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US Federal Reserve intends to keep rates low for several years

The US Federal Reserve System (FRS), which acts as the country's central bank, intends to maintain a low base interest rate for several years. This was stated by Fed Chairman Jerome Powell in an interview published on Friday with National Public Radio (NPR).

“We think the economy will need a low-interest rate to keep economic activity going over a long period of time,” he said. “This will be measured in years.”

At the end of July, following a regular meeting of the Federal Open Market Committee (FOMC, the Fed's leadership), it was decided to keep the rate at 0-0.25% per annum. The next meeting will take place in mid-September. In March, the Fed cut interest rates twice unscheduled in connection with the threat to economic development caused by the spread of the coronavirus.

Jerome Powell also noted that the American economy still has a long way to go to full recovery, despite the decline in unemployment.

“The recovery continues, we really believe that from now on it will be harder.<...> In a sense, it will be more difficult for [Americans] to find work, because some sectors of the economy will need more time to recover,” the head of the financial regulator said.

As the US Department of Labor reported on Friday, the US unemployment rate fell to 8.4% in August, falling below 10% for the first time since the coronavirus pandemic. At the same time, the number of jobs increased by about 1.4 million last month. Powell stressed that the figures are better than expected, but “to return to full employment, the disease must be brought under control.” “The pace of improvement may slow down a little, but the improvement continues. And in the labor market, I would say, it [recovery] is at least as fast as we expected,” the Fed chairman stressed. He suggested that additional financial support for the unemployed and small businesses may be needed to help Americans seriously hit by the coronavirus-related economic crisis.

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