U.S. Interest Rates May Remain Low For a Long Time

U.S. economic data for August was mixed. Manufacturing grew at the fastest pace since late 2018, while consumer spending cooled after July. The unemployment rate fell nearly 2 percentage points to 8.4% and employment rose by 1.37 million. Unemployment has improved across all age groups.

Given that the economic recovery will take a long time. Fed Chairman Jerome Powell reiterated that interest rates will remain low for an extended period on an annual basis.

At the June meeting, 17 Fed officials agreed that the target federal funds rate will remain near zero this year and next. All but two expect current rate levels to remain in place until 2022. Officials will provide updated quarterly forecasts, including a first for 2023, at their meeting on Sept 15-16.