Economic recovery is related to virus response, according to chairman of Federal Reserves
Interest rates are remaining the same, after the Federal Reserves has updated its monetary policy last Wednesday. The US central bank also pledge to put out more efforts to back the economy during the current crisis.
The Federal Reserves has decided to maintain the lending rate to almost zero, which was kept at that level since March when the pandemic was just starting. Furthermore, the Federal Open Market Committee, the one responsible for the monetary policy, said that they are committed to maintaining the bond purchases and the different programs concerning lending and liquidity that are related to coronavirus response.
Jerome Powell, chairman of the Fed, stated: “We are committed to using our full range of tools to support our economy in this challenging environment.”
After announcement from the central bank, US stocks increased and concluded the day higher, according to CNN Business. Meanwhile, process of gold has climbed to new all-time high, even reaching $1,973 per ounce. The dollar index on the other hand fell by 0.5 percent and then saw a slight rise, which brought monthly losses to about 4 percent.
“Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year,” a statement after the meeting reads.
According to Powell in a news conference, the recovery for the economy has beginning to decelerate as spikes in confirmed infected people were reported in June. He thinks that the data lead to a slower recovery.
Federal Reserves has remarked that the economy, job rate, and inflation are all hinged on the coronavirus outbreak, saying that the crisis “poses considerable risks to the economic outlook over the medium term.”
The central bank chairman said, “The path of economy is going to depend to a very high extent on the course of the virus and on the measures that we take to keep it in check. That is just a very fundamental fact about our economy right now. The two things are not in conflict.”
During the outbreak, unemployment rate in the US has been increasing, however the stimulus aid, which is expiring by month’s end, from the congress is somehow keeping several businesses alive.