London Daily

Focus on the big picture.
Saturday, Aug 01, 2026

Fed keeps interest rates near zero and warns of further pandemic strain on the economy

Fed keeps interest rates near zero and warns of further pandemic strain on the economy

The Federal Reserve left interest rates unchanged at ultra-low levels Thursday, and warned that the Covid-19 pandemic will continue weighing on the economy in the short term.
"The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term," said the central bank in its November monetary policy statement.

For the months to come, the Fed committed to more asset purchases at least at the current pace of $80 billion Treasury securities and $40 billion agency mortgage-backed securities per month.

The Fed slashed interest rates to near zero in March in the wake of the pandemic crisis. Since then, the central bank has launched various lending facilities to help the economy recover. An internal survey in September showed the central bank officials expect to keep interest rates on hold through 2023.

But Powell has repeatedly called for more government stimulus to go along with the monetary stimulus the Fed is providing, an appeal he repeated on Thursday. With no clarity on who will win the presidential election, it's uncertain what kind of stimulus package the next administration will put forward.

"We'll have a stronger recovery if we can at least get some fiscal support," Powell said. He added that health care policy to address the pandemic — vaccines, therapeutics and measures to control the spread of the virus — are "absolutely critical to the economy," especially as cases continue to climb in the United States.

The economy also remains in crisis, even though the recovery has in some respects been faster than many, including Powell, anticipated. This was in part due to government stimulus checks and expanded unemployment benefits, which have since expired.

However, improvements in the job market have tapered off recently. Of the roughly 22 million jobs lost in March and April, only about half have been recovered.

The government will release its October jobs report on Friday. Economists are expecting that 600,000 jobs were added last month, a further slowdown in the job market recovery. The unemployment rate is expected to slip to 7.7%, down from 7.9% in September.

"Economic dislocation has upended many lives and left significant uncertainty for the future," Powell said.

Last week, the central bank reduced the minimum amounts for loans from its Main Street Lending Facility, which is designed to help small businesses through the pandemic crisis. Main Street loans can now be as small as $100,000, compared with the previous minimum of $250,000. Fees for the loans were also reduced.

Powell said designing lending facilities to respond to the crisis was complex and alluded to some trial and error, in response to a question from CNN.

He said demand for loans below $1 million was low initially, and that the compensation for the banks underwriting the loans still had to be an incentive to get the facility working.

"We concluded that we could just change the fee structure to create incentives for that. So we did that," Powell said. "We try to be responsive, we want qualifying businesses to be able to borrow. And we'll see how much demand will come."
Newsletter

Related Articles

0:00
0:00
Close
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
Sainsbury Agrees to Sell Argos in £120 Million Deal to Private Consortium
High Court Clears Way for Construction of Chinese Embassy at Royal Mint Court
UK Fuel Prices Climb to Multi-Month Highs as Strait of Hormuz Tensions Disrupt Oil Supplies
Severe Summer Drought and Record Heat Put UK Harvests at Risk
Prime Minister Andy Burnham Faces Labour Backbench Opposition Over Potential Support for New North Sea Oil and Gas Drilling
Bank of England Warns Inflation Will Stay Above 3% as Middle East Energy Shock Prolongs Cost-of-Living Pressures
Andy Burnham has Announces Plans to Redistribute Income Tax Revenue to English Mayors
Early-Release Scheme Faces Fresh Scrutiny as Reoffending and Prison Recalls Rise
Police Phone Checks Followed Report on Murder of MI5 Agent Inside Sinn Féin
Archbishop of Canterbury Reaffirms £100 Million Reparative Justice Fund During Ghana Visit
Charities Allege French Police Used Tear Gas Against Channel Migrants
Norwegian Teenager Convicted Over Iran-Linked Murder Plot in Britain
Christian Organisations File Charity Complaints Against Amnesty International UK
Ofgem Tightens Grid Connection Rules for New Data Centres
FTSE 100 Reaches Record High Despite Global Technology Sell-Off
Millions of UK Households Urged to Check Eligibility for Winter Energy Discount
Labour Restores Parliamentary Whips to Diane Abbott and Joani Reid
UK Supreme Court to Hear Challenge Over Palestine Action Ban
UK Commits More Than £8.4 Billion to Dreadnought Nuclear Submarine Programme
England Declares Severe Drought as Wildfire Burns Near Sizewell Nuclear Site
Bank of England Holds Interest Rates at 3.75% as Middle East Tensions Fuel Inflation Risks
Drought Status Extended Across All of Wales as Heat and Dry Weather Deepen Environmental Strain
Record-Low Danube Exposes Probable Mammoth Remains in Bulgaria
UK Business Confidence Climbs to Four-Month High
Greater Manchester Gains Expanded Powers Under Regional Funding Reforms
UK Supreme Court to Hear Appeal Over Palestine Action Terror Ban
Shell's Quarterly Profit Doubles to Nearly $10 Billion on Higher Energy Prices
UK Government Removes VAT From Household Electricity Bills
Exceptional Drought Grips Half of England as Wildfire Threatens Sizewell
Bank of England Holds Interest Rates at 3.75% as Inflation Risks Persist
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
The chief executive of the popular gaming company laid off many employees and his pay rose to 38 million dollars
UK Employment Holds Steady as Wage Growth Remains Moderate
England to Introduce Artificial Intelligence into Secondary School Curriculum
Wales Launches £1.2 Billion Industrial Regeneration Programme
High Court Upholds UK Digital Surveillance Framework
Northern Ireland Reaches Budget Agreement on Infrastructure and Public Sector Pay
Home Office Expands Digital Border Checks Nationwide
UK Approves Major North Sea Wind and Carbon Capture Project
The World's Most Terrifying Smartphone: Recording, Documenting, and Reporting to the Regime
Scotland Approves Major Renewable Energy Expansion
UK and United States Sign AI and Semiconductor Cooperation Pact
UK Treasury Tightens Fiscal Controls After Gilt Market Volatility
Bank of England Holds Interest Rates at 4.5%
UK Unveils £10 Billion NHS Funding Overhaul and Workforce Reform
The AI User Nightmare: Private Claude Conversations Leaked to the Internet
UK: Former Football Association Leaders Call for World Cup Boycott Over FIFA Privatization Plan
Forbidden Love: China severs millions from their virtual partners
×