Federal Reserve Will Keep Rates Near Zero

Today, the FOMC kept interest rates near zero and maintained our sizable asset purchases. These measures, along with our strong guidance on interest rates, and on our balance sheet, will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete. Indicators of economic activity and employment have turned up recently. Although the sectors of the economy most adversely affected by the resurgence of the virus and by greater social distancing, remain weak. The unemployment rate remains elevated at 6.2 percent in February. This figure understates the shortfall in employment, particularly as participation in the labor market remains notably below pre-pandemic levels. As the committee reiterated in today’s policy statement, with inflation running persistently below 2 percent, we will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time, and longer-term inflation expectations remain well anchored at 2 percent. The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.