FX.co ★ Results of the Fed meeting

On Wednesday, the Fed announced that interest rates would remain close to zero until 2022, and promised to continue buying bonds and support the US economy, which was devastated by the coronavirus pandemic.

The Federal Open Market Committee, in a unanimous statement, reaffirmed previous guidance that the Fed's base rate will remain unchanged from 0 to 0.25% until "there is confidence that the economy has reached price stability and maximum employment".

Powell said the US economy may need additional political assistance to avoid a "protracted" recession.

Forecasts were also presented by the central bank, which predicts that the US GDP will shrink by 6.5% this year, and then recover by 5% in 2021.

This suggests that at the end of 2020, unemployment will drop to 9.3%, and in 2021, will drop to 6.5%. Even by 2022, the unemployment rate is expected to remain at 5.5%, which is much higher than the pre-crisis level of 3.5%.

The New York Fed also said in a statement that treasury bond purchases will grow by approximately $ 80 billion a month, and mortgage-backed securities for about $ 40 billion.

"Working with mortgage-backed securities and treasury bonds underlines the belief that additional support is needed," said Diane Swonk, chief economist at Grant Thornton. "The Fed does not yet see a prospect of recovery in employment. "The risk of deflation is still high, and the economy needs more support to have a more complete recovery."

Powell also mentioned that the FOMC received a briefing on controlling the yield curve, a strategy to limit treasury yields to a certain maturity. He told reporters that this would be discussed at upcoming meetings.

The central bank has introduced nine emergency lending programs to support the flow of loans during the pandemic. Three have not yet been launched, including a mechanism designed for main street businesses.

On Monday, the Fed expanded the program to include smaller companies, and said it would soon be open to suitable lenders in the near future. Powell echoed this perspective and said that the Fed is very persistent in how it can include nonprofits in its program or in its own institution.