London Daily

Focus on the big picture.
Thursday, Aug 13, 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
China’s Kimi Launches AI-Focused Credit Card With Agricultural Bank of China and American Express
UK Residents Gather to Watch Rare Partial Solar Eclipse
Reform UK Deputy Leader Richard Tice Faces Criticism Over Legal Threat Against Guardian Journalist
Michael Forsyth Elected Speaker of the House of Lords
Cambridge Researchers Launch £20 Million Human Organoid Drug Testing Programme
Heathrow Loses European Passenger Traffic Lead to Istanbul Airport
Households Near New UK Electricity Pylons to Receive £250 Annual Energy Bill Discount
UK Government Estimates Zero-Hours Contract Ban Could Cost Employers Up to £3 Billion a Year
Robert Jenrick Leaves Conservatives for Reform UK in Major Parliamentary Defection
UK Police Chiefs Urge Government to Block Early Release of Andrew Harper Killers
UK Government Holds Emergency Cobra Meeting as Drought and Heatwave Raise Wildfire Risks
Former Labour Adviser Arrested on Suspicion of Spying for China Held Privileged Access as Top Party Donor
Turkish Parliament Passes Landmark Bill Granting Conditional Amnesty to Disarmed PKK Members
Donald Trump Warns FIFA Against Ousting Gianni Infantino Amid Revolt by Global Football Leaders
Jeff Bezos Joins Investor Group Closing In on $6 Billion Liverpool FC Stake
Police Conduct Cross-Border Raids Against Northern England Drug Network
Nicola Sturgeon Protested at Edinburgh Festival Fringe Event
Major UK Retail Chain Enters Administration With One Hundred Fifty-Four Stores Set to Close
Heathrow Renews Call for Runway Expansion After Losing Europe’s Busiest Airport Ranking
Government Condemns One Million Pound Thames Water Executive Bonus Amid Drought
NHS England Says More Than One Hundred Thousand Hepatitis C Patients Have Been Cured
UK Foreign Secretary Ed Miliband Calls for End to West Bank Settler Violence
UK Prepares for Deepest Partial Solar Eclipse Since Nineteen Ninety-Nine
UK Heatwave Triggers Amber Health Alerts as Economic Losses Reach Four Point Four Billion Pounds
UK Offers Electricity Bill Discounts to Communities Hosting New Power Infrastructure
Bank of England Expected to Hold Interest Rates at Three Point Seven Five Percent
UK Government Moves to Ban Subscription Traps and Misleading Retail Discounts
Andy Burnham Gives Councils New Powers to Block Betting and Vape Shops
UK Councils to Receive Sweeping Planning Powers to Ban New Vape and Betting Shops
Nicola Sturgeon Says She Has No Contact With Estranged Husband After SNP Embezzlement Case
Police Arrest Two Men After Aberdeenshire Defense Technology Office Break-In
Greater Manchester Councils Gain Powers to Restrict New Vape and Betting Shops
Coroner Finds Treasury Workplace Failures Contributed to Personal Assistant’s Suicide
English and Welsh Courts Ban Meta Smart Glasses Over Recording and Privacy Risks
Strait of Hormuz Disruption Could Double UK Inflation and Trigger Recession, Forecasters Warn
UK Expands Global Talent Visa Scheme to Support Research-Intensive Companies
UK Equity Funds Suffer Record One Point Six Billion Pound Outflow Amid Capital Gains Tax Fears
Three-Quarters of England Enters Drought as Fifth Summer Heatwave Raises Economic Risks
UK Hiring Stabilizes for First Time Since 2022 as Employers Adjust to Higher Payroll Costs
UK Chancellor Orders Whitehall Spending Cuts as Public Debt Exceeds Three Trillion Pounds
UK Manufacturing Output Records Fourth Straight Month of Growth
UK Condemns Russian Torture of Ukrainian Prisoners and Recruitment of Foreign Nationals
Long-Lost Royal Navy Warship HMS Tiger Found in English Channel After 118 Years
Northern Ireland Finance Minister Seeks Urgent Treasury Talks Over Regional Budget Pressures
UK Government Targets Subscription Traps and Misleading Discounts in New Consumer Rules
Alleged Cartel Boss Daniel Kinahan Extradited From Dubai to Face Criminal Charges
AI Chatbots Challenge Traditional News Consumption and Raise Job Concerns
Andy Burnham Government Promises Crackdown on Exploitative Business Practices
UK University Funding Model Faces Growing Pressure From Unsustainable Student Debt
Government Urged to Subsidise Energy Bills for Vulnerable UK Households
×