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Rates stopped at current levels at least until 2023 and purchases of securities at current rates were held for longer. The Federal Reserve expands its expansionary orientation following the adoption of the new strategy. In the last meeting before the US elections, the Fed did not change interest rates. The cost of money remains constant between 0 and 0.25%.
The Fed expects the US economy to contract 3.7% this year with an unemployment rate of 7.6% and inflation of 1.2%. For 2021, the GDP rebound is estimated between 3.6 and 4.7%, lower than the 4.5-6.0% expected in June. The Fed will leave rates near zero until maximum employment is reached. Rates are expected to remain at current levels for the next three years, at least until 2023.
“Economic activity and employment have improved in recent months but remain well below the levels of the beginning of the year.” This was stated by the Fed promising “to use all the tools at its disposal to support the economy.” The road to recovery “will depend significantly on the evolution of the virus. The health crisis will continue to weigh on economic activity, employment and inflation in the short term, and poses significant risks to the medium-term economic outlook.”
Social distancing and masking help the economy, the course of which will depend on the ability to contain the coronavirus. This was stated by Jerome Powell, Chairman of the Fed. Donald Trump has questioned the positive effects of wearing a mask even in recent hours.
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