The Federal Reserve decided during its meeting today to keep interest rates unchanged, reiterating that monetary policy will remain supportive of further easing for a longer period of time to support the ongoing economic recovery.
The FOMC kept the benchmark interest rate unchanged in the 0% to 0.25% range. The vote was taken to keep the interest at near-zero levels for a longer period of time by consensus of the members, except for bank member Robert Kaplan, who indicated that interest should be kept until economic conditions improve, and also a member of Kashkari Bank who believes that interest should be kept until the inflation rate reaches 2%.
The Federal Reserve also reiterated its pledge to maintain policies that support expansion and face the repercussions of the Corona pandemic in light of weak global and local demand, and the monetary policy of the bank will remain in this situation until the bank makes sure of improving economic conditions and achieving price stability, which may not occur before 2023.
The bank indicated that the economy witnessed an improvement in employment and spending rates in recent months with the return of economic activity to work again, but it is still at pre-crisis levels. This indicated the success of monetary policy in supporting the economy.
The Federal Reserve also announced a change in its economic forecasts, as it raised growth expectations to -3.7% in 2020, after it was at -6.5%, and lowered 2021 growth forecasts to 2% and 3% in 2022.
As for inflation, the
bank’s expectations rose in 2020 to 1.2% from 0.8%, and it also raised
inflation expectations in 2021 to 1.7% and in 2022 to 1.8%.