The Fed slashed rates to zero and lent billions of dollars. Its next step is complicated
New York (CNN Business)The Federal Reserve slashed interest rates to zero and committed to a large-scale asset buying programs to help the economy through the coronavirus shock. Now the attention turns to the future, as economists and investors await word on where the Fed expects the economy is headed.
When it slashed interest rates so zero in March, the Fed didn't provide much of a road map beyond acknowledging an expected severe economic disruption. Since then, 26.5 million people filed for initial unemployment benefits, consumer confidence fell to a six-year low and retail sales dropped to the lowest level on record.
The advance reading of first-quarter US GDP growth will be released Wednesday morning ahead of the Fed's update. Economists predict the economy contracted at a 4% annualized rate -- its worst performance in eleven years.
Since the Fed last took action, enough economic data has been released to illustrate just how bad the coronavirus shock is for the US economy. But it fares through the summer and what the recovery looks like remain big question marks.
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