The super-easy monetary policy is part of a long-term strategy the Fed adopted in August to help it navigate a world of persistently low interest rates that limits the central bank’s options for fighting downturns and makes it difficult to hit its 2% inflation goal.
In its final policy meeting of the year this week, the U.S. central bank is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come; many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program.
The idea is to counteract any unhealthy downward drag on prices by letting the economy run hotter than in the past. The Fed now plans to keep rates near zero until the economy reaches full employment and inflation hits 2% and is on track to exceed it.
Re-upping that bold promise this week won’t seem out of place amid the alarming U.S. rise in COVID-19 cases and deaths that threatens to stall a still-partial recovery. The labor market has regenerated only about half of the 22 million jobs lost since the pandemic began