Federal Reserve policymakers, still working to fully roll out a multi-trillion-dollar effort to shore up financial markets and an economy cratered by the coronavirus pandemic, last month dove into a new debate: how best to support the economy during a recovery they now agree could be slower and more fraught than initially thought.
FILE PHOTO: The Federal Reserve building is set against a blue sky, amid the coronavirus disease outbreak, in Washington, U.S., May 1, 2020. REUTERS/Kevin Lamarque/File Photo
It has slashed interest rates to near zero, bought trillions of dollars of bonds, and initiated a raft of lending programs, including one for medium-sized businesses which it hopes to launch later this month. Some participants called for more precise forward guidance for the path of interest rates, like tying any change to rates to achieving specific economic milestones on unemployment or inflation, or to specific dates, an approach the Fed used during the last crisis.
“Fed officials remain concerned the pandemic could have more long-lasting effects,” said Paul Ashworth, chief U.S. economist for Capital Economics. FILE PHOTO: The Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 27, 2019. REUTERS/Brendan McDermid/File Photo
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