“The outlook for the economy is extraordinarily uncertain,” Powell said at the news conference.
The central bank has been buying Treasury and mortgage bonds to hold down long-term borrowing rates to encourage spending. And it has kept its key short-term rate, which influences many corporate and individual loans, near zero. Some economists think the policymakers' next move will be to expand its bond-buying effort, which is intended to boost the economy by lowering longer-term borrowing rates.
The Fed’s latest policy meeting coincided with an anxiety-ridden election week and an escalation of the virus across the country. Most economists warn the economy cannot make a sustained recovery until the pandemic is brought under control and most Americans are confident enough to return to their normal habits of shopping, traveling, dining and congregating in groups.
“The recent rise in COVID-19 cases both here and abroad is particularly concerning,” Powell said. “All of us have a role to play, to keep appropriate social distance and to wear masks in public.”
The central bank’s policy statement Thursday was approved on a 10-0 vote. Robert Kaplan, president of the Federal Reserve Bank of Dallas, who had dissented at the previous meeting, voted with the majority this time. Another dissenter in September, Neel Kashkari, head of the Minneapolis Fed, was absent, with his alternate, Mary Daly of the San Francisco Fed, approving the statement.
The statement was nearly identical to the one the Fed issued in September. At that meeting, it adopted a policy goal change it had made in August to keep rates low for some period of time even after inflation hits its 2% annual target. The reason was to allow the Fed to supply a longer boost to the economy and for unemployment to fall further before the policymakers begin to worry about inflation.