates unchanged at its latest policy meeting, but a shift in sentiment emerged as to how soon it should begin raising rates.

Why it matters: The Fed's rock-bottom rates policy and monthly asset purchases helped the U.S. markets avoid a meltdown during the COVID-19 crisis last year. But as the economy recovers, a chorus is growing for the Fed to at least consider a timeline for pulling back its support before things get overheated.

What he's saying: "You can think of this meeting as the 'talking about talking about' [tapering] meeting if you like," Fed chair Jerome Powell said at a press conference Wednesday afternoon, while reiterating the Fed will continue its current monthly purchases for now.

Context: The Fed has stressed over recent meetings that it's looking for "substantial further progress" in the economy — without defining what that is —before it will begin tapering its monthly asset purchases.

What happened: During the press conference, Powell acknowledged that inflation has been higher than expected, but noted that it's largely in pandemic-impacted industries and because of supply chain issues likely to be temporary.

  • The Fed moved its PCE inflation forecast for the year by a percentage point, to 3.4%. But it expects inflation to come back down to 2.1% in 2022 and 2.2% in 2023 — somewhat in line with its long-term target of 2%.
  • "We do tend to look at the longer-term inflation expectations because that's really what matters for inflation. The shorter-term ones tend to move around," Powell said.

The big picture: "The view has shifted on the timing of rate hikes with a majority of members expecting anywhere from one to six rate hikes by the end of 2023," Bankrate chief financial analyst Greg McBride wrote in a note Wednesday afternoon. "Projections of rate hikes starting in 2022 also increased by three members since the March meeting.”

State of play: Stock indexes were slightly down ahead of the release of the Fed's statement Wednesday morning, and they edged down further afterward. The S&P 500 is down about 0.54% on the day.

  • The 10-year Treasury yield gained to 1.57% Wednesday, from the open of 1.49%.

The bottom line: Many in the market wanted to see the Fed react to the recent inflation figures, and to at least talk about talking about tapering. That’s happened.

Go deeper

Fed chair says he isn't concerned by Delta surge

Fed Chairman Jerome Powell at the G20 finance ministers and central bankers meeting in Venice last month. Photo: Andreas Solaro/AFP via Getty Images

One of the country's most influential economic officials doesn't anticipate that surging coronavirus cases will knock the reopening recovery off course.

What he's saying: "There has tended to be less economic implications from each [coronavirus] wave. We'll see if that's the case for the Delta variety," Federal Reserve Chairman Jerome Powell told reporters today.

Conservative media's gold diggers

Illustration: Annelise Capossela/Axios

With inflation rising and Congress pumping out massive spending bills, conservative media have focused renewed attention on financial issues — and lent significant airtime to some of the very companies underwriting their shows.

Why it matters: Politics is bleeding into financial advice, and all incentives are to play up impending economic disaster.

Manhattan, Westchester prosecutors request evidence from Cuomo investigation

Gov. Cuomo during a press conference in New York City on Aug. 2. Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

The district attorneys for Manhattan and Westchester County on Wednesday requested evidence related to New York Attorney General Letitia James' investigation into sexual harassment allegations against Gov. Andrew Cuomo (D), according to a letter obtained by NBC News.

Why it matters: The district attorneys are investigating if alleged conduct highlighted in an independent report published by James' office that occurred in their jurisdictions was criminal in nature.

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