The Fed maintained the basic interest rate
The Fed maintained the basic interest rate
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The Fed acts with caution until the results of the American presidential election
On Thursday, Fed Chairman Jerome Powell spoke after a meeting of the Federal Open Market Committee (FOMC), reporting on the Central Bank's position on US monetary policy.
As many experts predicted, the Fed maintained its benchmark interest rate between 0% and 0.25% as its officials had previously stated that it would maintain this level until at least 2023.
Powell's speech included cautious statements calling on Congress to pass the Cares 2 bill to provide additional financial support to the US economy.
Powell said that it would take time for economic activity and occupation to return to the levels of the beginning of the year and expressed the hope that after many discussions between the two parties, at least some additional financial support would be adopted, then and to the extent that Congress considered appropriate. Gross Domestic Product (GDP) in the third quarter showed the fastest growth ever, increasing by 33.1 per cent after a sharp 31.4 per cent fall in the second quarter. The economy recovered 11.4 million of the 22 million jobs lost in March and April.
However, according to Powell, the economic recovery has slowed down in recent months. The reasons for this may be a weak labour market recovery, quarantine restrictions and an increase in COVID-19 morbidity.
The unemployment rate has fallen in the last five months, but remained elevated at 7.9% as of September.
Powell reiterated that the Fed's policy will continue to be "adaptive" depending on the conditions of the pandemic and job recovery in the US and the financial assistance provided by the government to support the unemployed and small and medium-sized businesses. The Fed has also repeated that it will aim to keep inflation at a high level of 2% for some time and maintain long-term inflation expectations at 2%.
Powell said: "I think we are firmly committed to using the powerful tools we have to support the economy in these difficult times as long as necessary and no one should have any doubts about that".
Persons1 and Companies2 in the news
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POWELL Jerome
6th Chair of the Federal Reserve
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