May 19, 2021

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The Federal Reserve agreed to strengthen the US economy, but kept interest rates unchanged

Facade of the Federal Reserve Building in Washington, DC (REUTERS / Brendan McDermott / File)

United States Federal Reserve This Wednesday maintained current interest rates (0% to 0.25%) and its monthly bond purchase plans, Acknowledges the growing strength of the economy, but gives no indication that it will begin to reduce its support for recovery.

“As the vaccine progresses, economic activity and employment indicators have strengthened as there has been strong policy support.” At the end of the two-day meeting, the US Federal Reserve said in a unanimous political statement.

However, “The path of the economy depends on the course of the virus, including vaccine advances.”The central bank said. “The current public health crisis continues to weigh on the economy and the risks to the economic outlook continue.”

Comments on the virus echoed slightly less negative views than the central bank’s explanation in March, saying the health crisis “poses significant risks to the economic outlook.”

Despite the recovery in the economy, the Federal Reserve repeated the guidelines used from December to L.Or what should happen before considering the possibility of withdrawing crisis support measures taken at the onset of the epidemic.

Federal Reserve Chairman Jerome Powell (EFE / EPA / AL DRAGO / POOL / File)
Federal Reserve Chairman Jerome Powell (EFE / EPA / AL DRAGO / POOL / File)

One of which “Substantial improvement” towards its inflation and employment targets Before reducing your monthly bond purchases.

Federal Economic Leader Jerome Powell is scheduled to hold a press conference at 18:30 (GMT).

Job growth has accelerated The central bank expects inflation to rise to its 2% target over time, Which will allow the central bank to cut its $ 120 billion monthly bond purchases and eventually Raise the intermediate bank interest rate close to zero from the current level.

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But even the first step in reducing bond purchases may come in a few months, and the central bank does not indicate any urgency.

The economy has not yet recovered the 8 million jobs lost by the health crisis The entire industry was forced to shut down to prevent the spread of the corona virus.

The central bank acknowledged that the vaccine has contributed to expectations for rapid economic growth this year, but depends on continued progress in managing the epidemic.

Reuters and AFP

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