FED SEES GROWTH CONTRACTING BY 6.5% THIS YEAR
Sees 9.3% unemployment rate at year’s end; pledges at least $120 bn in monthly bond-buying
The US Federal Reserve on Wednesday repeated its promise of continued extraordinary support for the economy as policymakers projected a 6.5 per cent decline in GDP this year and a 9.3 per cent unemployment rate at year’s end. “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 Fed said in its latest policy statement.
The US Federal Reserve on Wednesday repeated its promise of continued extraordinary support for the economy as policymakers projected a 6.5 per cent decline in gross domestic product this year and a 9.3 per cent unemployment rate at year's end.
“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 Fed said in its latest policy statement. The first policymaker economic projections since December see the overnight interest rate remaining near zero through at least 2022. Though much of the statement repeated language from its April meeting, the central bank did promise to maintain bond purchases at "the current pace" of around $80 billion per month in Treasuries and $40 billion per month in agency and mortgage backed securities - a sign it is beginning to shape its long run strategy for the economic recovery.
That is expected to begin in earnest in 2021 with growth forecast at 5 per cent. The pledge to keep monetary policy loose until the US economy is back on track repeats a promise made early in the central bank's response to the coronavirus pandemic. That response included cutting its key overnight interest rate to near zero in March and making trillions of dollars in credit available to banks, financial firms, and a wide array of companies.
On Wall Street, which had been near unchanged ahead of the Fed statement, stock prices rose, with the benchmark S&P 500 Index gaining by 0.3 per cent.
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West Bengal Chief Minister Mamata Banerjee on Wednesday denied having called 'Shramik Special' trains, ferrying migrant labourers back home, "Corona Express" as alleged by Union Home Minister Amit Shah, insisting it was the people who gave that name to crammedto- capacity trains.
Her comments came a day after Shah, addressing a virtual rally for West Bengal, accused Banerjee of "insulting" migrant workers returning to the state on Shramik Special trains by calling the trains 'Corona Express', and asserted that migrant workers will ensure the "exit" of her government in the 2021 assembly polls.