The Federal Reserve signaled Wednesday that it will keep its key short-term interest rate near zero for the foreseeable future as part of its extraordinary efforts to bolster an economy that is sinking into its worst crisis since the 1930s. As part of its emergency steps, the Fed said it will also keep buying Treasury and mortgage bonds to help keep rates low and ensure that companies can lend easily to each other amid a near-paralysis of the economy caused by the coronavirus, reports the AP. At a news conference, Chairman Jerome Powell cautioned about any prospects for a swift or a robust economic recovery, saying, “I would say that it may well be the case that the economy will need further support from all of us if the recovery is to be a strong one.”
In its statement, the Fed said it is "committed to using its full range of tools to support the US economy in this challenging time." But that statement provided no additional details about its actions. It said it will keep its rate at nearly zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” That’s the same language it used in its previous statement last month. Nor did the Fed provide details about the pace of its purchases of Treasurys and mortgage-backed securities. It has tapered those purchases recently as markets have calmed. But earlier this month, it bought as many Treasury securities in a day as it did during an entire month in the 2008-2009 Great Recession.
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