In the statement made by the US Federal Reserve (Fed), it was stated that the decision to keep the interest rate constant was taken unanimously.
In the statement, it was pointed out that the new type of coronavirus (Covid-19) epidemic caused economic difficulties in the USA and around the world, and it was emphasized that the bank was determined to use all its tools to support the US economy in this difficult period, thus supporting the targets of maximum employment and price stability.
The epidemic poses a significant risk to the economic outlook in the medium term
In the statement, it was reminded that the measures taken to protect the epidemic and public health caused sharp declines in economic activity and job losses, and that weakening demand and significantly falling oil prices reduced consumer inflation.
In the statement, it was noted that financial conditions have improved with policy measures to support the flow of credit to companies and households, and it was stated that the public health crisis will continue to put pressure on economic activity, employment and inflation in the near term and poses significant risks on the economic outlook in the medium term.
In the statement, it was noted that in line with these developments, the Open Market Committee (FOMC) decided to keep the target range for the federal funds rate between 0 and 0.25 percent.
Target range maintenance signal
In the Fed’s statement, it was stated that the target interest rate range is expected to be maintained until it is sure that the economy has overcome the recent troubles and is on the path to achieving maximum employment and price stability targets.
It was stated in the statement that the committee will continue to monitor developments regarding the economic outlook, including information regarding public health, and that appropriate tools will be used to support the economy.
In the statement, it was noted that the Fed will increase its purchases of treasury bonds and mortgage-backed securities in the coming months to support the flow of credit to households and businesses.
In the statement, it was stated that large-scale overnight and forward repo transactions will continue and it was underlined that the Committee will follow the developments closely and take appropriate steps.
A 6.5 percent contraction expectation for the American economy this year
In the statement, it was stated that the long-term growth expectation for the US economy was reduced to 1.8 percent, and that the country’s economy is estimated to shrink by 6.5 percent this year, and to grow by 5 percent in 2021 and 3.5 percent in 2022.
In the statement, it was noted that the Fed’s median expectation for the funding rate is 0.1 percent for 2020, 2021 and 2022, and the long-term average interest rate expectation is 2.5 percent.
In the statement, which also included predictions about the unemployment rate, it was stated that unemployment in the country is predicted to be 9.3 percent this year, 6.5 percent in 2021 and 5.5 percent in 2022.
Source: https://www.aa.com.tr/tr/ekonomi/fed-faiz-oranini-sabit-tuttu/1872567
