The Federal Reserve Announces Continued Near-Zero Interest Rates

Interest rates will be staying low is the conclusion the Federal Reserve reached in its first meeting since its August decision to keep the benchmark federal funds rate near zero and its last meeting before the November presidential elections.

The Feds renewed its promise to keep interest rates close to zero until a time when they see inflation on a consistent climb.

The decision to keep the benchmark federal funds rate between 0 and 0.25 percent was not a surprise. The low rate has been maintained since March, when the pandemic began to take its toll on the US economy and health. Fed officials expect that the low rates will be maintained at least until 2023. Fed officials also altered their predictions about GDP, saying it would not be as steep a decline as they originally envisioned. They also expect the unemployment rate to reach about 7.6% by the end of this year.

“With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well-anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” the post-meeting statement declared.

About James Cannon

James Cannon is an experienced hedge fund analyst. He has served on the advisory boards for various different Fortune 500 companies as well as serving as an adjunct professor of finance. James Cannon has written for a variety of Financial Magazines both on and off line. Contact James at james[at]businessdistrict.com