The US Federal Reserve announced a 0% interest rate increase through 2023 and predicts that the nation’s GDP will increase by 6.5% in 2021.
Fed Chairman Jerome Powell made the announcement yesterday at 2 p.m. EST following a 2 day meeting of its key personnel to decide what the US fiscal policy would be in 2021. The vote to hold interest rates was unanimous.
US markets were in a slump yesterday prior to the meeting but rallied in the last two hours of trading following Powell’s remarks. The Dow ended on an intraday high, up nearly 190 points (+0.58%) while the S&P and Nasdaq indices reversed their downward trend to end the day ahead.
Some investors and economists have cited concerns about rising inflation, but the Fed has maintained its stance, shooting for a “healthy” 2% inflation rate according to Powell. The Fed does expect prices on most major commodities and services to increase as the world eases pandemic restrictions, but said that this would be a “one-time” occurrence.
Powell also stressed to journalists that their economic outlook was uncertain at best, noting that the United States “hasn’t had this type of fiscal support” before. He did acknowledge that most of the worst-case scenarios the could have befallen the US were “probably avoided”.
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