How the Fed’s policy statement has changed this year

September 23, 2021

(Reuters) – The Federal Reserve now says its $120 billion in monthly bond purchases are on the way out as the U.S. economy improves despite the persistence of the coronavirus pandemic.

The shift in policy has taken place over several months as the U.S. central bank marked the benefit of COVID-19 vaccines, and tracked the “substantial further progress” on jobs that it sees as needed to begin tapering its purchases of Treasuries and mortgage-backed securities.

Here is how its guidance evolved this year:

COVID-19

Jan. 27, 2021

Paragraph 2: The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world.

Paragraph 3: 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.

March 17, 2021

Paragraph 2 (unchanged from January): The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world.

Paragraph 3 (unchanged from January): 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.

April 28, 2021

Paragraph 2 (Notes progress on vaccination in new second sentence): The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened.

Paragraph 3 (In second sentence, drops reference to inflation in second sentence and softens assessment of risk to the outlook): 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 the economy, and risks to the economic outlook remain.

June 16, 2021

Paragraph 2 (Amplifies vaccine progress): Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened.

Paragraph 3 (Anticipates continued progress): The path of the economy will depend significantly on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

July 28, 2021

Paragraph 2 (Notes further progress with vaccinations): With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen.

Paragraph 3 (Softens assessment of COVID-19’s influence over the outlook): The path of the economy continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

Sept. 22, 2021

Paragraph 2 (First sentence is unchanged but a revised second sentence acknowledges the impact of the summer-driven surge in cases on pandemic-sensitive economic sectors): With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months, but the rise in COVID-19 cases has slowed their recovery.

Paragraph 3 (Unchanged from July): The path of the economy continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

‘SUBSTANTIAL FURTHER PROGRESS’

Jan. 27, 2021

Paragraph 4 (Unchanged from December when it introduced the “substantial further progress” standard): In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.

This language remained unchanged for the statements issued on March 17, April 28 and June 16.

July 28, 2021

Paragraph 4 (Includes a new sentence acknowledging “progress” has been made): Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings.

Sept. 22, 2021

Paragraph 4 (Includes a new sentence signaling the standard for starting a bond taper may soon be met): Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals. If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted.

(Compiled by Howard Schneider and Dan Burns; Editing by Paul Simao)

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