Federal Reserve raises economic growth forecast for this year, keeps interest rates unchanged

The Federal Reserve left interest rates unchanged Wednesday while raising its forecast for economic growth in the world’s largest economy in 2021, noting a “near-term” rebound in both the economy and employment due to accelerated vaccinations.

AFP news agency, with the rapid start of vaccination action, the United States in recent weeks the number of infections fell sharply, a large number of businesses to reopen. And the U.S. Congress passed and signed by President Biden last week, the $1.9 trillion economic bailout plan will show the results of economic stimulus in the coming months.

The Federal Reserve on Wednesday sharply boosted this year’s U.S. gross domestic product expectations, the Fed said, Fed members more optimistic about the U.S. economic outlook, predicting that the economy will grow by 6.5 percent this year and 3.3 percent by 2022, more than 2 percentage points higher than the last estimate.

Rapid economic growth will also make the Inflation rate rose to 2.4%, but the Federal Reserve policy-making Federal Open Market Committee (FOMC) members predicted that they expect at least until 2023, will not raise the current benchmark interest rate close to zero.

This is the first Time the Fed has updated its economic forecast since last December, reflecting the Fed’s continued optimism about economic growth expectations after President Biden signed a $1.9 trillion revitalization package last week and Congress passed $900 billion in aid measures late last year.

Fed Chairman Jerome Powell said that while rapid congressional action has improved the economic outlook, the U.S. economy is still far from a full recovery and the Fed will continue to provide stimulus to support the economy.

Powell said vaccinations bring hope for recovery later this year, but no one should be complacent. He noted that the economic recovery is not even and is far from complete. Powell believes that the next 2-3 years economic conditions are still very uncertain, there are still 10 million Americans to return to work.

In addition, the Federal Reserve announced on Wednesday to keep interest rates unchanged, in line with market expectations. Federal funds rate target range to maintain zero to 0.25%, this is the eighth consecutive meeting without adjusting interest rates, members voted unanimously to support the monetary policy decision. The Federal Reserve reiterated that it maintains an accommodative policy and continues to use all tools to support the U.S. economy until there is further progress in employment and inflation.