As expected the US Federal Reserve kept its very easy monetary policy intact on Thursday and again said it would do whatever it can in the coming months to sustain a US economic recovery that is again being threatened by a spreading coronavirus pandemic.
The Fed’s two-day meeting was overshadowed by the ongoing argy-bargy over the count for the presidential election and growing signs of civil instability.
Democratic presidential nominee Joe Biden was near the minimum 270 votes in the state-by-state Electoral College needed to win the White House with more count details due after 8 am Sydney time.
In a media conference after the release of the statement, Fed Chair Jerome Powell said the American economy is now recovering more slowly after being boosted earlier in the year by fiscal aid and the re-opening of some businesses.
“The overall rebound in household spending owes in part to stimulus payments and expanded unemployment benefits, which provided essential support to many families and individuals,” Powell – an analysis that could be said for the Australian and other major economies as well.
He said the recent rise in coronavirus infections in the United States and abroad was “particularly concerning,” and said social distancing and masks were needed to help contain the virus and support the economy – which was not a key plank of Donald Trump’s administration of his campaign rallies.
Powell again made it clear that the first thing to do is control the virus to allow the economy and consumer room to move.
“A full economic recovery is unlikely until people are confident that it’s safe to re-engage in a broad range of activities,” Powell said.
Earlier, the Fed’s post-meeting statement was all but unchanged from the one issued after the September policy meeting.
The Federal Open Market Committee repeated its pledge to use its “full range of tools” to support the economy, and promised not to consider raising interest rates until maximum employment had been restored and inflation was heading above its 2% target.
“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” it said in a unanimous statement which left the central bank’s key overnight interest rate unchanged at near zero.
“The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world,” Mr Powell said in comments that will fall on deaf ears in much of the Trump-supporting US.
The Fed said it would for now continue buying “at least” $US120 billion per month in government bonds and use its other tools and programs as needed depending on how the economy evolves.
It’s a statement that could have been issued after a recent Reserve Bank meeting in Australia without too many eyebrows being raised.
We all remain in the same boat.
