Fed says it will do everything it can to support economy facing public-health crisis
The Federal Reserve on Wednesday committed itself to use its full range of tools to help the U.S. economy which is facing considerable risks from the coronavirus pandemic.
“The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Fed said in a statement after two-day meeting.
The Fed kept its benchmark interest rate in a range from 0 to 0.25% as expected and repeated it would hold monetary policy steady until the economy has weathered recent events and “is on track” to achieve full employment and price stability. That is unchanged from the March forward guidance.
“The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world,” the statement said.
The disruptions around the world have affected financial conditions and have “impaired the flow of credit to U.S. households and businesses,” the Fed said.
Fed Chairman Jerome Powell will hold a press conference at 2:30 p.m. Eastern
The economy is reeling as the stay-at-home orders designed to stop the spread of the COVID-19 pandemic have brought business and personal activity economy to a standstill. The service economy typically can power through a recession but not a quarantine. There are now 26 million Americans who have been laid off over the past five weeks. Economic activity in the first quarter contracted at a 4.8% annual rate and economists expect an even larger drop in the April-June quarter.
Stocks were trending higher midday Wednesday on optimism about a drug manufacturer’s coronavirus treatment. The Dow Jones Industrial Average DJIA, 2.61% was up over 500 points.
Treasury yields came off session highs after the Fed statement was released. The yield on the 10-year Treasury note TMUBMUSD10Y, 0.617% was flat at 0.610%. Yields are down from the 52-week high of 2.552% hit last May.