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Fed Anticipates Rates Remain Near Zero Until 2022

On Wednesday the Federal Reserve monetary policy-setting committee said it anticipates to leave its benchmark lending rate at near zero until at least 2022 as the economy continues to try and recover from the impact of the COVID-19 pandemic.

As many expected, the Federal Open Market Committee, kept the fed funds rate at between zero and 0.25% at the end of its two-day meeting.

The Fed states the coronavirus pandemic is causing “tremendous human and economic hardship” globally as activity has dropped steeply and job losses hiked as authorities ordered their economies to shut down to protect the health of its citizens.

The Fed said the outbreak is causing “tremendous human and economic hardship” worldwide as activity declined sharply and job losses surged as authorities moved to shut

“Weaker demand and significantly lower oil prices are holding down consumer price inflation,” the Fed said in a statement. “Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to US households and businesses.”

Fed Chair Jerome Powell said, “The Fed expects a recovery starting in the second half of this year.”

Also, they said in the upcoming months that they will increase holdings of Treasury securities and agency residential and commercial mortgage-backed securities to help credit flow to businesses and households. Its Open Market Desk would continue to offer large-scale overnight and term repurchase agreement operations and adjust plans if required.

In the meantime, the FOMC said in its first Summary of Economic Projections for the year that predicts interest rates to run at an average rate of 0.1% through 2022 before a longer-run estimate of 2.5%. The members of the FOMC see a 6.5% pullback in economic output laid out for this year before a rebound of 5% growth in 2021.

The fed has been set to report the projections at the interest-rate meeting back in March, but due to the current crisis, the release was canceled, cutting rates to nearly zero.

The unemployment rate is expected to be viewed at 9.3% in 2020, compared with the December projection for 3.5%, while core personal consumption expenditure inflation is estimated at 1% this year, slower than the 1.9% pace previously seen.

By Brett David

Brett David is a digital marketing and finance professional for nearly 10 years now and a contributing author for StockMarket.com. His passion for digital marketing and the stock market began after graduating with a B.S.B.A in business administration and finance. After completing college, he went on to becoming an entrepreneur in the marketing and finance space, which led to becoming a contributor to outlets such as ThriveGlobal.com, MarijuanaStocks.com, MarketingAgency.com and SearchEngineWatch.com.

Brett loves the ability to deliver to his readers engaging and educational content that can be easily consumed by the reader. He enjoys writing about a wide variety of companies ranging from blue-chip stocks to the undervalued small and micro cap stocks. His favorite stock market sectors today to write about are: Tech, Cannabis, Mining, Biotech, and TMT.

Brett has worked with hundreds of publicly traded companies on increasing their digital footprint and corporate outreach since 2013.

You can find Brett most of time digging through corporate filings conducting fundamental analysis or at an industry conference looking for the next big trend or company to hit the street. His digital marketing experience gives a competitive edge over other contributing authors by allowing him to see and analyze trends faster than the next person.

Brett, a South Florida native, enjoys spending time with his wife and son outdoors, and is an avid basketball and MMA fan.

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