The Federal Open Market Committee expects no rate increases in the next several years

WASHINGTON—Credit unions can prepare for low rates to continue through 2023, according to new projections released by the Federal Reserve.

The Federal Open Market Committee adjourned its meeting on Wednesday with a statement saying it not only expects no rate increases in the next several years it will provide additional support to the economy as is needed.

In its statement, the Fed said it would maintain rates near zero “until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

The policy meeting is the first for the Fed since it announced a significant policy shift in its approach to inflation and in how it will consider other economic metrics. Practically speaking, the shift indicates the Fed moving forward will be less inclined to increase interest rates when the unemployment rate falls, as long as inflation isn’t on the rise.

In addition, at its most recent meeting FOMC officials also issued a new forecast for a faster-than-expected decline in the unemployment rate in mid-2020, with the Federal Reserve not projecting unemployment will average around 7% to 8% during the final quarter of 2020, a reduction from June’s projections of around 9% to 10%.

Fed officials indicated in their statement they remain relatively concerned the reopening of the economy is going to reveal deeper issues, and that many employees in hard-hit economic sectors are likely in for long unemployment.

The Fed said rates will remain low because it does not see inflation returning to the long-time goal of 2% until the end of 2023, at the earliest.

With inflation running persistently below the Fed’s 2% goal in recent years, the Fed said Wednesday it would “aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time” and so that longer-run expectations of future inflation remain anchored at that level, the statement said.