• United States, the Fed leaves rates unchanged
  • Fed. Powell: "Money leverage is not enough," crucial "mega aid plan fired by US Congress"
  • Fed, firm rates. Powell: "Coronavirus creates uncertainty for global economy"
  • Fed: interest rates remain stable. 2% inflation target

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by Tiziana Di Giovannandrea June 10, 2020 The Federal Reserve, the American Central Bank, has decided to keep rates unchanged until the end of 2022 to contain the economic shock caused by the Coronavirus pandemic and help recovery. 

The Fed has assured its full support for the US economy and has declared that the Central Institute remains committed "to using all the tools at its disposal for as long as necessary".

The Board unanimously voted on the decision to leave the Fed Funds rates unchanged between 0 and 0.25%. At the end of the meeting, Jerome Powell, Fed President, highlighted - as previously done since the outbreak of the global pandemic - his concern about the economic situation: "There is great uncertainty about the future", also claiming that the collapse of GDP in the second quarter will be the "worst ever". However, some data show that the US economy is stabilizing and more updated numbers on the labor market have been "unexpectedly positive".

However, the new Federal Reserve estimates remain negative. US GDP will drop 6.5% in 2020 and then rebound by 5% in 2021 and 3.5% in 2022. In December, before the Covid-19 epidemic, the economy that was expected to the American economy would have grown by 2%.

The labor market will also be affected very strongly by the negative situation caused by Coronavirus. The unemployment rate will rise to 9.3% in 2020, before falling to 6.5% in 2021 and again to 5.5% in 2022.

The ' inflation  is expected at 0.8% this year, to 1 , 6% in 2021 and 1.7% in 2022. Powell stressed that the current crisis presents, despite the dramatic situation "many differences" compared to the Great Depression and a full recovery of economic activity is not excluded when Covid-19 will be defeated. Also thanks to the "rapid and powerful" government response. The Fed chairman notes that "there are no manuals to follow." There is great uncertainty about the future: the picture "is being defined" and the coming months "will be crucial for understanding" the consequences of the pandemic.

Coronavirus, observes the Fed, "is causing tremendous human and economic difficulties throughout the United States and around the world. The virus and measures taken to protect public health have resulted in a sharp decline in economic activity and a surge in losses. of jobs ". And there is no doubt that "the ongoing health crisis will weigh heavily on economic activity, employment and inflation in the short term and poses considerable risks to the economic outlook in the medium term".