The Federal Reserve left interest rates near zero and signaled it would hold them there through at least 2023 to help the U.S. economy recover from the coronavirus pandemic.
The Federal Open Market Committee "expects to maintain an accommodative stance of monetary policy" until it achieves inflation averaging 2% over time and longer-term inflation expectations remain well anchored at 2%, the central bank said in a statement Wednesday following a two-day policy meeting.
The statement reflects the central bank's new long-term policy framework in which officials will allow inflation to overshoot their 2% target after periods of under-performance. That shift was announced by Chairman Jerome Powell last month at the central bank's annual Jackson Hole policy conference.
The vote, in the FOMC's final scheduled meeting before the Nov. 3 presidential election, was 8-2. Dallas Fed President Robert Kaplan dissented, preferring to retain "greater policy rate flexibility," while Minneapolis Fed President Neel Kashkari dissented in favor of waiting for a rate hike until "core inflation has reached 2% on a sustained basis."
Mr. Powell and other Fed officials have stressed in recent weeks that the U.S. recovery is highly dependent on the nation's ability to better control the coronavirus, and that further fiscal stimulus is likely needed to support jobs and incomes.
The Fed committed Wednesday to using its full range of tools to support the economic recovery. The central bank repeated it will continue buying Treasuries and mortgage-backed securities "at least at the current pace to sustain smooth market functioning." A separate statement Wednesday pegged those amounts at $80 billion of Treasuries a month and $40 billion of mortgage-backed securities.