Much of the government U.S. aid contained in a $2.3 trillion spending package is gone

The two-day meeting is the U.S. central bank’s first under a newly adopted framework that promises to shoot for inflation above 2% to make up for periods, such as now, where it is running below that target. The strategy means the Fed will not take its foot off the monetary gas pedal even if unemployment continues to drop at a faster-than-expected pace.

Fed officials don’t appear ready to translate that framework into an explicit promise to keep the central bank’s key overnight lending rate in its current range of 0% to 0.25% until certain economic benchmarks – say, 2.5% inflation – are met.

Since Fed policymakers last met in late July, the economic outlook has brightened somewhat. A scary midsummer spike in daily new U.S. cases of COVID-19 has subsided, though clusters of infections continue to surface around the country. More than 194,000 Americans have died from the disease, according to a Reuters tally.

The economy also has recouped about half of the 22 million jobs lost in the first two months of the recession, unemployment has dropped to 8.4% from a crisis high of 14.7%, manufacturing activity has increased and some measures of consumer spending have surged.

But much of the recent data suggests the recovery is slowing. So while the summary of Fed policymaker projections is expected to point to lower unemployment and faster economic growth than anticipated in the last round of forecasts in June, Powell will likely stick to his message that the road to recovery will be long and bumpy.

Much of the government aid to small businesses and the unemployed contained in a $2.3 trillion spending package passed by the U.S. Congress in March is gone, and lawmakers are at an impasse over providing another aid package. A stopgap program to give the unemployed an extra $300 every week – less than the now-expired $600 weekly supplemental payment under the first rescue package – ended this month. Powell and other Fed officials have repeatedly said the economic damage of the coronavirus crisis will be harder to undo without new government aid.

Fed expected to raise economic forecasts, extend vow to keep rates low, Reuters, Sep 16