This week the U.S. Federal Reserve met for two days at the Federal Open Market Committee meeting and detailed that it would keep short-term borrowing rates at near zero. Meanwhile, the Fed also stated that it would continue buying bonds until the U.S. economy returns to full employment.
America’s central bank met this week for the last Federal Open Market Committee (FOMC) meeting of 2020. The Fed has a touch more optimism for the end of this year and into 2021 according to the summary of economic projections. However, the central bank will make no changes to the benchmark interest rate and it will remain near zero for quite some time.
“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the Fed said this week. “The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the central bank further added.
The FOMC progress report also noted that the Fed plans to continue purchasing at least $120 billion in bonds per month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” The committee did not disclose how long it will continue the easing program’s bond purchases.
“These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses,” the Federal Open Market Committee added.
However, despite the optimistic outlook, the U.S. dollar has been looking dreadful lately as the U.S. Dollar Index has plunged below 90. During the last few months, many economists and analysts have predicted bad omens for the American currency.
“The U.S. Dollar Index has broken below 90 with very little fanfare,” the gold bug Peter Schiff wrote on Thursday. “I expect a bit more noise when it breaks below 80. However, the real fireworks will start when the index cracks 70, which would take it into uncharted territory. That failure could happen as soon as next year,” Schiff added.
Meanwhile, the safe-haven asset gold has been climbing in value again as the precious metal trades for $1,887 on Thursday afternoon (EST). Since the Fed’s FOMC meeting this week, crypto assets have been on a tear, as the crypto economy is now getting much closer to a trillion dollars at $650 billion.
After the Fed convened and gave the FOMC’s economic outlook, bitcoin (BTC) touched a lifetime price high at $23,777 per unit.
What do you think about the fact that the Fed is keeping interest rates at zero and will continue to purchase massive sums of bonds? Let us know what you think about this subject in the comments section below.
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