Fed still sees 'considerable risks' from Covid-19 pandemic

America's central bank stayed put on policy, reiterating its commitment to maintain short-term interest rates low until the economy was firmly on the recovery path.

With the above in mind, Federal Reserve chairman, Jerome Powell, set out the conditions for beginning to shift policy, including inflation heading above target for a time and on a non-transient basis.

Indeed, in his post-meeting press conference, Powell highlighted the still unheightened uncertainty.

Hence, he said, he did not want people's attention to start shifting towards where the economy would be two to three years out and how the Fed might respond.

The Federal Open Market Committee, the central bank's rate-setting body, said as much in its policy statement: "The path of the economy will depend significantly on the course of the virus, including progress on vaccinations.

"The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook."

Nevertheless, the projections from the members of the Federal Reserve Board and the central bank's regional presidents, showed that they now expected much faster growth in 2021 - followed by a more normal pace thereafter.

Their median forecast for GDP growth in 2021 was now 6.5%, up from 4.2% before.

For 2022, GDP was expected to grow at a still strong 3.3%, which was a tenth of a percentage point more than last time.

In 2023 on the other hand, GDP growth was now seen running at 2.2%, down from 2.4% previously.

Against that backdrop, and by unanimity, the Fed's policy makers decided to keep the short-term target for the so-called Fed funds rate at 0.0-0.25%.

They also reiterated their intention to continue purchasing US Treasury debt at a monthly pace of $80bn and of mortgage backed securities by $40bn.