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Fed Keeps Rates Steady, But Pledges to Keep Liquidity Spigot Open

Economic IndicatorsDec 16, 2020 20:02
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© Reuters.

By Yasin Ebrahim

Investing.com – The Federal Reserve kept rates unchanged Wednesday, and reiterated its accommodative policy stance to support the next phase of the economic recovery as the vaccine rollout gets underway.

The Federal Open Market Committee left its benchmark rate unchanged in the range of 0% to 0.25%.

The central bank pledged to maintain its near-zero interest rate range to prop up the recovery, which has slowed recently as rising infections across the country triggered restrictions, exacerbating concerns over the uncertain economic outlook.

The slowdown in the recovery has created a sense of urgency for further fiscal support from Congress. Lawmakers on Capitol Hill have touted progress on efforts to get a $748 billion stimulus deal over the line before the end of the week.

Last month, Federal Reserve Chairman Jerome Powell warned that a lack of further stimulus could  have dire economic consequences as the recovery still has a "long way to go."

The central bank has turned to its bond-buying purchases to steady the economic fallout, buying  $120 billion bonds on a monthly basis that has seen the Fed's balance sheet rise above  $7 trillion from about $4 trillion just before the pandemic struck in early March.

Investor attention will shift to Powell's press conference at 2:30 pm ET for further insight into the central bank's thinking on monetary policy and outlook.

Fed Keeps Rates Steady, But Pledges to Keep Liquidity Spigot Open
 

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