Fed Signals Interest Rates Will Stay Near Zero Through 2023

The Federal Reserve concluded its final policy-setting meeting before the November presidential election on Wednesday with a renewed pledge to hold interest rates near zero and keep them there until inflation is consistently rising.

The U.S. central bank, as widely expected, held the benchmark federal funds rate at a range between 0 percent and 0.25 percent, where it has been since mid-March. Updated guidance shows that Fed officials expect rates to remain near-zero through 2023. Officials also changed their projections to reflect a smaller decline in the nation’s GDP and a lower unemployment rate of 7.6% at the end of 2020.

The economic projections from individual Fed members showed that a majority of policymakers expect to keep the benchmark federal funds rate at near zero through the end of 2023. One official saw rates increasing in 2022, and four officials saw them increasing in 2023.

“With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved,” the Fed’s post-meeting statement said.