Asset purchase scale as it is… “Economic activity and employment recovery slows”
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The US central bank, the Federal Reserve System (Fed, Fed), maintained a’zero interest rate’ on the 27th (local time).
As the’yellow light’ was lit up in recent economic recovery, the asset purchase program was also decided to remain as it is.
The Fed issued a statement after completing a two-day regular meeting of the Federal Open Market Committee (FOMC) on the same day and announced that the interest rate would be frozen at the current 0.00~0.25%.
The committee members unanimously agreed to the rate freeze.
It has maintained the same level for seven consecutive times since the zero interest rate was set to respond to the novel coronavirus infection (Corona 19) in March last year.
At the time, the Fed reduced the standard interest rate by 1 percentage point from 1.00 to 1.25% to 0.00 to 0.25% as concerns over the economic downturn were raised strongly due to the global pandemic of Corona 19.
As the U.S. economy, which had been recovering since last summer, faltered again amid the recent re-proliferation of Corona 19, the zero interest rate freezing was a scheduled procedure.
In a statement that day, the Fed said in a statement that “in recent months, the pace of recovery in economic activity and employment has slowed,” and “the sectors that were most affected by the pandemic (a global pandemic) have intensively weakened.”
Bloomberg reported that last month, the number of non-agricultural jobs declined for the first time since April, the beginning of the pandemic, and retail sales declined for three consecutive months.
Accordingly, the Fed maintains the scale and composition of asset purchases worth $120 billion per month.
The Fed is buying $80 billion worth of U.S. government bonds and $40 billion worth of mortgage securities (MBS) every month to curb interest rates and support economic recovery.
Recently, some Federal Reserve governors suggested the possibility of’tapering’ to gradually reduce the size of asset purchases as early as the end of this year, but Fed Chairman Jerome Powell drew a line at an event on the 14th, saying, “It is not time to talk about the exit.” have.
In a statement, the Fed reiterated the existing position that “the future of the economy depends on the path of the virus,” adding the phrase “this includes the progress of the vaccine.”
It seems to suggest that the economic recovery could be accelerated depending on the speed of vaccine distribution.
The Fed also reaffirmed its intention not to change its current easing monetary stance until it achieves full employment and a long-term inflation rate of 2%.
As the current price is significantly below the 2% target, the company plans to tolerate it even if it exceeds 2% for a certain period of time.
/yunhap news
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