US Capital

Fed signals rates will stay near zero for at least three years

From Transport Topics.

The Federal Reserve left interest rates near zero and signaled it would hold them there through at least 2023 to help the U.S. economy recover from the coronavirus pandemic.

The Federal Open Market Committee “expects to maintain an accommodative stance of monetary policy” until it achieves inflation averaging 2% over time, and longer-term inflation expectations remain well anchored at 2%, the central bank said in a statement Sept. 16 following a two-day policy meeting.

The statement reflects the central bank’s new long-term policy framework in which officials will allow inflation to overshoot their 2% target after periods of underperformance. That shift was announced by Chair Jerome Powell last month at the central bank’s annual Jackson Hole policy conference.

The vote, in the FOMC’s final scheduled meeting before the U.S. presidential election Nov. 3, was 8-2. Dallas Fed President Robert Kaplan dissented, preferring to retain “greater policy rate flexibility,” while Minneapolis Fed President Neel Kashkari dissented in favor of waiting for a rate hike until “core inflation has reached 2% on a sustained basis.”

See the complete article from Transport Topics online.