Fed faces tricky act balancing impact of vaccines

The Federal Reserve on Wednesday will offer its first glimpse of how a coronavirus vaccine has changed the U.S. economic outlook, and whether businesses, workers and families need more help from the central bank until inoculations and immunity are widespread.

The conclusion of the Fed’s last policy meeting of 2020 will cap a tumultuous year in which it slashed interest rates, ramped up bond purchases and took other extraordinary measures to stem the economic carnage of the pandemic.

The landscape, however, has changed dramatically since Fed policymakers held their last two-day meeting in early November, with the rollout of one COVID-19 vaccine and another one on the way almost certain to boost the outlook for 2021.

In quarterly economic projections last issued in September, Fed officials at the median saw the economy growing 4% next year and the unemployment rate falling to 5.5%. Analysts expect both figures to be upgraded.

It’s a move many in financial markets have called for and expect at some point, though Fed officials have for the most part said they are not yet ready to do it.