Fed Upgrades U.S. Economic Outlook, Expecting 4.2% GDP Growth in 2021

The U.S. Federal Reserve (Fed) slightly upgraded its economic outlook to a 2.4% contraction in 2020, and revised up GDP expansion in 2021 to 4.2%.

 

The Fed predicted its GDP to contract only 2.4% this year, compared to its earlier forecast in September at 3.7% contraction. Meanwhile, the GDP in 2021 has been revised up to an expansion of 4.2% from an earlier forecast at 4.0%.

 

Following the Federal Open Market Committee (FOMC) meeting, Fed’s chairman Jerome Powell estimated the U.S. unemployment rate to fall to 6.7% this year, a brighter outlook when compared to 7.6% projection in September. The unemployment rate should fall to 5.0% in 2021, according to the statement.

The Fed said that it will maintain benchmark interest rates near zero and will continue to buy at least $120 billion of bonds each month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.