Fed Strongly Indicates Maintaining Zero Interest Rates Until Economic Recovery (Comprehensive)

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The United States central bank, the Federal Reserve (Fed), announced that it will keep the benchmark interest rate unchanged and maintain a 'zero interest rate' for the time being.

On the 10th (local time), the Fed announced through a statement released after the Federal Open Market Committee (FOMC) regular meeting that the existing interest rate was kept steady at 0.00~0.25%.

The Fed also indicated through a separately released dot plot that the zero interest rate will be maintained until 2022. The dot plot is an indicator showing FOMC members' future interest rate projections. Although signs of real economic recovery are emerging due to the recent reopening of economic activities, the Fed clearly stated its position to continue supporting the economy with zero interest rates until the damage caused by the novel coronavirus infection (COVID-19) is fully recovered.

The Fed reiterated, "We will deploy the full range of tools to support the U.S. economy during this challenging time."

The Fed also announced that it will continue monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage-backed securities.

In this statement, the Fed also released a new economic outlook for the U.S. economy. The Fed expects the U.S. economy to contract by 6.5% this year and grow by 5% next year. The growth rate for 2022 is projected at 3.5%. The unemployment rate is expected to reach 9.3% by the end of the year.

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