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Fed Keeps Rates Steady as Economy Faces Long Road to Recovery

Published 06/11/2020, 02:02 AM
Updated 06/11/2020, 02:03 AM
© Reuters.

© Reuters.

By Yasin Ebrahim

Investing.com – The Federal Reserve kept rates unchanged Wednesday, and reiterated its commitment to maintaining easy monetary policy measures as the economy likely faces a long road to recovery.

The Federal Open Market Committee left its benchmark rate unchanged in the range of 0% to 0.25%.

The decision comes as the central bank continues to roll out its lending programs to support the economy, which officially entered a recession in February, data earlier this week showed.

Last week's data showed a surprise return in U.S. hiring in May, stoking some investor hopes that the economy is shaping up for a speedier recovery, but the Fed continues to opt for caution as the extent of the impact from the Covid-19 pandemic remains uncertain.

The wave of stimulus from the Fed has taken its balance sheet above $7 trillion from about $4 trillion just before the pandemic struck in the U.S. in early March.

Yet, the central bank has faced pressure to push rates into negative territory to help the economy emerged from the Covid-19 recession.

Fed chairman Jerome Powell is not a fan of cutting rates below zero. He has repeatedly pointed to the lack of evidence over the efficacy of using negative interest rates as an effective policy tool to spur growth.

Investor attention will shift to Powell's press conference at 14:30 ET (18:30 GMT) for further insight into the central bank's thinking on monetary policy, particularly concerning yield curve control.

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