The Federal Reserve said Wednesday after that it will keep its interest rate target near zero and noted that the economic recovery depends on controlling the coronavirus pandemic.
“The path of the economy will depend significantly on the course of the virus,” the central bank’s Federal Open Market Committee said in a statement following a two-day meeting in Washington, D.C.
The central bank last cut its interest rate target on March 15 to between 0% and 0.25% in an emergency response to the pandemic, and Federal Reserve Chairman Jerome Powell said last month that raising it is not being discussed at his organization.
“We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates,” he said in June.
The Fed statement also noted that “[f]ollowing sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year.”
Job gains were made in May and June, 2.7 million and 4.8 million, respectively.
Since June, however, job growth in the United States has stalled, especially in areas of the country where coronavirus infections are raging.
Hot spots such as Florida and California saw new claims for unemployment benefits of over 65,000 and 20,000, respectively, just for the week ending July 11. That’s an unusually high level of layoffs and suggests net declines in employment.
For the economy overall, the number of new jobless claims was 1.4 million for the week ending July 18, the Labor Department reported, which is higher than the prior week’s claims of 1.3 million.
The Labor Department report marked the first weekly increase in jobless claims since the end of March, when new applications peaked at 6.9 million, and is a troubling sign of danger for the economic recovery and job creation.
The surge in virus infections has also prompted worry in the small-business sector as two-thirds of owners fear the pandemic will force them to close their doors, according to a U.S. Chamber of Commerce poll.
The Fed has acknowledged the change in the economy and on Tuesday extended several lending facilities through the end of the year that were originally scheduled to expire around Sept. 30.
The effort was to ensure that the central bank would be able to continue to provide funding to banks that grant loans to companies and individuals negatively affected by the pandemic.
