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Fed keeps key rate near zero, sees inflation as 'transitory'

In a statement Wednesday, the Fed said the economy and job market have strengthened, and while inflation has risen, Fed policymakers ascribed the increase to temporary factors.

April 29, 2021 / 07:25 AM IST
Source: Reuters

Source: Reuters

The Federal Reserve is keeping its ultra-low interest rate policies in place, a sign that it wants to see more evidence of a strengthening economic recovery before it would consider easing its support.

In a statement Wednesday, the Fed said the economy and job market have strengthened, and while inflation has risen, Fed policymakers ascribed the increase to temporary factors.

The Fed left its benchmark short-term rate near zero, where it's been since the pandemic erupted nearly a year ago, to help keep loan rates down to encourage borrowing and spending. It also said in a statement after its latest policy meeting that it would keep buying $120 billion in bonds each month to try to keep longer-term borrowing rates low.

The U.S. economy has been showing unexpected strength in recent weeks, with barometers of hiring, spending and manufacturing all surging. Most economists say they detect the early stages of what could be a robust and sustained recovery, with coronavirus case counts declining, vaccinations rising and Americans spending their stimulus-boosted savings.