Breaking: FOMC leaves policy rate unchanged, sees economy shrinking 6.5%

The Federal Open Market Committee (FOMC) on Wednesday announced that it left the benchmark interest rate, the target range for federal funds, unchanged at 0%-0.25% as widely expected.

In its updated economic projections, the FOMC said it expects the gross domestic product to contract by 6.5% in 2020 and sees unemployment at 9.3% at year's end.

Follow our live coverage of the FOMC decision and the market reaction.

Fed Press Conference: Chairman Jerome Powell speech live stream – June 10

Market reaction

With the initial market reaction, the US Dollar Index fell toward 96.00 before starting to edge higher. As of writing, the index was down 0.3% on the day at 96.12.

Fed Quick Analysis: Powell Put alive and kicking, three factors to boost stocks, down dollar.

The bank has your back – that is the message from the Federal Reserve to investors. There are no signs of Fed fatigue – the commitment to support the economy remains strong and should boost stocks while dollar printing will likely keep the dollar down.

Fed's economic forecasts

"Median view of appropriate fed funds rate at end-2020 0.1%."

"Median view of fed funds rate at end-2021 0.1%."

"Median view of fed funds rate at end-2022 0.1%."

"Median view of fed funds rate in longer run 2.5%."

"Median forecast of Fed policymakers is for rates to stay near zero through 2022."

"Two Fed policymakers see lift-off in fed funds rate from zero in 2022."

"Median Fed forecasts for 2020: GDP -6.5%, jobless rate 9.3%, PCE Price Index 0.8%."

"Median Fed forecasts for 2021: GDP +5.0%, jobless rate 6.5%, PCE Price Index 1.6%."

"Median fed long-run forecasts: GDP growth +1.8% (+1.9% in December forecast); jobless rate 4.1% (previous 4.1%); PCE Price Index 2.0% (previous 2.0%)

Key takeaways from the policy statement

"Fed will use the full range of tools to support the US economy."

"Coronavirus crisis will weigh heavily on economic activity, employment and inflation in the near-term period."

"Health crisis poses considerable risks to the economic outlook over the medium-term period."

"FOMC expects to maintain the current fed funds rate until confident US economy has weathered recent events and is on track to achieve the central bank's goals."

"Will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities over coming months at least at the current pace to sustain smooth markets."

"Will continue to offer large-scale overnight and term repurchase agreement operations."

"Fed is prepared to adjust its market operation plans as appropriate."

"Fed plans to continue to increase SOMA holdings of Treasury securities at the current pace, which is the equivalent of approximately $80 billion per month."

"Treasury purchases will be conducted on a monthly basis, starting with the period from mid-June to mid-July, and will continue to be conducted across a range of maturities and security types."

"Fed plans to continue to increase SOMA holdings of agency MBS at the current pace, which is the equivalent of approximately $40 billion per month."

"MBS purchases will be conducted on a monthly basis, starting with the period from mid-June to mid-July."

"Total purchases during this monthly period are expected to be approximately $96 billion."

"Fed plans to continue to increase soma holdings of agency CMBS at the current pace by conducting weekly operations of approximately $250 to $500 million."

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