Federal Reserve holds rates steady, forecasts higher growth, inflation

• The Federal Reserve holds its key interest rate near zero and will continue to asset purchases at the current monthly rate.
• The FOMC vote was unanimous.
• The majority of Fed officials still don't expect a rate increase through 2023, according to the closely watched dot-plot; however, three of them expect a rate increase next year (vs. only one in the prior projection) and seven see a rate increase during 2023 (vs. five in the December estimates).
• The Fed also emphasizes that the pandemic continues to weigh on the economy and poses "considerable risks to the economic outlook."
• Target range for the federal funds rate stays at 0.0%-0.25%; and the central bank will continue to increase its holdings of Treasury securities by at least $80B per month and of agency mortgage‑backed securities by at least $40B per month.
• As usual, the Fed will continue to keep the rate unchanged and asset purchases at that rate until the economy makes substantial progress on its goals for full employment and inflation runs at over 2% for some time.
• The Fed members increase their expectations on GDP growth and core PCE inflation in their economic projections; their median expectation for real GDP growth is now 6.5% in 2021 vs. their prior view of 4.2%; for core PCE inflation that's increased to 2.2% from the December projection of 1.8%.