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WASHINGTON: The US Federal Reserve on Wednesday left its benchmark interest rate unchanged at the all-time low near zero after concluding the final 2020 policy meeting, while expecting rates to stay there until at least 2023, reported the Xinhua news agency.
“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the Fed said in a statement after the meeting, noting that the trajectory of the economy will significantly depend on the course of the virus.
“The current public health crisis will continue to weigh on economic activity, employment and inflation in the short term, and poses considerable risks to the economic outlook in the medium term,” the Fed said, deciding to maintain the target range for the government. federal. fund rate from 0 to 0.25 percent.
The central bank also said it will continue to increase its holdings of Treasury securities by at least $ 80 billion (RM323.32 billion) per month, and of agency mortgage-backed securities by at least $ 40 billion. (161.66 billion ringgit). per month until “additional substantial progress has been made” toward the Fed’s maximum price stability and employment targets.
“We believe that the increase in our balance sheet has materially eased financial conditions and is providing substantial support to the economy,” Fed Chairman Jerome Powell said at a virtual press conference Wednesday afternoon.
“Our improved balance sheet guidance will ensure that monetary policy remains highly accommodative as progress is made,” he said.
Powell also said he expected the US economy to “perform strongly” in the second half of next year as more people get vaccinated.
“You have to think that sometime in the middle of next year you will see people feel comfortable going out and participating in a wider range of activities,” he said.
The Fed cut interest rates to near zero in two unscheduled meetings in March and began buying massive amounts of US Treasuries and agency mortgage-backed securities to repair financial markets.
Most Fed officials expected interest rates to stay close to zero until at least 2023, according to new Fed economic projections released Wednesday.
The new projections also showed that Fed officials expected the US economy to contract 2.4 percent this year, better than their previous projection of a 3.7 percent drop in September. – Called
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