The Federal Reserve signaled today that it is likely to hold interest rates near zero through 2022. This is an indication that central bank policymakers see a long road to recovery from the economic devastation caused by the coronavirus pandemic.
as evidence that the economy would soon be roaring back, and some on Capitol Hill questioned whether additional pandemic relief aid was warranted.The Fed outlook “could take some steam out of those arguing for a V-shaped recovery,” said Christopher Rupkey, chief financial economist at MUFG Bank, referring to a relatively quick and complete bounce-back from the downturn.
Despite the addition of 2.5 million job gains in May, payroll employment is down 19.6 million since February, and millions more people have dropped out of the labor force.The Fed projected the jobless rate to average 9.3% in the fourth quarter and declining to 6.5% in the final months of 2021, according to the median forecast from Fed officials. The range of projections was very wide, with some forecasting unemployment as low as 4.5% and as high as 12% in the fourth quarter of 2021.
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