Jan. 26 (UPI) — The Federal Reserve on Wednesday left its benchmark lending rate unchanged near zero but warned an increase could be coming soon.
The Federal Open Market Committee completed its two-day meeting with a statement saying interest rates will remain at 0% to 0.25%, the same level since March 2020. The Fed’s monetary policy arm dropped interest rates to near zero at that time as the economy plummeted at the beginning of the COVID-19 pandemic.
The Fed’s statement said the U.S. economy is still being impacted by the pandemic, but with inflation well above 2% and the labor market growing, it expects to raise rates “soon.”
The FOMC projected last month that it will raise the lending rate three times in 2022 as the economy rebounds.
“Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation,” Wednesday’s statement said. “Risks to the economic outlook remain, including from new variants of the virus.”
The committee also said it will continue to reduce the monthly pace of its net asset purchases, with a full halt planned in March. In February, it will increase holdings of treasury securities by at least $20 billion a month and of agency mortgage-backed securities by at least $10 billion a month.