Federal Reserve has kept its base rate at 0-0.25% per annum
The US Federal Reserve System (FRS), following the September meeting, kept the base interest rate at 0-0.25% per annum, the regulator said in a press release.
The regulator has kept the base rate for the twelfth time after it twice unscheduled reduced it in March 2020 to the level of 0-0.25% per annum. Previously, the rate was at this level in the period from December 2008 to December 2015. The Fed has decided to cut rates in response to the dire economic impact of the coronavirus outbreak.
The US Federal Reserve plans to continue buying assets from the market at $ 120 billion per month until significant progress in achieving employment and inflation targets, the regulator said in a statement following the September meeting.
“The Federal Reserve will continue to increase its balance sheet in government bonds worth at least $ 80 billion per month and mortgage-backed securities by at least $ 40 billion per month until significant further progress in meeting the targets for maximum employment and price stability, “the release says.
The regulator notes at the same time that the economy has made progress in achieving the set goals. Therefore, if progress continues as a whole in line with expectations, then, as the committee reasoned, a slowdown in the redemption rate is possible soon.
The regulator indicates that the inflation target is 2%.
The US Federal Reserve System (FRS) has downgraded its forecasts for GDP and unemployment and raised its forecast for inflation in the country for 2021, according to a press release from the regulator.
forecast for US GDP growth for 2021 worsened 5.9% from 7% in June, for unemployment – to 4.8% from 4.5% in June, inflation – increased to 4.2% from 3.4%.
Same time, for 2022, the forecast for GDP growth was improved to 3.8% from 3.3%, expected in June, for unemployment, kept it at the level of 3.8%. The inflation forecast has to 2.2% from 2.1%.
The forecast for core inflation for 2021 to 3.7% from 3%, and for 2022 – to 2.3% from 2.1%.
All 18 members of the Open Markets Committee of the Federal Reserve System of the United States at the end of the September meeting, as in June, predict the base interest rate in 2021 at the level of 0-0.25%, but already in 2022, it is possible to increase it, it follows from the economic forecast of the regulator.
In 2022, 9 committee members expect the rate to remain 0-0.25%, while nine people expect an increase: six favor raising it to 0.25-0.5% and three – to 0, 5-0.75%.
In 2023, only one person expects the rate to remain at 0-0.25%. remaining 17 spoke increase compared to the current year: four – up to 0.25-0.5%, three – up to 0.5-0.75%, one – up to 0.75-1%. At the same time, six people expect a rate of 1-1.25%, three – at the level of 1.5-1.75%.
Opinions rate in 2024 are divided: six people expect the speed at around 2-2.25%, while the forecasts of the rest vary in 1-3 votes from 0.5-0.75% to 2.5-2.75%.
On average, the rate in 2021 will be 0.1%, the regulator notes; in 2022, the rate is expected at 0.3% and not 0.1%, as expected in June. In 2023, the rate is likely to be at around 1% instead of 0.6%, and in 2024 it will be 1.8%. In the long term, the Fed predicts the rate will remain at 2.5% per annum.
