As widely expected, the US Federal Reserve (Fed) set interest rates to remain in the 0-0.25% target range as policymakers take a wait-and-see approach amid election uncertainty.
Following the decision of the Federal Open Board (FOMC), Fed Chairman Jerome Powell stressed that the economy needed more fiscal and monetary support.
Although economic and employment activity is said to continue to recover but it is still far from the level before the Covid-19 pandemic crisis hit.
He also warned that the ongoing health crisis would burden short-term economic activity, employment and inflation as well as pose a significant risk to the economic outlook in the medium term.
Short-term prospects have been obscured by doubts about how fiscal policy will be implemented in the future in the event of a change of government and the possibility of the Donald Trump administration that will influence decisions on government financing and expanding central bank emergency programs.
With the Republican party's tendency to dominate the Senate, Democrats face a major challenge to implement changes in formulating fiscal policy if Joe Biden wins this election.
This split will thus reduce the chances of approving a larger stimulus measure from Congress even if the Covid-19 pandemic continues to threaten the country's economy.
This certainly puts pressure on the Fed to increase its bond purchases, or at least change the composition of its purchases in an effort to lower borrowing costs and increase recovery.
