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Federal Reserve Holds Rates Steady as U.S. Economy Still in Recovery

EconomyNov 05, 2020 14:11
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© Reuters.

By Christiana Sciaudone

Investing.com -- The Federal Open Market Committee held its short-term rate at 0.25%, as expected by analysts.

“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the FOMC said in a statement. "Weaker demand and earlier declines in oil prices have been holding down consumer price inflation." 

Fed officials have spoken publicly in recent months about the need for more stimulus to support a recovery, though Congress has been unable to reach an agreement on a plan to give aid to households and businesses.  

"Over coming months the Federal Reserve will increase its holdings of Treasury securities and agency mortgage-backed securities at least at the current pace to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses," according to the statement. 

The Fed held its periodic two-day meeting this week, amid the U.S. election that has yet to see a clear winner. Former Vice President Joe Biden is in the lead, with 264 electoral votes to President Donald Trump's 213. Pennsylvania and Nevada are among those states most likely to impact the result.

In September, policy makers agreed to hold rates until the labor market improves and inflation reaches 2%, not expected until 2023 or 2024. 

The bankers are expected to have discussed the future of the Federal Reserve’s asset-purchase program at this week's meeting, either shifting what they buy or how much, according to Bloomberg.        

 

Federal Reserve Holds Rates Steady as U.S. Economy Still in Recovery
 

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