FED KEEP THE INTEREST RATE FIXED
The US Federal Reserve (Fed) kept its policy rate stable in the range of 0-0.25. In a statement made by the Fed, it was stated that the decision to keep the interest rate fixed was taken unanimously, and that the bank is using all its tools to support the US economy in this challenging period, thereby deciding to support its maximum employment and price stability targets.
In the statement pointed out that the new type of coronavirus (Covid-19) epidemic caused economic problems in the USA and the world.According to the statement, “Following sharp declines, economic activity and employment have recovered somewhat in the past few months, but are well below their new year’s levels.”
It was stated that weakening demand and low oil prices put consumer inflation under pressure, and general financial conditions improved in recent months due to the policy measures to support the economy and the credit flow provided to American households and companies.
“The path to the economy will depend heavily on the course of the virus. The ongoing public health crisis will put heavy pressure on economic activity, employment and inflation in the short term, and pose significant risks to the economic outlook in the medium term.”
In light of these developments, it was stated that the Federal Open Market Committee decided to keep the target range for the federal fund rate at 0-25 percent. It is reported that the target interest rate range is expected to be maintained until the economy is overcome with recent challenges and is on track to reach maximum employment and price stability targets.
It was stated that the Committee will continue to follow developments regarding the economic outlook, including information on public health, and appropriate tools will be used to support the economy.
To support the credit flow for households and businesses, it was noted that the Fed will increase treasury bonds and mortgage-backed securities purchases in the coming months, and large-scale overnight and forward repo transactions will continue. The Fed also announced that it has extended temporary dollar swap lines and repo facilities for foreign central banks until March 31.