WASHINGTON (dpa-AFX) - Citing the economic hardships caused by the COVID-19 pandemic, the Federal Reserve left interest rates unchanged on Wednesday and signaled rates are likely to remain at near-zero levels for years to come.
The Fed announced its widely expected decision to keep the target range for the federal funds rate at zero to 0.25 percent.
The central bank said it expects rates to remain at current levels until labor market conditions reach levels consistent with maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.
The economic projections provided along with the announcement suggest most Fed officials expect interest rates to remain unchanged through at least 2023.
The Fed stressed it would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of it goals.
In its assessment of the economy, the Fed noted activity and employment have picked up in recent months but remain well below their levels at the beginning of the year.
The Fed also said weaker demand and significantly lower oil prices continue to hold down consumer price inflation.
The statement referenced the Fed's recent shift toward 'average inflation targeting,' saying the central bank will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time.
The projections from Fed officials suggest consumer price inflation will remain below 2.0 percent until at least 2023.
The Fed's latest estimates point to a 3.7 percent contraction in GDP in 2020, reflecting an improvement from the 6.5 percent plunge forecast in June.
However, the Fed downwardly revised its estimates for GDP growth in 2021 and 2022 to 4.0 percent and 3.0 percent, respectively. GDP growth in 2023 was forecast at 2.5 percent.
The central bank reiterated its commitment to using its full range of tools to support the U.S. economy in this challenging time.
Two Fed officials, Dallas Fed President Robert S. Kaplan and Minneapolis Fed President Neel Kashkari voted against Wednesday's decision.
The Fed said Kaplan preferred retaining greater policy rate flexibility, while Kashkari preferred indicating rates will remain at current levels until core inflation has reached 2 percent on a sustained basis.
Following the announcement, Fed Chair Jerome Powell is scheduled to deliver his post-meeting press conference beginning at 2:30 pm ET.
Copyright RTT News/dpa-AFX
© 2020 AFX News
