Coronavirus to continue to ‘weigh heavily on economic activity’ – Fed stands pat

The Fed keeps its benchmark interest rate target range on hold at 0%-0.25%, as expected.

The central bank will also increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace “to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions.”

The vote was unanimous.

As it has been saying for months, the “path of the economy will depend significantly on the course of the virus.”

While economic activity has been improving recent months, the health crisis will continue to “weigh heavily on economic activity, employment, and inflation in the near term,” according to the Fed statement.

It also continues to pose “considerable risks to the economic outlook over the medium term.”

Stocks hold their gains. The Dow +0.4%, the Nasdaq +1.0%. The S&P 500 +0.9%. 10-year Treasury yield is little changed at 0.58%.

https://seekingalpha.com/news/3596921-coronavirus-to-continue-to-weigh-heavily-on-economic-activity-fed-stands-pat