Fed: US Federal Reserve leaves key interest rate at 0 to 0.25 percent

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Fed Chairman Jerome Powell

Photo: ERIC BARADAT / AFP

The US Federal Reserve (Fed) is sticking to its historically loose monetary policy.

As expected, the key interest rate will remain at the very low level of 0.0 to 0.25 percent.

Securities purchases of around $ 120 billion per month to support the economy are also expected to continue.

This is still appropriate in view of the situation on the labor market and the low inflation, said the central bank.

Before the Fed's decision, analysts had expected the central bank to stick to its previous course.

The Fed has already responded with an unprecedented easing of its monetary policy in order to support the economy of the world's largest economy in the corona crisis.

At the same time, the Federal Reserve significantly increased its forecasts for economic growth and price developments.

For 2021, the Fed expects gross domestic product (GDP) to rise by 6.5 percent and an inflation rate of 2.4 percent.

According to the forecasts, unemployment is likely to decline more sharply than previously expected.

For the current year, the Fed expects an unemployment rate of 4.5 percent.

Analyst Friedrich Heinemann from the Leibniz Center for European Economic Research is already warning of the US economy overheating.

"With the containment of the pandemic, the pent-up consumer demand of US consumers will lead to a demand boom," said the expert.

"If the full effects of the stimulus package unfold, inflation could quickly become uncomfortable."

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