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Federal Reserve (Fed). First Signs of Monetary Policy Normalization

June 16, 2021
Francis Généreux
Principal Economist

As expected, Fed leaders report in their statement on the improved health situation and the recently strengthened economic indicators. That said, they do not officially signal that the Fed will change its policy on key rates or bond purchases in the very short term. Moreover, the increase in the rate paid by the Fed on bank reserves should not be seen as a sign of monetary policy, but rather as a reflection of the difficulties in managing the enormous liquidity present in the monetary system.