NEW YORK (Reuters) – The U.S. Federal Reserve on Wednesday signaled years of extraordinary support for an economy facing a torturous slog back from the coronavirus pandemic, with policymakers projecting a 6.5% decline in gross domestic product this year and a 9.3% unemployment rate at year’s end.
FILE PHOTO: Federal Reserve Board building on Constitution Avenue is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis
In the first economic projections of the pandemic era, U.S. central bank policymakers put into numbers what has been an emerging narrative: that the measures put in place to battle a health crisis will echo through the economy for years to come rather than be quickly reversed as commerce reopens.
MARKET REACTION:
STOCKS: U.S. stocks turned higher with the S&P 500 .SPX last 0.21% firmer BONDS: The 10-year U.S. Treasury note yield US10YT=RR was down slightly from before the statement at 0.7592% and the 2-year yield US2YT=RR was off at 0.1826%.
FOREX: The dollar index .DXY slipped further and was down 0.715%
COMMENTS:
MICHAEL SKORDELES, U.S. MACRO STRATEGIST, TRUIST/SUNTRUST ADVISORY SERVICES, ATLANTA
“They’re essentially saying, with the (rate) projections, that we’re going to hold steady until 2022. When you look at the next page…back to the infamous ‘dot plot,’ it’s only two that are showing any kind of increase in 2022. So even then, (zero rates are) likely to last three-plus years.”
“One thing that came from last Friday that we heard fairly universally…is a little of this notion of ‘oh, now we’re through wit