The u.s. central Bank warned that it would leave its interest rates low for a good time, even if it anticipates a rebound in the largest economy as early as next year.
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In 2020, the national bank expects a decline in gross domestic product of the United States of 6.5%, before a strong rebound of 5% in 2021, and more modest growth (3.5%), following year. The world’s largest economy had dropped from 4.8% in the first quarter, after more than ten years of growth. The GDP could plunge to 20 or 30% in the second quarter. Unemployment, which had climbed to 14.7% with the implementation of containment measures, but declined in may to the general surprise, the Fed is seen reaching 9.3% for the whole of 2020, and then decline to 6.5% in 2021 and 5.5% in 2022. Before the pandemic, it had reached its lowest level in 50 years, to 3.5%.
These forecasts are the first that are published by the Fed since the beginning of the pandemic that has brought the country into one of its worst crises. “The health crisis present will weigh heavily on economic activity, employment and inflation in the short term, and poses significant risks to the economic outlook in the medium term,” noted the Fed in a communiqué issued at the end of the two-day meeting on monetary. In its previous projections, published in December, the powerful financial institution forecast growth of 2% this year and 1.9% next year.
Rate to zero
The central Bank has kept its policy rates unchanged in the range of 0 to 0.25%, the level at which it had lowered in march when the country has begun to implement containment measures in the face of the pandemic, putting a screeching halt to economic activity. She promised, as it has done since the beginning of this crisis, to do everything she could to support the first economy in the world. The u.s. central Bank has put in place since the beginning of the crisis, which has made over 112,000 deaths in the country, a range of measures, some unprecedented, to allow the economy to withstand.
“The epidemic of the coronavirus because of the enormous difficulties the human and economic in the United States and in the world. The virus and the measures being taken to protect public health have resulted in a significant decline in economic activity and a sharp increase in the destruction of jobs”, is still the Fed in its press release. Before the pandemic, the first economy of the world, which had benefited from 2018 to fiscal stimulus measures had started to decline but continued to increase at a sustained pace compared to other advanced countries.
The United States went into recession in February after 128 months of expansion, according to the National Bureau of Economic Research, whose authority in the matter, and has even revised its definition because of the brutality of the shock caused by the pandemic of sars coronavirus. The secretary of the Treasury, Steven Mnuchin, said Wednesday that it expects a strong rebound of the economy in the second half. The u.s. economy shows signs of perking up for several weeks, while the shops and restaurants in the country re-opened gradually.
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