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Fed not confident on long-term recovery

By Sarah Kendell
 — 1 minute read

The US Federal Reserve has announced its latest interest rate decision, with the emergence of the Delta strain of COVID-19 appearing to have tempered its previous optimism on the nation’s economic recovery.

The US central bank left interest rates unchanged after its most recent meeting, signalling that it still did not see inflation moving persistently above target levels.

The Fed said while indicators of economic activity and employment had “continued to strengthen” on the back of the US’ successful vaccine roll-out, “the sectors most adversely affected by the pandemic have shown improvement but have not fully recovered”.

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“The path of the economy continues to depend on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain,” the central bank said.

The Fed’s open markets committee said it would continue to maintain “an accommodative stance of monetary policy” until inflation was averaging 2 per cent in the long-term.

“In assessing the appropriate stance of monetary policy, the committee will continue to monitor the implications of incoming information for the economic outlook. The committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee’s goals,” the bank said.

The central bank also opted to continue its $80 billion a month bond-buying program until “substantial further progress” was made towards improving employment and inflation outlook.

 

Fed not confident on long-term recovery
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