The U.S. Federal Reserve has left interest rates near zero and reiterated that it will use all the tools at its disposal to support the U.S. economy moving forward.
Calling the COVID-19 economic downturn the most severe “in our lifetime,” Federal Reserve Chairman Jerome Powell stressed that there is a long road ahead to get back to where the U.S. economy was only months ago and noted that more fallout from the virus lies ahead.
“The path forward for the economy is extraordinarily uncertain, and will depend in large part on our success in keeping the virus in check,” Powell told reporters in a virtual press conference after the central bank left interest rates unchanged near zero. The vote to leave the federal funds target rate in a range of 0% to 0.25% was unanimous.
Powell also said that not all sectors of the economy were weakening, citing housing as one bright spot. High-frequency economic indicators are pointing to a stall in the U.S. economic rebound as consumers hold back from activities like dining out and air travel.
The dollar extended its decline on the Fed announcement, while U.S. stocks maintained their gains and gold remained buoyant. The 10-year Treasury yield was steady at around 0.57% as the U.S. bond curve steepened. Five-year yields chalked up a series of record lows, a sign that investors expect the U.S. Federal Reserve to hold interest rates near zero for an extended period of time.