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The Federal Reserve System (Fed), the central bank of the United States, announced at a regular meeting of the Federal Open Market Committee (FOMC) on the 16th (local time) that it will maintain its zero interest rate policy until less late 2023.
Furthermore, “it has expressed a policy of retaining the rate hike until it reaches 2% inflation (inflation rate). The introduction of Forward Guardians (preventive guidance), which declares a policy of long-term low interest rates, is in a hurry to recover from the new coronavirus infection (Corona 19).
According to Reuters and others, the Fed has held a regular FOMC meeting, a two-day monetary policy meeting, and decided to keep the current Federal Fund rate (FFR) at 0.00 ~ 0.25%.
The Fed, which decided on a zero interest rate in response to the new coronavirus infection (Corona 19) in March, continued its freeze mode. The quantitative easing policy, which was resumed in March, also raised US government bonds worth $ 80 billion (93 trillion won) per month. The Guaranteed Securities (MBS) decided to maintain the current rate at $ 40 billion (46 trillion won) per month. At the meeting, 17 attendees, including President Jerome Powell, directors and governors of banks in each state, presented policy policies and economic prospects through 2023, respectively. Thirteen said they would maintain the zero interest rate policy until 2023. No participant had to consider introducing negative interest rates.
In a statement that day, the Fed said in a statement that “the labor market will recover to the level that ΔFOMC sees as full employment ΔInflation reaches 2% ΔTemporarily, we will maintain zero interest rates until we reach a trajectory in which the inflation smoothly exceeds 2% ”.
Japanese business magazine Nihon Keizai said: “Through Forward Guardians, which promises a low interest rate policy to the market, the market can judge that the low interest rate policy is durable. This makes it easier for entrepreneurs to raise funds for investors ”, he analyzed.
After this year, the economic outlook was expected to recover in stages. Regarding the average value of 17 participants, the estimate of real economic growth this year for the United States was -3.7%, which increased from June (-6.5%). The unemployment rate is expected to fall from the highest level in April (14.7%) to 7.6% in October-December and to 5.5% next year.
However, President Powell said at a press conference after the interest rate announcement that day, “The economic recovery was better than expected, but economic activity in the United States was still decelerating sharply than before Corona 19. The economic outlook is also very uncertain. ”
President Powell said: “Overall economic activity is well below the pre-Corona 19 pandemic level. The way forward is very uncertain,” he said. “It will take some time to get back to solid levels of economic activity and employment early this year. To achieve this, monetary policy and fiscal policy may require continued support. “
(Seoul = News 1)
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