Arab Press

بالشعب و للشعب
Saturday, May 31, 2025

Fed keeps interest rates near zero and warns of further pandemic strain on the economy

Fed keeps interest rates near zero and warns of further pandemic strain on the economy

The Federal Reserve left interest rates unchanged at ultra-low levels Thursday, and warned that the Covid-19 pandemic will continue weighing on the economy in the short term.
"The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," said the central bank in its November monetary policy statement.

For the months to come, the Fed committed to more asset purchases at least at the current pace of $80 billion Treasury securities and $40 billion agency mortgage-backed securities per month.

The Fed slashed interest rates to near zero in March in the wake of the pandemic crisis. Since then, the central bank has launched various lending facilities to help the economy recover. An internal survey in September showed the central bank officials expect to keep interest rates on hold through 2023.

But Powell has repeatedly called for more government stimulus to go along with the monetary stimulus the Fed is providing, an appeal he repeated on Thursday. With no clarity on who will win the presidential election, it's uncertain what kind of stimulus package the next administration will put forward.

"We'll have a stronger recovery if we can at least get some fiscal support," Powell said. He added that health care policy to address the pandemic — vaccines, therapeutics and measures to control the spread of the virus — are "absolutely critical to the economy," especially as cases continue to climb in the United States.

The economy also remains in crisis, even though the recovery has in some respects been faster than many, including Powell, anticipated. This was in part due to government stimulus checks and expanded unemployment benefits, which have since expired.

However, improvements in the job market have tapered off recently. Of the roughly 22 million jobs lost in March and April, only about half have been recovered.

The government will release its October jobs report on Friday. Economists are expecting that 600,000 jobs were added last month, a further slowdown in the job market recovery. The unemployment rate is expected to slip to 7.7%, down from 7.9% in September.

"Economic dislocation has upended many lives and left significant uncertainty for the future," Powell said.

Last week, the central bank reduced the minimum amounts for loans from its Main Street Lending Facility, which is designed to help small businesses through the pandemic crisis. Main Street loans can now be as small as $100,000, compared with the previous minimum of $250,000. Fees for the loans were also reduced.

Powell said designing lending facilities to respond to the crisis was complex and alluded to some trial and error, in response to a question from CNN.

He said demand for loans below $1 million was low initially, and that the compensation for the banks underwriting the loans still had to be an incentive to get the facility working.

"We concluded that we could just change the fee structure to create incentives for that. So we did that," Powell said. "We try to be responsive, we want qualifying businesses to be able to borrow. And we'll see how much demand will come."
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Netanyahu Accuses Starmer of Siding with Hamas
Calls Grow to Resume Syrian Asylum Claims in UK
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Denmark Increases Retirement Age to 70, Setting a European Precedent
Iranian Director Jafar Panahi Wins Palme d'Or at Cannes
Israeli Airstrike Kills Nine Children of Gaza Doctor
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
×