US Fed sees uncertain recovery as Covid-19 will ‘weigh heavily’ on economy

US Federal Open Market Committee on warned the economic downturn induced by the Covid-19 pandemic faces a highly uncertain path and reiterated the need for additional fiscal stimulus.

At the July 28-29 session, the Federal Reserve’s policymaking arm voted to keep short-term interest rates anchored near zero, citing an economy that was falling short of its pre-pandemic levels.

Officials at the meeting “agreed that the ongoing public health crisis would weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term,” the meeting summary said.

The dovish remarks from the Fed on the U.S. economy triggered a retreat in U.S. stocks and across Asian markets.

Central banks, including the Fed, have rolled out massive stimulus measures and cut interest rates near zero to combat the economic toll from the virus outbreak, helping gold rise more than 28% so far this year as it’s considered a hedge against inflation and currency debasement.