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The United States Federal Reserve (Fed) left the policy rate unchanged at 0-0.25 percent within expectations.
In the statement made by the Fed, it was stated that the decision to keep the interest rate constant was accepted by 2 votes to 8.
In the statement made after the first meeting of the Federal Open Market Committee (FOMC) held after the new monetary policy strategy that Fed Chairman Jerome Powell said at the Jackson Hole meetings on August 27, he reiterated that the The Fed is determined to use all its tools to support the US economy in this difficult period.
The statement noted that the new type of coronavirus epidemic (Kovid-19) caused economic difficulties in the US and around the world, “Economic activities and employment have recovered in recent months, but have remained very below levels at the beginning of the year. ” It was evaluated.
“THE JOURNEY OF THE ECONOMY WILL DEPEND ON THE BIG VIRUS”
In the statement, it was noted that weaker demand and the significant drop in oil prices are putting downward pressure on consumer price inflation, noting that general financial conditions have improved in recent months.
In the Fed statement, “The course of the economy will largely depend on the course of the virus. The current public health crisis will continue to put pressure on economic activity, employment and inflation in the short term, and will create significant risks. on the medium-term economic outlook. ” expression was used.
In the statement emphasizing that the Committee aims to achieve “maximum employment” and a “2 percent inflation rate” in the long term, the Committee will seek to achieve inflation slightly above 2 percent for a time, to that inflation remains below the long-term goal. Expectations were reported to have been set at 2 percent.
ASSET PURCHASES WILL CONTINUE
In the statement, it was emphasized that the committee is expected to maintain the harmonious stance of monetary policy until these results are obtained, and it was noted that the target range for the federal funds rate was decided between 0 and 0.25 percent.
“It would be appropriate to maintain this target range until labor market conditions are in line with the Committee’s maximum employment assessments, and inflation reaches 2 percent and exceeds this level for a time,” the Fed said in its release. It was evaluated.
It is noted that the bank will increase purchases of treasury bonds and mortgage-backed securities at the current rate, at least the current rate, to support the flow of credit to households and businesses to keep the market running smoothly and help develop harmonious financial conditions.
NO CHANGE IN THE INTEREST RATE IS EXPECTED UNTIL 2023
In the statement, it was emphasized that if risks arise that may hinder the achievement of the Committee’s goals, the Committee will be ready to change its monetary policy stance appropriately.
In the statement, which also included forecasts on the economy, it was noted that no changes in interest rates are expected until 2023.
In the statement, it was noted that the Fed’s average expectation for the financing rate was 0.1 percent for 2020, 2021, 2022, and 2023, and the average long-term interest expectation was 2.5 percent. .
In the statement, which indicated that the long-term growth expectation for the US economy rose to 1.9 percent, it was estimated that the country’s economy, which was expected to contract 6.5 percent, will contract 3.7 percent this year. The statement predicted that the economy will grow 4 percent in 2021, 3 percent in 2022 and 2.5 percent in 2023.
UNEMPLOYMENT AND INFLATION ESTIMATES
The statement, which also includes estimates of the unemployment rate, indicated that the unemployment rate in the country is expected to be 7.6 percent this year, 5.5 percent in 2021, 4.6 percent in 2022. and 4 percent in 2023.
In the statement, it was indicated that inflation is expected to be 1.2 percent this year, 1.7 percent in 2021, 1.8 percent in 2022 and 2 percent in 2023.
Fed Chairman Jerome Powell announced at the Jackson Hole meetings on August 27 that the monetary policy strategy had been changed and that the bank would aim for “average” inflation of 2 percent.
“Maximum employment is a broad and inclusive goal,” said Powell, who did not set a numerical goal for employment. she had used the expression.
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