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30.07.2020 10:55 AM
Fed keeps interest rate at 0.25%

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The Fed concluded its two-day meeting on Wednesday, reaffirming its commitment to keep rates near zero on purchases of Treasury bonds and a range of other securities. Fed Chairman Jerome Powell made it clear that the regulator is ready to do more, and said that the review of the strategy of monetary policy and communications, which the central bank launched last year, will be completed soon.

The meeting also highlighted the recent signs of economic recovery, so all members of the committee voted unanimously in maintaining interest rates at 0% -0.25%, and change it as soon as the economy stabilizes. "The committee plans to keep the interest rate at 0% -0.25% until there is confidence in the stability of the economy," the Fed stated.

However, economists argue that the Fed's stance on interest rates suggests that they are unlikely to raise the range over time.

Assistance programs, which were given especially to unemployed Americans, were also discussed.

Politicians were divided over whether to provide additional support worth trillions of dollars, that is, Republicans introduced another recovery plan in an amount of $ 1 Trillion.

Gregory Daco of Oxford Economics said: "We predict that rate cuts will not occur until mid-2024, as inflation is close to 2% and unemployment is lagging behind."

Greg McBride of Bankrate.com also said the Fed's low-rate strategy supported consumer and business lending, which helped support the housing market and retail spending. "But they cannot tame the virus or increase demand, which is what the economy needs to bounce back," he said.

The results of the meeting raised the dollar slightly against other assets such as gold and risk currencies.

Andrey Shevchenko,
Analytical expert of InstaForex
© 2007-2024
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