US economic recovery remains on track, says Fed 

WASHINGTON: US economy remained on recovery path and employment have continued to strengthen despite a rise in coronavirus infections, the US Federal Reserve said in a latest policy statement.

In a unanimous policy statement the Federal Reserve left interest rates and bond-buying programme unchanged and said the job market needed to be made fortified.

The Federal Open Market Committee in July 28 meeting kept its benchmark interest rate in the range of 0% to 0.25%, but provided an update on its December 2020 commitment to purchasing at least $120 billion a month in Treasuries and agency mortgage-backed securities until the FOMC will continue to assess progress after economic recovery looked like it was making substantial further progress, agencies quoted as saying on Wednesday.

The policy-setting Federal Open Market Committee noted that inflation still appears to be the result of “transitory factors,” identical to its wording from its last policy decision six weeks ago.

In a news conference following the release of the statement, Fed Chair Jerome Powell said the US job market still had “some ground to cover” before it would be time to pull back from the economic support the US central bank put in place in the spring of 2020 to battle the coronavirus pandemic’s economic shocks.

Powell said there was ‘very little support’ for cutting the $40 billion in monthly purchases of mortgage-backed securities “earlier” than the $80 billion in Treasuries, and that once the process begins “we will taper them at the same time.”

Overall, however, the Fed seemed unfazed by spread of the Delta variant, even though new daily coronavirus infections have roughly quadrupled since the Fed’s June 15-16 policy meeting.

Though vaccinations have slowed – and Powell plugged inoculation as the best chance to get the economy durably back to normal – the Fed said it still expected vaccinations to “reduce the effect of the public health crisis on the economy.”

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