New York (CNN Business)The Federal Reserve left interest rates unchanged Wednesday and committed to maintaining its unprecedented stimulus plan until the economy “has weathered recent events.”
That means it could be years until interest rates rise again. The Fed’s “dot plot”, which reflects the forecasts of the central bank’s policy makers, isn’t showing any rate hikes this year or in 2021. Even in 2022, the majority of policymakers believe rates will remain at the current rate levels.
The central bank acknowledged the “tremendous human and economic hardship” that the coronavirus pandemic has brought upon people around the world, and it doesn’t think the economic difficulties will let up anytime soon: The Fed updated its economic projections for the year, predicting a 6.5% drop in gross domestic product, the broadest measure of the economy, in 2020.
By December, the Fed expects the unemployment rate to fall to 9.3%, down from 13.3% in May, but still substantially above the 3.5% rate from February — a near 50-year low.
The Fed slashed interest rates to near zero in March at the outset of the coronavirus pandemic. Since then, the central bank has committed billions of dollars to supporting financial markets, businesses, and state and local governments.
Even though Fed Chairman Jerome Powell has vehemently opposed negative interest rates, which other developed world central banks have had to revert to, voices supporting negative rates from within the Federal Reserve network are getting louder.
This is a developing story. It will be updated