Federal Reserve warns of continued need to protect US economy


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Federal Reserve Chairman Jerome Powell holds a press conference to explain the Fed’s strategy.

The US central bank has reiterated its vow to protect the US economy in the face of rising coronavirus rates and concerns about growth.

The Federal Reserve kept interest rates hanging at near zero on Wednesday, saying it would keep them there for as long as needed.

A Fed statement said there were signs of an economic recovery recently.

But he warned that the long-term trajectory of the economy was tied to the trajectory of the virus.

“After sharp declines, economic activity and employment have recovered somewhat in recent months, but remain well below their levels at the start of the year,” policy makers said after their report. last two-day meeting.

All members of the Fed’s policy-making committee voted to leave the target range for short-term interest rates between 0% and 0.25%, where it had been since March 15, when the Covid- 19 was beginning to take hold in the country.

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“The Committee plans to maintain this target range until it is satisfied that the economy has withstood recent events and is on track to meet its maximum employment and price stability targets,” the Committee said. statement, adding: “The trajectory of the economy will depend greatly on the evolution of the virus. ”

Economists have said the Fed’s stance on interest rates suggests they are unlikely to rise significantly for some time.

Gregory Daco, Chief US Economist at Oxford Economics, said: “We expect rates to take off until mid-2024 as inflation struggles to reach 2% on a sustained basis and the unemployment rate slows. [behind] improvement of the economy as a whole. ”

Bankrate.com chief financial analyst Greg McBride said the Fed’s low rate strategy had kept credit going to consumers and businesses, helping to support the housing market and retail spending.

“But they can’t tame the virus or manufacture demand, and that’s what the economy desperately needs to bounce back,” he said.


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