What were the key highlights of the FOMC announcement on 17 March during the FOMC meet?

Here are some of the key announcements made by the Fed in the outcome of the meeting which concluded after two days of deliberations on 17 March.

· On 17 March, the Federal Open Markets Committee or FOMC of the US, opted to hold the Fed rate at the range of 0.00-0.25%

· The Fed also committed to continue its bond buying program at the current level of $120 billion and also increase it if required.

· The bond buying will consist of $80 billion of treasury securities and the balance $40 billion in agency backed mortgage securities.

· The FOMC decided to hold rates at 0.00%-0.25% till growth bounced back and the ill-effects of COVID were sufficiently, if not fully, eliminated.

· Fed has virtually assured the markets that that it would not tinker with rates till the end of 2023 and the policy would continue to basic till then.

· Fed would not only focus on headline inflation number but sustained average inflation of over 2.2% over a sustained period of time.

· The FOMC has also commented that the FOMC meet on 17 March was crucial as it came after one of the sharpest rallies in US bond yields.

· The 10-year benchmark yields on US bonds has already rallied from 0.51% to 1.74% giving a hint that the Fed may not be able to hold rates low despite its best intentions.

· The principal goal of the FOMC on 17 Mar was to ensure that the economy revived but higher levels of inflation and interest rates will not be conducive to that.