The Fed's commitment to zero rates and asset purchases was not a surprise, but a somber reminder that the economy could take long to heal.
The Federal Reserve was slightly more dovish than expected by the markets, prompting buying in the bond market but a selloff in banks stocks and the dollar.
The Fed left the door open to using a policy of controlling interest rate levels, expected by many market pros later this year. The Fed's message did not really contain surprises, but it showed a commitment to long-term easing with a forecast that it expects interest rates to remain at zero through 2022. By the end of 2022, it also expects unemployment to reach 5.5% and inflation to reach 1.7%, below its target 2%.
Fed Chairman Jerome Powell discussed the uncertainties facing the economy and the difficulties of re-employing all of the people who were suddenly out of work when the economy locked down.
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