As widely expected, the Federal Open Market Committee (FOMC), the policy-making arm of the Federal Reserve, left interest rates unchanged in a unanimous vote. The benchmark federal funds rate remains at a target range of 0%-0.25% for the time being and will stay there until the COVID-19 pandemic and its economic effects are largely behind us.
"The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals," the FOMC said in its statement.
The Fed's statement
As you might guess, the FOMC statement has changed tremendously since the last regularly scheduled meeting took place in January (the March rate cuts and other Fed actions were emergency meetings). Specifically, almost the entire statement had to do with the Fed's response to the COVID-19 pandemic and how it's monitoring the recession.
"The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world," according to the statement.
Keep in mind that the FOMC's goals are to maximize employment and control inflation. The committee's statement said that the virus and containment measures have resulted in a surge in job losses, and that weak consumer demand and plummeting oil prices are keeping inflation down.
In addition to keeping the federal funds rate at virtually zero, the Fed will continue its other recently announced initiatives, such as its quantitative easing program.
It's fair to say that the FOMC has surprised investors a few times during the pandemic. Specifically, the FOMC pledged unlimited quantitative easing in late March, and that was after it was announced that the Fed would begin buying corporate debt for the first time since the financial crisis, an initiative that was later expanded to a broader corporate-debt guarantee program.
The point is that every time it seems the Fed is "out of ammo," it ends up surprising investors. And the statement that was just released indicates that there could still be more weapons in the arsenal, as it notes that the committee "will use its tools and act as appropriate to support the economy."