This week the US Federal Reserve met for two days at a Federal Open Market Committee meeting and detailed that it would keep short-term lending rates near zero. Meanwhile, the Fed also indicated that it would continue to buy bonds until the US economy returns to full employment.
The American central bank met this week for the last meeting of the Federal Open Market Committee (FOMC) in 2020. The Fed has a more optimistic touch for the end of this year and into 2021 according to the economic projections summary. However, the central bank will make no changes to the benchmark interest rate and will remain near zero for some time.
“Economic activity and employment have continued to improve but remain well below their levels at the start of the year,” the Fed said this week. “The path of the economy will depend greatly on the course of the virus. The ongoing public health crisis will continue to weigh economic activity, employment and inflation in the near term, and pose significant risks to the medium-term economic outlook, ”the central bank further added.
The FOMC progress report also noted that the Fed plans to continue to buy at least $ 120 billion in bonds each month “until significant further progress has been made toward the Committee’s highest employment and price stability goals.” The committee did not disclose how long it will continue to buy the mitigation program bonds.
“These asset purchases help foster the smooth functioning of the market and hostile financial conditions, thereby supporting the flow of credit to households and businesses,” added the Federal Open Market Committee.
However, despite the optimistic outlook, the US dollar has been looking awful lately as the US Dollar Index has plummeted below 90. Over the past few months, many economists and analysts have predicted poor returns for American currency.
“The US Dollar Index has broken below 90 with little fanfare,” gold bug Peter Schiff he wrote on Thursday. “I expect a little more noise when it breaks below 80. However, the real fireworks will start when the index cracks 70, which would take it into uncharted territory. That failure could happen as early as next year, ”Schiff added.
Meanwhile, the safe haven asset gold has been climbing in value again as the precious metal traded for $ 1,887 on Thursday afternoon (EST). Since the Fed’s FOMC meeting this week, crypto assets have been in turmoil, as the crypto economy is now getting much closer to a trillion dollars at $ 650 billion.
After the Fed convened and provided the FOMC economic forecast, bitcoin (BTC) touched a high lifetime price at $ 23,777 per unit.
What do you think about the fact that the Fed keeps interest rates at zero and will continue to buy huge amounts of bonds? Let us know what you think of this topic in the comments section below.
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