Fed Holds Policy Steady as Pandemic Risks Recovery

The Fed kept the interest rate and the bond-purchase program unchanged, reiterating its pledge to use its full tools to support the US economy against the pandemic.

The Fed added in its monetary policy statement issued on Wednesday that it decided to fix the interest rate at a level ranging from zero to 0.25%, according to analysts' expectations.

"The Fed has set short-term interest rates near zero, launched a bond-purchase program of $120 billion a month, and said it would keep simulative measures in place until its goals of lower unemployment and 2% inflation are achieved," WSJ wrote.

The Federal Reserve stated that the pace of recovery in economic activity and employment has slowed in recent months, with weakness concentrated in the sectors most affected by the pandemic.

“Fiscal conditions remain favorable, in part reflecting policy measures to support the economy and the flow of credit to American households and companies,” the statement added.

Federal Reserve statement

The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic.

Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.