The U.S. Federal Reserve has vowed to support the U.S economy for years to come as plans to get the economy back to where it was before the global pandemic will be an enormous task with policymakers projecting the economy to shrink 6.5% in 2020 and the unemployment rate to be 9.3% at year’s end.
In the first economic projections of the pandemic era, U.S. central bank policymakers put into numbers what has been an emerging narrative: that the shutdowns, restrictions and other measures used to battle a health crisis will echo through the economy for years to come rather than be quickly reversed as commerce reopens.
Some 20 million or more people have been thrown out of work since February, and Fed Chair Jerome Powell acknowledged it could take years for them to all reacquire jobs,
Powell, acknowledging the nationwide demonstrations in his opening remarks at a news briefing, said it was now the Fed’s single-minded mission to bring the job market back to where it was at the end of last year, with the unemployment rate at a record low 3.5% and wage gains accumulating for some of the very same lower-paid workers in the service sector that have suffered most during the recent collapse.
The decision to leave the policy rate unchanged on Wednesday was unanimous. The central bank also began shaping the longer-term measures it will use to keep the recovery as strong as possible. Officials promised to maintain ongoing Fed bond purchases at least at the current pace of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage-backed securities - levels that may be increased later, or supplemented with other strategies.
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