Fed leaves interest rates unchanged, projects zero rates through 2023

CNBC's Steve Liesman reports on the Fed's latest decision to leave interest rates unchanged heading into 2021. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

The Federal Reserve on Wednesday made a key adjustment to its efforts to support the economy, while upgrading its outlook for growth.

As expected, the Fed held benchmark interest rates near zero following the conclusion of its two-day meeting.

Investors were watching whether the Fed would present outcomes-based guidance in which it would state the conditions necessary for a reversal in policy.

The Fed delivered in that respect, saying it would continue to buy at least $120 billion of bonds each month “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals,” the post-meeting statement said.

“These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses,” the Federal Open Market Committee added in a statement that gained unanimous approval.

The committee, however, did not say it would extend the duration of those purchases.

The Fed already had committed to not raising rates until inflation exceeds its 2% goal even if unemployment comes down to levels that normally had signaled price pressures. Changing the language around the asset purchases underlines the central bank’s commitment to seeing the recovery through from its coronavirus-era slump.

“Together, these measures will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete,” Fed Chairman Jerome Powell said at his post-meeting news conference.

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