Fed Promises to Hold Rates Steady

By:
Chris Gaetano
Published Date:
Jul 30, 2020
The Federal Reserve will continue to hold interest rates at near-zero levels, citing the ongoing economic damage incurred by the pandemic.

The central bank noted that much remains uncertain about the economy, as much of it depends significantly on the course of the virus itself. Given the ongoing public health crisis that has continued to weigh heavily on economic activity, employment and inflation in the near term, and given the considerable economic risks over the medium term, "the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent" and "expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."

With this in mind, it also said it plans to maintain the current pace of buying Treasury securities and residential and commercial mortgage-backed securities, or even accelerate that buying, if that's what's required to maintain smooth market functioning. The Open Market Desk will also continue offering large-scale overnight and term repurchase agreement operations.

This announcement comes just days after the central bank said it would also extend the life of its various lending facilities—Primary Dealer Credit Facility, the Money Market Mutual Fund Liquidity Facility, the Primary Market Corporate Credit Facility, the Secondary Market Corporate Credit Facility, the Term Asset-Backed Securities Loan Facility, the Paycheck Protection Program Liquidity Facility, and the Main Street Lending Program—to the end of the year. They had originally been set to expire Sept. 30.

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