Fed plans to keep interest rates low, even if inflation rises: Who stands to benefit?

The Federal Reserve is likely to keep interest rates at rock bottom for even longer than previously expected after a major policy shift that has profound implications for Wall Street, workers and savers.

In rethinking the trade-off between inflation and unemployment, the Fed decided to put more weight on maximizing employment, including what Powell called “our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities.”The policy shift, which Fed officials have been developing for many months and was adopted unanimously, isn’t meant to address the immediate economic problems caused by the pandemic-induced downturn.

Powell noted that in the months before COVID-19 struck, the U.S. unemployment rate was hovering at 50-year lows of about 3.5%, and the tight labor market was creating more job opportunities and wage gains for lower-income and minority communities.The pandemic cost 22 million payroll jobs in March and April, and about 9 million have been recovered through July.

“They’re really going to struggle to find work. We need to stay with those people, we need to support them,” Powell said Thursday in a virtual speech and exchange that was part of the central bank’s annual late-summer symposium, normally held in Jackson Hole, Wyo.

Analysts worry that prolonged ultra-low interest rates could fuel speculation and lead to dangerously high asset prices. Even amid the pandemic and a sharp hit to many companies’ earnings, major U.S. stock indexes have recovered and soared near or to record highs.Stocks mostly rose Thursday on news from the Fed, with the Dow industrial average gaining 160 points.

This will drive even more depositors out of FDIC-guaranteed savings account into riskier instruments. And it feeds the next housing bubble.

Rich folks with assets.

Trump and large scale developers with lots of outstanding debt. New home buyers, NOT SENIORS or anyone retired or near retirement.

Not my savings account.

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