Fed to Keep Rates Near Zero

Welcome to this week’s Friday post. Head over to our Youtube channel and take a look at this article from The Wall Street Journal to learn more.

To close out the week, we thought we would touch on a few general economy topics. This week the fed is meeting, and last week Chairman Powell had already indicated that they were gonna keep interest rates near zero. We expect that to happen at this week’s meeting. What does that mean to the average person? It means a continuation of low interest rates, but he also indicated that they’re launching another bond purchase program, about $120 billion a month. This is a continuation of economic stimulus, just to keep a liquidity in the economy, and he says they will keep this in place until we achieve the lower unemployment goals and a two percent inflation rate.

He thinks we are in for a bumpy ride, but he is in support of the additional $1400 stimulus checks, because he thinks it’s gonna be the third and fourth quarters of this year before most people get back to their jobs. For this year, they’re estimating that the GDP growth will be 4.2%, which is a good year, and that the unemployment rate will fall to 5% for 2021, down from the 6.7% in December. Now remember, we started 2020 in the 3’s for unemployment, and it shot up into the the 20 percents, coming down in the year end to 6.7 percent.

So they’re actually calling to basically get back to a normal economy at full employment by the second quarter of 2022. A lot of this depends on where you live. If you’re in one of the states that are already open, you may not know of any impacts that are going on, but in other states that have responded by closing most of the economy down, you’re seeing a lot of impacts. We need everybody to get back to work, wherever they are, and hopefully the vaccine roll out will be nearly complete by June 1st, helping everybody get back to work that wants to work.

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