In the coming months, the regulator plans to continue buying treasury bonds for at least $80 billion a month.
The US Federal Reserve, which serves as the country’s central bank, kept its benchmark interest rate at 0-0. 25%, as expected by the market. This is stated in the message of the financial regulator following the meeting of its management.
“The Committee [on Open Market Operations] has decided to maintain the target range of the federal funds rate at 0-0. 25% and believes that it will be appropriate to maintain this range until labor market conditions reach levels consistent with estimates of maximum employment, as well as an increase in inflation to 2%,” the regulator said in a statement.
Also, in the coming months, the Fed plans to continue buying at least $80 billion in Treasury bonds monthly, as well as mortgage-backed securities (MBS) for at least $40 billion monthly, until significant progress is made on maximum employment and price stability. “Asset purchases contribute to the smooth functioning of the market and provide a favorable financial environment that supports the flow of credit to households and businesses,” the regulator added.
The Fed stressed that the COVID-19 pandemic continues to put pressure on economic activity, employment, and inflation and also poses significant risks to the economic outlook – both in the US and around the world. “Economic activity and employment indicators have improved recently, but the sectors most affected by the pandemic remain weak. Inflation also remains below 2%. Overall financial conditions remain favorable, which partly reflects policy measures to support the economy,” the report explains.
The Fed has improved its forecast for US GDP growth in 2021 from 4.2% to 6.5%. This is stated in the updated macro forecasts of the regulator.
US GDP growth in 2022 is expected to reach 3.3% against 3.2% projected in December, in 2023-at the level of 2.2% against 2.4%.
The Fed also raised its forecast for inflation in the United States in 2021 to 2.4% from 1.8%. The forecast of inflation in 2022 is also increased to 2% from 1.9%, in 2023-to 2.1% from 2%.
The forecast for US unemployment in 2021 was lowered to 4.5% from 5%. In 2022, the indicator, according to the US Federal Reserve, will be at the level of 3.9% against 4.2%, in 2023 – at the level of 3.5% against 3.7% projected in December.