Fed vows to continue bond-buying until it sees 'substantial' economic progress
The Federal Reserve on Wednesday vowed to continue bond-buying until "substantial" economic progress is made in inflation and the labor market.
In a statement at the conclusion of its two-day policy meeting, the American central bank said it would buy at least $80 billion per month of Treasury bonds and $40 billion of agency mortgage-backed securities.
Fed Chair Jerome Powell acknowledged the U.S. central bank's tools are not well-suited to the most pressing needs faced by households and businesses today.
"The parts of the economy that are weak are the service-sector businesses that involve close contact," such as restaurants and the travel industry, Powell said in a news conference following the two-day policy meeting.
Unemployed households or struggling businesses are more in need of immediate cash, Powell added, something top lawmakers in Congress were working to provide in talks towards a new $900 billion pandemic relief bill.
For the Fed, the more relevant horizon is the middle of next year, when Powell said the central bank is hopeful the country may approach widespread immunity from the coronavirus, and see economic activity surge.
"The issue is the next four, five, six months," Powell told reporters. "You have to think sometime in the middle of next year you will see people feeling comfortable going out engaging in a broader range of activities."
The U.S. central bank is keeping interest rates unchanged amid growing concern about the pace of a post-pandemic recovery. The Fed said it expects to keep its benchmark short-term interest rate near zero through at least 2023.
U.S. stocks ended the session largely higher, with the Nasdaq closing at a record high. The Treasury yield curve steepened slightly while the dollar edged up against major trading partner currencies.
(With input from Reuters)
(Cover: Fed Chair Jerome Powell, December 1, 2020. /CFP)