Federal Reserve to Renew Promise to Use All Tools to Strengthen Economy
The Federal Reserve, which has released trillions in emergency funding into U.S. financial markets to stem the damage from the coronavirus pandemic, is anticipated Wednesday to reiterate its promise to do whatever it takes to support the world’s largest economy.
The U.S. central bank may signal how long, and by what benchmark, it plans to leave rates of interest near zero after the recovery begins from what many economists forecast will be the sharpest slowdown in recorded U.S. history this quarter.
What no one is expecting from lawmakers at this meeting is an extensive forecast for the economy, given the uncertainty around the impact of the virus before a remedy or a vaccine can be discovered.
An increasing number of U.S. states are reopening their economies or setting out plans for easing remain-at-home restrictions, resulting in fears there could be a resurgence of infections over the coming months and a headache for the Fed as it seeks to estimate the swiftness of the financial recovery.
The Fed’s rate-setting committee, which is meeting by videoconference, is scheduled to challenge its policy assertion. Fed Chairperson Jerome Powell is about to hold another videoconference with reporters half an hour later.
The statement is likely to point to a sharp downgrade in the Fed’s evaluation of the job market, household spending, energy markets, and the scope for inflation since its last assembly in March before most U.S. states had done much to halt economic activity and put the brakes on the exploding outbreak.
It may offer clues as to how long the central bank expects to keep supporting the economy.