Policymakers reiterated they are committed to using a full range of tools to support the US economy in this challenging time. The so-called dot plot of funds rate projections showed rates are expected to remain at current levels through 2022.
Fed officials see the US economy shrinking 6.5% in 2020, compared to a 2% growth projected in December but see a 5% growth in 2021 (vs 1.9% earlier forecasted). The unemployment rate is expected to rise to 9.3% this year (vs 3.5%) and to fall to 6.5% in 2021 (vs 3.6%). PCE inflation is seen slowing to 0.8% (vs 1.9%) and rebounding to 1.6% in 2021 (vs 2%).
The Fed also said it will continue to increase its bond holdings, targeting Treasury purchases at $80 billion a month and mortgage-backed securities at $40 billion.