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The United States Federal Reserve (Fed) left the policy rate unchanged at 0-0.25 percent, within expectations. The decision on the interest rate was taken unanimously (10-0).
In its statement, the Fed promised that the Committee will continue to buy $ 120 billion in bonds each month until there is significant progress toward maximum employment and price stability targets. The bank stated that it will continue to buy $ 80 billion Treasury bills and $ 40 billion mortgage-backed securities per month.
On the other hand, the committee did not say anything about the extent of these purchases. The Fed reiterated its commitment to use all means to support the economy. Furthermore, the dollar swap lines were extended until September 2021.
While the Fed’s balance sheet was $ 4 trillion before the pandemic hit economies in March, it rose to more than $ 7 trillion with extraordinary COVID-19 packages.
Growth forecast revised upwards
The Fed, which also made predictions for the economy, noted that there will be no changes in interest rates until 2023.
In the statement, it was noted that the Fed’s median expectation for the financing rate was 0.1 percent for 2020, 2021, 2022, and 2023, and the long-term average interest expectation was 2.5 percent. .
In the statement, the long-term growth expectation for the US economy fell from 1.9 percent to 1.8 percent, and the country’s economy, which is expected to contract 3.7 percent this year in projections, is estimated to September, to contract by 2.4 percent in 2020. The statement predicted that the economy will grow 4.2 percent in 2021, 3.2 percent in 2022 and 2.4 percent in 2023.
The statement, which also includes estimates of the unemployment rate, indicated that the unemployment rate in the country is expected to be 6.7 percent this year, 5 percent in 2021, 4.2 percent in 2022 and 3 , 7 percent in 2023.
In the statement, it was said that inflation is projected to be 1.2 percent this year, 1.8 percent in 2021, 1.9 percent in 2022 and 2 percent in 2023.
