Interest rates are expected to stay at or near zero through 2023, the Federal Reserve said Wednesday.
Announced as the U.S. central bank concluded its two-day policy meeting, the move aims to stimulate more economic growth as the country recovers from the economic impact of the coronavirus pandemic.
The Fed's interest rate benchmark determines the cost of borrowing money for businesses and homebuyers, as well as the interest rates on consumer credit cards.
The central bank also said it would allow inflation to run slightly above the 2% target.
"With inflation running persistently below this longer run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well anchored at 2 percent," the post-meeting statement said.
This was the first time the central bank forecast its outlook for 2023.
"These changes clarify our strong commitment over a longer time horizon," Fed Chairman Jerome Powell said at a post-meeting news conference.
The Fed expected annual GDP would fall by 3.7%, compared with the 6.5% it forecast in June. The Fed projects unemployment at the end of the year will be 7.6%, compared to the 9.3% it predicted in June. After peaking at 14.7% in April, the current unemployment rate is 8.4%.