The U.S. Federal Reserve said it will continue to support the American economy with massive monetary stimulus until it sees "substantial further progress" in employment and inflation.
At their final meeting of 2020, policy makers, led by Chair Jerome Powell, voted to maintain monthly bond purchases of at least $120 billion U.S. Policy makers made no changes to the composition of bond purchases, declining to shift them toward longer-term maturities.
"The Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion U.S. per month and of agency mortgage-backed securities by at least $40 billion U.S. per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals," the Federal Open Market Committee said.
The U.S. unemployment rate stood at 6.7% in November, and inflation remains below the Federal Reserve’s 2% target.
The Fed meeting came as lawmakers on Capitol Hill tried to wrap up an agreement on new stimulus after months of deadlock, with both fiscal and monetary policy poised to help support an increasingly shaky U.S. economy during the wait for widespread vaccine distribution.
Ten-year Treasury yields rose after the Fed statement was released to 0.94% - up from about 0.91% just before. Stocks had a mixed reaction to the news.
The U.S. Federal Reserve Committee unanimously agreed to keep the federal funds target rate in a range of zero to 0.25%, where it’s been since March, and reiterated that the benchmark lending rate would be held near zero until at least 2023.
