NEW: Federal Reserve says it will keep buying bonds to maintain low borrowing rates and support a U.S. economy mired in a deep recession with high unemployment. Nearly all its policymakers foresee no rate hike through 2022.
ABCNews.com
Stock prices rallied modestly on the news after having been mainly lower before the Fed issued its latest policy statement at 2 p.m. Eastern time. At a virtual news conference Wednesday afternoon, Chairman Jerome Powell is expected to drive home the message that the economy remains in need of extraordinary help despite recent despite glimmers of a possible recovery, including a government report Friday that employers surprisingly added jobs in May.
Many economists say those steps have prevented the downturn from worsening, by keeping credit flowing. This week, the National Bureau of Economic Research, the official arbiter of recessions, declared that the U.S. economy entered a recession in February. For now, Fed officials likely feel little pressure to act further because few investors expect them to make any changes to their benchmark rate anytime soon. Though the Fed could technically cut rates into negative territory, Powell has largely rejected negative rates as an option.
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