The Federal Reserve announced that it would make no change in interest rates, as it lowered the expected losses in the US GDP for 2020 to -2.4%, a slight improvement from the -3.7% previously prediction, Politico reports.
With increased distribution of the coronavirus vaccine, the Fed anticipates the first half of 2021 to continue to feel detrimentally impact of the pandemic, with most businesses and communities reopening by mid-year.
The forecast was also bolstered by a promising rumors about a second round of coronavirus relief for businesses, families and the unemployed.
“[T]he economy should be performing strongly, businesses should be reopening,” Fed Chair Jerome Powell said of the second half of 2021. “The issue is more the next four, five months.”
The Fed report comes on the same day as the Commerce Department announced that consumer spending fell 1.1% in November, a sign of weakness amid lower household incomes.