Federal Reserve votes to keep US interest rates near zero

HOUSTON (ICIS)–The US Federal Reserve voted on Thursday to hold interest rates at 0-0.25% and committed to keeping rates at current levels until the economy recovers.

The central bank warned that the outlook for the US economy will continue to depend significantly on the course of the coronavirus (Covid-19), which will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.

Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year, the Federal Reserve said.

Weaker demand and earlier declines in oil prices have been holding down consumer price inflation, the Fed said.

Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to US households and businesses, the Federal Reserve said.

Unlike many central banks, the Federal Reserve has a dual mandate to keep inflation under control and to encourage maximum employment.

Demand for plastics and chemicals tends to rise and fall at multiples of GDP. As a result, demand usually falls during recessions and rises during expansions.

Interest rates and other monetary policies can affect GDP by increasing or restricting the availability of credit to companies and households.

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