With the coronavirus pandemic continuing to cause significant economic disruptions and sharp spikes in unemployment, the Federal Reserve will maintain the target range for the federal funds rate at 0 to 0.25%. “We expect to maintain interest rates at this level until we’re confident the economy has weathered recent events,” said Federal Reserve Chairman Jerome Powell during a virtual press conference following the release of the Federal Open Market Committee statement today.
The FOMC noted in its statement that the pandemic “will weigh heavily on economic activity, employment and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.” Powell noted that these risks include the trajectory of the virus, the possibility of damage to the productive capacity of the economy during an extended period of stagnation and the global economy’s response to the pandemic.
Powell added that the Fed in recent weeks has taken “broad and forceful actions” to ensure the functioning of financial markets and the continued flow of credit and liquidity to businesses and households. These actions include the establishment of several credit facilities under the Fed’s authority under Section 13(3) of the Federal Reserve Act, that can be expanded if needed, he said.
He also noted that the Fed is “very close” to releasing a revised term sheet for its Main Street Lending Program. He added that the Fed would continue to evolve the MSLP and “keep looking to add different products and different kinds of borrowers as we go.”