The Fed has improved its economic forecast, promising to continue buying bonds

The Fed has improved its economic forecast, promising to continue buying bonds

The US Federal Reserve (Fed) has said it will continue to buy government bonds until the economy makes "substantial" progress, in an effort to calm the financial markets. The US Federal Reserve also expressed expectations to keep its key interest rate close to zero until at least 2023. At this level, the Fed has maintained a key rate since March, when it took extraordinary steps to combat the recession caused by the pandemic. The US Federal Reserve has improved its economic forecast for next year. This improvement probably reflects the expected impact of coronavirus vaccines. The Fed now predicts that the US economy will shrink by 2.4 percent this year, while in September it estimated this year's decline at 3.7 percent. According to the Fed, the US economy will grow by 4.2 percent next year, and forecast growth of four percent in September. The latest statement by the US Federal Reserve on monetary policy came at a time when the economy is slowing down and may shrink during the winter, as the pandemic imposes new restrictions on business. Considering a gloomy short-term outlook as well as a brighter long-term picture complicates monetary policy decisions. Fed chief Jerome Powell acknowledged these difficulties and said that although the economy and labor market are expected to recover significantly in the second half of 2021, "the problem is the next four to five months" as the coronavirus continues to weaken economic growth.