D.he American central bank, the Fed, is signaling ultra-low interest rates beyond the corona crisis. On average, the monetary authorities assume that the key interest rate will be kept close to zero until the end of 2023. They left him in a range of zero to 0.25 percent on Wednesday.
At the same time, the monetary authorities around Federal Reserve Chairman Jerome Powell declared at their last interest rate meeting in the pandemic year 2020 that they were determined to use the full range of their instruments to support the economy. They want to maintain the volume of their monthly security purchases of 120 billion dollars until “substantial further progress” has been made on the way to full employment and price stability.
The Fed had to set course amid a political scramble over further stimulus aid in Congress. Recently, there was increasing evidence that Republicans and Democrats could agree after much back and forth on a $ 900 billion aid package. With the increasing number of corona cases, the economic recovery has recently slowed down.
Although the situation on the labor market had recently weakened and future President Joe Biden spoke of “one of the worst economic and job crises in recent history”, most experts had not expected the Fed to change course. The central bank had already reacted to the Corona crisis with drastic measures and made it clear that it initially saw financial policy as an obligation to provide further economic aid.