Fed Holds Rates Steady and Signals Continued Wariness

Now, the economy is teetering on an uncertain precipice as U.S. coronavirus cases rise and support programs run dry. The outcome of this week’s presidential and congressional election remains uncertain, making it hard to guess whether and when the government will renew forgivable small business loans, expanded unemployment insurance and other measures that have helped to keep businesses and families afloat.

The uncertainty comes while the economy has 11 million fewer jobs relative to February, based on official government figures that probably understate the full extent of employment loss. A jobs report on Friday is expected to show that employers added about 600,000 nonfarm workers in October, based on the median estimate in a Bloomberg survey of economists. While that is a high number by historical standards, it is a relatively lackluster figure when so many are out of work on a purportedly “temporary” basis.

Jerome H. Powell, the Fed chair, will hold a news conference at 2:30 p.m. where he will make remarks and answer questions.

There is still more that the Fed could do to stimulate the economy, and Mr. Powell is likely to face queries about its next steps. The central bank could reinforce its pledge to keep interest rates low for an extended period of time. It could change up the communication around its bond purchases, or shake up their composition so that they tilt more toward longer-dated debt, all with the goal of making credit cheaper and keeping money flowing into the economy.

Yet such measures are no panacea. They benefit people who are in a position to buy houses and cars and can help the economy to recover in the medium to long term. But Fed policies are not suited to get money straight into the hands of the workers who have lost their jobs in the short term. Such targeted relief would have to come from Congress and the White House.

Article source: https://www.nytimes.com/2020/11/05/business/economy/fed-meeting.html