US Federal Reserve keeps interest rates near zero

US Federal Reserve keeps interest rates near zero

Washington: The US Federal Reserve has kept its benchmark interest rate unchanged at a near-zero level, as the inflation debate has heated up, driven by the Kovid-19 vaccination progress and the latest relief package.
The Fed said in a statement after the conclusion of its two-day policy meeting, “Following the decline in the pace of recovery, indicators of economic activity and employment have changed recently, although the sectors most affected by the epidemic are weak. ” Wednesday.
Noting that inflation is running below 2 percent, the Federal Bank’s policy making body, the Federal Open Market Committee (FOMC), reaffirmed that it would aim to achieve inflation above 2 percent for some time so that Inflation is 2 per. Over time and long-term inflation expectations remain at 2 percent.
The Fed also said it would continue an asset purchase program, and buy bonds of at least $ 120 billion per month, making its holding of Treasury securities at least $ 80 billion and agency mortgage-backed securities at least Increases by $ 40 billion.
“These measures will continue to provide powerful support to the monetary policy economy, with our strong guidance on interest rates and on our balance sheets,” Fed President Jerome Powell said at a virtual press conference. Wednesday afternoon.
Since January, the number of new Kovid-19 cases, hospitals and deaths has fallen, and ongoing vaccinations “expect a return to more normal conditions later this year”, he said.
The Fed’s chair, however, noted that the economic recovery is “uneven and far from complete”, and that the path ahead remains “uncertain”.
In the labor market, for example, conditions have “changed recently”, but employment is still 9.5 million below its pre-epidemic level, he said, adding that the unemployment rate in February remained at 6.2 percent.
Fed officials expect the US economy to grow 6.5 percent this year, which was 4.2 percent better than the previous projection in December 2020.
The newly passed $ 1.9 trillion relief package, the first legislative victory for President Joe Biden, went into effect over the weekend, with some Americans already receiving $ 1,400 direct payments.
The large-scale relief package, which helps fight the epidemic and helps strengthen the ravaged economy, could also boost the economy, inflationary pressures and rising interest rates, economists have warned.
The Fed’s chair noted that fiscal support has helped to reduce and support economic recovery, but more so to boost productive capacity or raise living standards over time.

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