Federal Reserve will leave interest rates near zero until 2023

Well, to no one’s surprise, the Federal Reserve is suppressing interest rates for longer.

Following its two-day September Federal Open Market Committee (FOMC) meeting, it left interest rates unchanged in the target range of zero and 0.25 percent. It will stay this way until at least 2023, in addition to allowing inflation to run above the two percent target rate.

Fed Chair Jerome Powell did announce a new inflation approach last month, but the Fed published specific and official language in its guidance.

With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.

It will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

The central bank also released its latest projections for the economy. For the gross domestic product, the Fed is expecting four percent GDP growth in 2021, three percent in 2022, and 2.5 percent in 2023. It predicts the jobless rate will decrease to four percent by 2023.

Powell is urging Congress to offer additional fiscal support while also asking the public to wear face masks to support the economic recovery.

The Dow Jones Industrial Average popped on the news, the U.S. dollar was unfazed, gold and silver prices were relatively flat, and Treasurys were unchanged.

As Robert Wenzel of the Economic Policy Journal would say, hang on to your gold coins.