Fed maintains dovish stance despite upgrading 2021 US growth to 6.5%

Fastest economic expansion since 1984 expected

Federal Reserve officials took a dovish stance in March's FOMC meeting yesterday, signalling that interest rates are likely to remain unchanged until 2024, despite a significant upgrade to US growth forecasts.

The Fed increased its US growth expectations for the year to 6.5% from the 4.2% forecast in December, which would mark the fastest economic expansion since 1984, on the back of fiscal stimulus and an accelerating vaccine rollout. However, over the next two years, real GDP growth is expected to drop to 3.3% and then 2.2%, respectively. Officials also expect unemployment to drop from 6% to 3.5% by 2023, while core personal consumption expenditure inflation is expected to rise beyond the 2% target to 2.2% this year, before dropping back down to 2% in 2022 and 2.1% in 2023. Despite thi...