US Fed Retains Base Rate

The US Federal Reserve System (FRS) has kept the interest rate on federal funds in the range from 0 to 0.25% per annum. This is stated in the message of the regulator.

“The ongoing crisis will significantly affect economic activity, employment and inflation in the near future and create risks for the economy in the medium term,” the report said.

The Fed plans to keep the rate at the current level until there is confidence that the economy has coped with the consequences of the pandemic, the regulator said.

In March, the US Federal Reserve unexpectedly lowered the interest rate twice. At the beginning of the month, the rate was lowered to the level of 1–1.25% from 1.5–1.75%, and on March 16 – to 0–0.25%.

In addition, the Fed announced measures to support the economy in connection with the pandemic. It was pointed out that the regulator will increase its portfolio of US government bonds by at least $ 500 billion, and the portfolio of mortgage bonds issued by parastatal agencies Ginnie Mae, Fannie Mae, and Freddie Mac by at least $ 200 billion.

On March 23, the Fed announced that asset purchases in the secondary market will be produced in unlimited volume.