June 10, 2020 / Sergei Klebnikov, Forbes Staff
The Federal Reserve left rates unchanged on Wednesday and indicated that they’ll likely remain near zero until at least 2022 as the economy tries to recover from the coronavirus recession.
- The Fed painted a grim view of the economy and said it would recover over the course of a few years: Unemployment will fall to 9.3% by the end of 2020—down from over 13% in May—and to 6.5% by the end of 2021, the Fed projected.
- The Fed sees the economy contracting 6.5% this year, before rebounding somewhat and growing 5% in 2021.
- The central bank also committed to maintaining its unprecedented stimulus plan until the economy has “weathered” the negative impact of the coronavirus pandemic.
- The Fed promised not to reduce the pace of its quantitative easing as it plans to increase holdings of Treasury and mortgage-back securities over the coming months; it pledged to continue its extensive bond buying programs, “at least at the current pace” for the foreseeable future.
- The Fed has so far enacted a slew of emergency initiatives including rate cuts, lending programs and credit facilities that have investors reassurance amid the coronavirus pandemic.