In the United States, the world's largest economy, the vaccination campaign against Covid-19 is progressing rapidly, and the number of cases is now at its lowest level since October. In this context, the relatively optimistic expectations of households and consumption behavior along with the progress on the recovery path signal that the inflation outlook is upward, led by durable goods and housing, in a setting, on which the Fed implemented ultra-loose monetary policy to minimize the economic effects of the pandemic. However, Fed Chair Powell had stated that they are not thinking about shrinking the balance sheet, after the FOMC meeting dated January 26 - 27, in which the Fed reiterated its commitment to maintain its federal funds target within the range of 0 to 0.25 percent and buy $80 billion a month in Treasuries and $40 billion a month in mortgage-backed securities.  
 
At the meeting, Powell emphasized that economic activity had shown resistance to the downward effects of the outbreak, but remained low compared to the pre-pandemic period, and shared that the path that the economy would follow would depend on the implementation plan of vaccines developed against the outbreak and the course of coronavirus.
 
Powell pointed out that they changed the expression "medium term risks" to "near term risks" in the statement of the Fed and that this change is a sign that it creates a more positive outlook, and also underlined that the increase in inflation due to the base effect will be short-term, noting that it is still too early for a debate on reducing asset purchases.

In the minutes of the FOMC meeting dated January 26 - 27, which will be published tomorrow at 21:00 (GMT+2) the downside risks that committee members evaluated for the economic outlook will be carefully reviewed, despite the expectations of balance sheet reduction. In addition, the lagged effects of the loose monetary policy and the persistency of the rise in inflation due to the recovery in international crude oil prices may be included in the minutes. In addition, how the conditions for the Fed's balance sheet reduction are evaluated by members will be one of the most important signs that market participants will look for in the minutes.