The U.S. economic recovery is going better than expected but not enough for the Federal Reserve to even think of tapping on the brakes.
That's the view from the Fed Wednesday - as it wrapped up its two-day policy meeting.
The central bank now sees the U.S. economy growing 6-1/2 percent this year and the unemployment rate falling to 4-1/2 percent, a noticeable upgrade from the Fed's recent projections.
But policymakers didn’t budge on their key lending rate – holding it steady near zero… where it's been ever since the health crisis began a year ago.
Federal Reserve Chairman Jerome Powell acknowledged the progress but wasn’t ready to declare total victory.
"We can say that some of the very worst economic outcomes have been avoided by swift and forceful action from Congress, from across government and in cities and towns across the country. More people held on to their jobs. More businesses kept their doors open and more incomes were saved as a result of these swift and forceful policy actions. And while we welcome these positive developments, no one should be complacent. At the Fed, we will continue to provide the economy the support that it needs for as long as it takes."
Even with an economy that will soon be flush with a $1.9 trillion economic stimulus package, Powell isn’t worried about the economy overheating. In fact, Powell says the committee wants to see hard facts on the labor market and inflation before it even hints at higher interest rates or thinks of tapering the bond purchases used to keep real rates low.
"When we see actual data coming in that suggests that we're on track to perhaps achieve substantial further progress, then we'll say so and we'll say so well in advance of any decision to actually taper."
He seemed to hit the right tone: stocks jumped during Powell's press conference and bond yields backed off the 13-month peak hit before he began to speak.