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Essentials of Monetary Policy

Federal Reserve (Fed). Willing to Accept Higher Inflation, the Fed Signals Its Intent to Keep Rates at Their Effective Lower Bound for Some Time

September 16, 2020
François Dupuis • Mathieu D’Anjou • Francis Généreux • Hendrix Vachon

The decision to keep key interest rates unchanged will come as no surprise. The policy appears to be in place for a good while. In fact, today, the Fed provided a few more details about the conditions under which it could begin to normalize its monetary policy. They reflect the Fed’s newly revamped long-term objectives, which include full employment, as well as a desire for inflation to momentarily exceed the target of 2%.