The Federal Open Market Committee kept their target fed funds rate and asset purchase program unchanged this week, as expected. The fed funds target rate remains in the range of 0.0% to 0.25%, and the Fed continues to purchase $80 billion of Treasuries per month, and $40 billion of agency mortgage-backed securities per month. The vote to keep policy unchanged was unanimous. During his press conference, Fed Chair Powell reiterated that the economy is still a long way from reaching their employment and inflation goals and it is too soon to begin discussing tapering asset purchases. The Fed believes that some parts of the economy will not be able to fully recover until the pandemic is decisively over. Chair Powell also reiterated that near term inflationary pressures are likely to be temporary. The Fed expects “base effects” (i.e., comparing current prices to prices at the early stage of the pandemic when prices were under pressure) will add 1.0% to headline inflation and 0.7% to core inflation readings in the near term, on a year-over-year basis. The base effects are expected to dissipate in a few months. Bottlenecks and supply chain disruptions are likely to add to inflation in the near-term as well. Nevertheless, the Fed is not signaling any near-term changes to monetary policy and plans to remain accommodative.