Federal Reserve extends debt purchases to boost economy
The Federal Reserve has announced plans to keep buying government debt in a bid to boost the faltering US economy.
Since June the Fed has been buying $80bn in Treasury bonds and $40bn in mortgage bonds per month and today pledged to buy assets at least at that pace for the “coming months”.
The new guidance from the Open Market Committee comes after a two day meeting.
The central bank did not announce plans to provide more fiscal stimulus but outlined some of its economic projections for 2021.
Officials expect interest rates to remain near zero at least through 2023 as the economy started to bounce back from the pandemic.
The Fed said it would keep its “accommodative stance of monetary policy” until employment and inflation reach 2 per cent over the longer term.
“The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the committee’s goals,” it added.
“The Fed has given markets part of what they want to hear… This is much as expected, but it is good to see the rhetoric remains very supportive,” said Neil Birrell, chief investment officer of Premier Miton Investors.
Separately it emerged today that US congressional leaders are nearing a deal on an economic relief package which would end the political impasse.
Democratic Speaker Nancy Pelosi and Mitch McConnell, the Republican Senate majority leader, are reportedly closing in on a package worth $900bn as coronavirus cases in the US surge.
Speaking on the Senate floor McConell said they had made “major headway” toward agreeing a package that could pass both chambers.