The Fed repeated on Wednesday after its monthly meeting its promise to continue extraordinary support for the economy and its members projected a 6.5% decrease in Gross Domestic Product (GDP) this year and an unemployment rate of 9.3% in late 2020. “The current public health crisis will weigh heavily on economic activity, employment and inflation in the short term and poses considerable risks to the medium-term economic outlook,” the US central bank said in its statement. Although much of the statement echoes the speech from its April meeting, the central bank promised to keep bond purchases at the “current rate” of about $ 80 billion a month in Treasury bills and $ 40 billion a month in government-backed securities. agencies and mortgages, a sign that it is beginning to shape its long-term strategy for economic recovery.
The promise to maintain expansionary monetary policy until the economy recovers again repeats what was said earlier by the central bank in response to the coronavirus pandemic . Measures that included reducing its overnight interest rate to near zero in March and making trillions of dollars of credit available to banks, finance companies and a wide range of companies. But the projections are the first since December and offer the views of the Fed authorities on how fast jobs and economic growth could recover, and initial guidance on how long the federal funds rate will hold.
For most of last year, US central bankers felt they were in an enviable position, with unemployment at record lows, pent-up inflation and a strong expectation that both would continue. But the pandemic has led to what could be a years-long struggle for Americans to return to jobs after an estimated 20 million jobs were lost from March to May.