In this news, we discuss the Fed keeps policy steady amid U.S. election uncertainty.
WASHINGTON (Reuters) – The Federal Reserve maintained loose monetary policy on Thursday and again pledged to do all it can in the coming months to support a U.S. economic recovery threatened by a coronavirus pandemic and facing uncertainty about a presidential election still undecided.
The results of Tuesday’s presidential vote were still being compiled in a few key states, although Democratic presidential candidate Joe Biden was close to the number of electoral votes needed to win the White House.
The U.S. central bank did not speak about the election in a policy statement released after its last two-day meeting, but Fed Chairman Jerome Powell is expected to address any concerns about the coming weeks in a press conference at 2:30 p.m. EST.
“Economic activity and employment have continued to recover but remain well below their levels at the start of the year,” the central bank’s Federal Open Market Committee said in a unanimous statement, which left the overnight key rate unchanged at the central bank. close to zero. “The COVID-19 pandemic is causing enormous human and economic hardship in the United States and around the world.”
In a statement virtually unchanged from that issued at its September policy meeting, the Fed reiterated its pledge to use its “full range of tools” to support the economy, and vowed not to consider raising interest rates until maximum employment is restored and inflation. was heading above its 2% target.
The Fed has said it will continue to buy “at least” $ 120 billion per month in government bonds for now, and use its other tools and programs as needed as the economy evolves.
The U.S. jobs report for October, due to be released by the Department of Labor on Friday, will give a final snapshot of how quickly the economy is bringing millions of people out of work due to the pandemic back to work.
But beyond that, the Fed will now wait to see if Biden actually wins the presidency or if Republican President Donald Trump manages to stay in power, and what either scenario might mean in terms of government spending. additional funds to help the unemployed.
“Risks to the economic recovery have increased since the Fed last met in September, with an increase in coronavirus cases, slower job growth, a lack of new stimulus for consumers and small businesses, and now an unresolved presidential election, ”Greg McBride, Bankrate. The chief financial analyst of com, said in an email. “The Fed has done what it can do at this point, although it says it still has a range of tools.”
US stocks, which were up sharply ahead of the Fed’s statement, showed little immediate response and remained higher that day. Yields on US Treasury debt were little changed and the dollar remained weaker on the day against a basket of currencies from major trading partners.
Reporting by Howard Schneider; Edited by Paul Simao
Original © Thomson Reuters