This Wednesday, Federal Reserve Chairman Jerome Powell announced that the Fed isn't expecting to lift short-term rates through the end of 2022. They responded that they are committed to providing more support to the economy following shutdowns to contain the coronavirus.
"We're not even thinking about thinking about raising rates," Powell responded. "We are storngly committed to using our tools to do whatever we can for as long as it takes."
The Federal Open Market Committee had earlier announced that they would increase their holdings of Treasy securities and agency residential and commercial mortgage-backed securities "at least at the current pace" to sustain smooth market functioning.
The Fed noted that financial conditions had improved. The Fed also repeated that the coronavirus pandemic poses “a considerable risk” to the outlook over the next 18 months or more.
Recent jobs reporting has showed that 2.5 million jobs were created last month after April's sharp losses. The unemloyment rate fell to 13.3%.
With a significant portion of Americans feeling severely cash-strapped, historically low borrowing rates means that loans are cheaper.
Although the federal funds rate, which is what banks charge one another for short-term borrowing, is not the rate that consumers pay, the Fed’s moves still affect the borrowing and saving rates they see every day.
If you have any questions about the changing interest rates, and how that impacts your selling or buying power, reach out to our team.
The Bushari Team