By Nick Timiraos
WASHINGTON (Dow Jones) – The US monetary authorities do not expect to raise rates in 2020 and 2021 in their projections. They also feel obliged to provide more support to the economy in order to contain the economic consequences of the pandemic. In order to support the flow of credit to households and businesses, the Federal Reserve plans to keep the purchase program at least at the current level of $ 80 billion per month in the coming months, as stated in the text accompanying the interest rate decision.
The key interest rate was left at 0.00 to 0.25 percent. The decision was made unanimously. Economists and stockbrokers had expected this decision.
In March, as the pandemic worsened, the US monetary authorities lowered the key interest rate to almost zero. In April, they reaffirmed their plans to keep interest rates there until they are confident that the economy is on the right track to push inflation up to its 2 percent target and unemployment to drop again.
The Fed also agreed to buy unlimited government bonds and certain mortgage-backed securities, insofar as this is necessary for the proper functioning of financial markets and Monetary policy is required. On the other hand, the Fed launched several loan programs that are primarily intended to support companies and households.
The May job report and a rebound in both auto sales and mortgage applications suggest that the US economy is experiencing a stronger recovery than initially thought. However, the Fed remains cautious and is ready to take further stimulus measures in the coming months.
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(END) Dow Jones Newswires
June 10, 2020 14:20 ET (18:20 GMT)
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