WASHINGTON (Sputnik) – The Federal Reserve left US interest rates unchanged on Wednesday in a range of zero to 0.25 percent, saying it will maintain those levels until it was sure the world’s largest economy was fully back on its feet from the debilitating effects of the coronavirus pandemic.
“The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world”, the Fed said in a statement issued after the conclusion of its two-day Federal Open Market Committee meeting for June. “In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals”.
The US economy shrank 5 percent in the first three months of 2020, its worst for a quarter since the 2008/2009 financial crisis. Most economists expect a double-digit contraction for the second quarter through June that when combined with the first quarter, would technically result in the deepest recession in American history.
As for employment, the country lost a total of 21.2 million jobs in March and April, though it also saw a surprising gain of 2.5 million in payroll numbers for May, despite businesses in many of the 50 US states remaining closed at least midway through the month in an attempt to control the spread of the COVID-19.
The Fed statement said that in order to support the flow of credit to households and businesses over coming months, the central bank will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities to sustain smooth market functioning and effective transmission of monetary policy to broader financial conditions.
In addition, the Fed said its Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations.