Pandemic Delays Economic Recovery, and Fed Keeps Monetary Policy Unchanged

    The continued rise of coronavirus infections makes people concern. "Economic activity continue to recover but remain well below levels at the beginning of the year," the FOMC said in a statement. Federal Chairman Jerome Powell said in a subsequent news conference that the outlook remained "very uncertain" and that the Fed would continue to maintain its target federal funds rate since March in the 0-0.25% range.

 

    With the fiscal outlook bleak and new stimulus less likely, the Fed must step up and think harder about how to steer the recovery. The FOMC statement reiterated its past guaranty to increase its holdings of Treasuries and mortgage-backed securities in the coming months "at least at the current pace."

    Currently, the total monthly purchase of these securities is about $120 billion. The monetary policy resolution was unanimously passed by all members.