Fed Continued Fighting The Crisis, Maintained Status Quo

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The U.S. Federal Reserve (Fed) opted Thursday for the status quo on its key interest rates, which remain close to zero (between 0% and 0.25%), a decision that was widely expected by economists.

As a result, the central bank has not changed its key interest rates or its asset buyback programs, which have been in place since the spring to combat the effects of the coronavirus crisis. The Fed will continue to buy “at least” $120 billion a month in Treasury bonds and use all other instruments and programs deployed since the beginning of the crisis.

In its statement, the Monetary Policy Committee reiterated its remarks from the previous meeting in mid-September. The Fed said that it was ready to “use the full range of its tools to support the U.S. economy in these difficult times,” suggesting that it could do more in the coming months.

The Fed also noted that “economic activity and employment have continued to recover, but remain well below their levels at the beginning of the year.” U.S. employment situation for the month of October will be released today, and is expected to confirm the slowdown in the recovery, with 600,000 job openings expected, compared to an average of 2.2 million per month over the May-September period.

The coronavirus crisis resulted in 22 million job losses in the United States in March-April, of which about half, or 11 million, have since been recreated.

The Fed’s message is what markets have been waiting for, in the particular perspective of the U.S. presidential election, the winner of which is not yet known. The central bank did not mention the election in its statement, in which Democrat Joe Biden is ahead of Donald Trump, according to the still partial results.

It should be noted that the decision to maintain the status quo was taken unanimously on Thursday, while in September two members of the Monetary Policy Committee had expressed dissenting opinions.

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