Article Content
We apologize, but this video has failed to load. Try refreshing your browser, or tap here to see other videos from our team.
Fed Holds Zero Rates as Powell Warns Virus Spike Hitting Economy
Back to video
The Path Forward for the Economy is Extraordinarily Uncertain
Federal Reserve Chair Jerome Powell warned the U.S. faced the most severe economic downturn ‘in our lifetime’ as the central bank left interest rates near zero and vowed to use all its tools to support a recovery.
Article content
We apologize, but this video has failed to load.
Try refreshing your browser,
ortap here to see other videos from our team.
Powell told reporters that supporting the recovery would need help from both monetary and fiscal policy, in a nod to ongoing negotiations among lawmakers and the Trump administration in Washington to refresh taxpayer support before current assistance runs out.
Markets Steady Amid Fed Decision
The dollar briefly extended its decline following the decision, while U.S. stocks maintained their gains and gold remained buoyant. The 10-year Treasury yield was steady on the day around 0.58 per cent as the U.S. bond curve steepened.
Fed Extends Liquidity Swap Lines and Repurchase Agreement Facility
The vote, to leave the federal funds target rate in a range of 0 per cent to 0.25 per cent, was unanimous. The FOMC also reiterated its pledge to increase its holdings of Treasuries and mortgage-backed securities ‘at least at the current pace’ over coming months.
In a separate statement Wednesday, the Fed said it extended its dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities through March 31, 2021.
Powell’s Warning on Virus Spike Hitting Economy
Powell and his FOMC colleagues have kept their benchmark rate pinned near zero since the pandemic’s onset in March and rolled out several emergency lending programs geared toward fostering liquid trading conditions in financial markets.
That aggressive action has helped to calm investors. But progress toward recovery has been complicated in recent weeks by a new wave of coronavirus outbreaks across major states in the South and West including Texas, Florida, California and Arizona.
High-Frequency Economic Indicators Point to Stall in Rebound
High-frequency economic indicators are pointing to a stall in the rebound as consumers hold back from activities like dining out and air travel, which had started to bounce back when the earlier wave of outbreaks dissipated.
Investors have remained relatively optimistic despite renewed signs of weakness in the economy, thanks in large part to rising hopes that researchers will soon succeed in developing a vaccine.
Before Wednesday’s Decision, S&P 500 Index was Near Record High
Before Wednesday’s decision, the S&P 500 index of U.S. stocks was within about 4 per cent of the record high set in mid-February after losing more than a third of its value in the early days of the pandemic.
Bloomberg.com
Share this article in your social network
Share this Story: Fed holds zero rates as Powell warns virus spike hitting economy
Copy Link
Email
X
Reddit
Pinterest
LinkedIn
Tumblr
Comments
You must be logged in to join the discussion or read more comments. Create an Account | Sign in
Join the Conversation
Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful.
Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments.
Visit our Community Guidelines for more information.
Trending
- History is foreshadowing the worst of times for markets
- Investor: A cut in January, then a pause: What jobs data mean for Bank of Canada and interest rates
- Economy: How far could Trump go using ‘economic force’ to try and annex Canada?
- News: Bundled pricing: How the best mortgage rates increasingly come with strings attached
- Mortgages: Howard Levitt: Trudeau’s exit a reminder of the perils of wrongful resignation