WASHINGTON–With little room to maneuver, the Federal Reserve concluded its Open Market Committee meeting here by opting to not change rates. The FOMC voted to maintain the target range for the federal funds rate at 0% to 0.25%. The Committee said it expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.
During a virtual press conference following the FOMC meeting, Fed Chairman Jerome Powell indicated the Fed has no plans to raise rates through 2022, meaning credit unions will need to prepare for a long-term low-rate environment.
“The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world,” the Fed said in a statement. “The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.”
The Fed added the ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and “poses considerable risks to the economic outlook over the medium term.”
The FOM said it continues to pursue its target for annual inflation of 2%.
Increased Holdings
To Fed added to support the flow of credit to households and businesses, over the coming months it will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, “thereby fostering effective transmission of monetary policy to broader financial conditions.”
In addition, the Fed said its Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations.
Voting for the monetary policy action were Jerome H. Powell, chair; John C. Williams, vice chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.