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FED leaves interest rate unchanged, increases inflation forecast

by VTV417 June 2021 Last updated at 13:00 PM

VTV.vn - US Federal Reserve (FED) officials held interest rates at near-zero but signaled they expect two increases by the end of 2023, pulling forward the date of lift-off as the economy recovers.

This was the conclusion of its two-day policy meeting. Inflation is now on track to exceed the Fed's 2% target by a wide margin of 3.5% this year and remain slightly elevated for the next two years, the projections showed.

However, the central bank gave no indication as to when it will begin cutting back on its aggressive bond-buying program. It expects that the U.S. GDP this year can reach 7% while the unemployment estimate remained unchanged at 4.5%.

The decision of the Fed immediately impacted the US stock market. The Dow Jones Industrial Average fell 265.66 points, or 0.8%, while the S&P edged down 22.89 points, or 0.5%, at the closing bell.

Recent indicators show that in some respects, the U.S. is expanding at its fastest rate since World War II. But that growth has also come with inflation, and the central bank has faced pressure from various sources to start curtailing at least a portion of the 120 billion USD in bond purchases it is making each month.

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