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Essentials of Monetary Policy

Federal Reserve (Fed). The Fed Seems Increasingly Concerned about the Current Situation

January 27, 2021
François Dupuis • Mathieu D’Anjou • Francis Généreux • Hendrix Vachon

It was clear that the Fed’s leaders had to see the short-term risks weighing on the U.S. economy, as some of the indicators had obviously deteriorated since their last meeting. December saw the loss of 140,000 jobs, the first contraction since April. To date, jobless claims in January have remained much higher than the average for the last quarter of 2020. Retail sales also fell in December. These are, without a doubt, the result of the current wave of the pandemic, which has forced some States to tighten the public health restrictions once again. The changes made to the Fed’s statement partially reflect these weaknesses. In it, the risks are described as being current rather than in the medium term.