US Fed pledges to keep rates low until maximum employment goal hit

A file photo shows US Federal Reserve Chairman Jerome Powell US Federal Reserve Chairman Jerome Powell speaks to reporters during a news conference in Washington, US, on March 3, 2020. (Reuters)

The Federal Reserve pledged Wednesday to keep interest rates low until it has achieved its goal of maximum employment, but new forecasts show central bankers expect rates will stay at zero at least through 2023.

The statement reaffirmed the policy shift that Fed Chair Jerome Powell announced last month, indicating the central bank will keep pumping the gas with low rates and allow inflation to push beyond 2 percent in order to spur job gains as the world’s largest economy recovers from the Covid-19 pandemic.

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The policy-setting Federal Open Market Committee “seeks to achieve maximum employment” and “will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time.”

“The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” the statement said.

However, two committee members dissented in the vote, with one objecting to the lack of flexibility in the policy statement and the other pushing for even an stronger commitment to waiting until inflation has reach 2 percent on a “sustained basis” before raising rates.

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Last Update: Thursday, 17 September 2020 KSA 23:53 - GMT 20:53
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