FOMC maintains fed funds rate near zero

On Wednesday in line with market expectation Federal Open Market committee (FOMC) voted unanimously to keep the fed funds rate in a range of zero per cent to 0.25 per cent. It expects fed fund rate to remain near zero per cent by 2022. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.

FOMC projects unemployment rate at 6.5 per cent in the 2021 while inflation is expected to be at 1.6 per cent below long run target of 2 per cent. The FOMC in its statement states that weaker demand and significantly lower oil prices are holding down consumer price inflation. Further, it added that in the coming months Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning. Currently, the Fed's balance sheet stands at US$ 7.17 trillion.

Earlier, US posted a surprising decline in the unemployment rate which had come down to 13.3 per cent as nearly 2.5 million workers were recruited by employers

Dow Jones on Wednesday settled in the negative terrain at 26989.99, down by 1.04 per cent. All the major indices across the globe in today's trading session witnessed sell-off. India's Nifty and Sensex too fell and were trading nearly 1.5 per cent down.