Skip to Content
Stock Analyst Update

More of the Same From the Fed in Latest Meeting

We still expect accommodative lean.

In its latest statement on Jan. 27, the Federal Open Market Committee unsurprisingly held the federal-funds rate at 0.0%-0.25%. Though some of the voting members changed because of the new year, the vote was still unanimous. The Federal Reserve continues to signal that it will remain very accommodative for some time and that it plans to hold off on any less accommodative measures until the recovery in the labor market and the economy, along with a recovery in inflation, is essentially completed. We anticipate that the FOMC will be in a holding pattern for some time, with the meetings and releases likely to be relatively mundane for a while.

The Fed plans to continue to increase its holdings of Treasuries by at least $80 billion a month and its holdings of agency mortgage-backed securities by at least $40 billion a month, which has been the case since June 2020. There were some slight updates to the language of the release. The Fed highlighted that the economic recovery has begun to stall out, whereas in the last release, its emphasis on the progress of the recovery was more prevalent. The Fed also took out certain language related to timing, taking out “in the near term” and “over the medium term” when describing the effects of COVID-19 on inflation and the economic outlook, respectively. We interpret this as the Fed removing language that potentially limits the expected timeline regarding the pandemic’s effects on the economy and inflation. In other words, there is no expected time limit for how long inflation or the economy could be weighed down, and therefore the current accommodative policy is not limited to the near or medium term. This is subtly more dovish, in our view, but again, the differences are admittedly quite slight.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.