Fed Stays in Holding Pattern With Rates and Asset Purchases Unchanged

Federal Reserve Chair Jerome Powell opened the door to a possible shift in the central bank’s bond purchases in coming months, saying that more fiscal and monetary support are needed as rising Covid-19 infections cloud the outlook for the economic recovery.

“At this meeting my colleagues and I discussed our asset purchases,” Powell told reporters Thursday after the Fed kept interest rates near zero and held bond purchases at a $120 billion monthly pace.

With the Fed’s overnight policy rate near zero, it has sought to support the economy during the pandemic by buying bonds. Those purchases help to lower longer term borrowing costs for businesses and households. Powell said that the central bank could shift the composition, duration, size or the life cycle of the program to provide more aid.

“We understand the ways in which we can adjust the parameters of it to deliver more accommodation if it turns out to be appropriate,” he said.

The Fed’s next meeting is Dec. 15-16, when it could possibly make a change if the economic picture deteriorates.

Powell spoke about the outlook for the economy against the backdrop of the U.S. election, whose results remain uncertain. He deflected questions on the outcome, saying: “It is a good time to step back and let the institutions of democracy do their jobs.”