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The Federal Reserve on Wednesday left its key overnight interest rate near zero and made no change to its monthly bond purchases, pledging again to keep those economic pillars in place until there is a full rebound from the pandemic-triggered recession.

That hasn’t happened, and U.S. central bank policymakers flagged a potential slowing in the pace of the economic recovery in a statement released after the end of their latest two-day meeting.

“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the Fed’s policy-setting committee said in the statement.

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“The ongoing public health crisis continues to weigh on economic activity, employment, and inflation, and poses considerable risks to the economic outlook.”

The Fed’s decision to leave its benchmark overnight interest rate in a target range of 0 to 0.25 per cent and to keep buying at least $80 billion of Treasury bonds and $40 billion of mortgage-backed securities each month was unanimous.

Policymakers’ focus on the possible moderation in the U.S. recovery puts further weight on the Fed’s pledge to keep monetary policy in an “accommodative” stance for what may be months or even years to come.

Though the ongoing coronavirus vaccination program may help the economy reopen and rebound more fully later this year, for now Fed officials feel it remains in a deep hole, with high levels of joblessness, ailing small businesses, and a recent surge in COVID-19 infections all requiring a crisis-level response by the central bank.

Fed Chair Jerome Powell, in a news conference after the release of the statement, emphasized that the central bank plans no changes to monetary policy until it is clear the economy is showing sustained improvement.

He also declined to comment on the share price of video game retailer GameStop Corp, which has surged in recent days as the result of a battle between retail investors and professional investors shorting the stock.

The Fed chief stressed that the central bank prefers to use macroprudential tools, including stress tests and liquidity levels, to address financial stability risks, and said he did not want to comment on daily market moves or the price of any one stock.

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“We don’t really think we’d be successful in every case in picking the exact right time to intervene in markets,” Powell said. “We monitor financial conditions very broadly, and while we don’t have jurisdiction ... over many areas in the nonbank sector, other agencies do.”

‘NOTHING MORE IMPORTANT’

The United States lost jobs in December, and many indicators of hiring and spending have stalled since the surge in coronavirus infections began in the fall.

The Fed said it would leave its bond-buying program untouched until there has been “substantial further progress” towards recovery and would keep the federal funds rate near zero until inflation hits its 2 per cent target and is expected to stay there.

Powell noted that the fate of the economy was tied to the success of the U.S. vaccination program.

“There’s nothing more important to the economy now than people getting vaccinated,” he said, adding that the weakest parts of the economy are sectors where people need to work near one another.

Powell told reporters he had received the first dose of a COVID-19 vaccine and expected to receive the second dose soon.

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U.S. stocks fell further after the release of the Fed statement and Powell’s comments, with the benchmark S&P 500 index down nearly 3 per cent and on track for its biggest daily drop in three months.

Yields on U.S. Treasury securities remained lower on the day, and the dollar ticked higher against a basket of trading partner currencies.

“This was perhaps the least-anticipated Fed meeting in years,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. “We knew what they were going to say.”

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