Federal Reserve Chair Jerome Powell announced in a meeting Wednesday that interest rates will be kept as is at ultra-lows as the coronavirus pandemic remains uncertain.
Milken Institute chief economist Bill Lee told "The Claman Countdown" that the Fed’s freeze aims to make "substantial progress" in reducing the number of unemployed Americans, which stands at 9.5 million.
"He actually told us, for the next two meetings, they’re not going to touch QE," he said. "They’re not going to touch these emergency steps that have been put in place because they still consider it an emergency that so many people that have been left out of the labor force remain unemployed."
Lee suggested that the announcement alleviated panic leading up to the annual Jackson Hole policy symposium while anxiety in the markets built up.
"The markets have tucked themselves into a panic about Jackson Hole being the timing of the announcement of QE and Chair Powell just completely put a nail into that coffin by saying, ‘No, we’re going to wait until it’s clear to us that there’s substantial progress and we ain’t there yet,’" he said. "That’s the key message."
Grant's Interest Rate Observer founder and editor Jim Grant chimed in with a different take on the decision, describing it as the world being "deeply immersed in a flood and the Fed is shooting a firehose."
The chairman reassured that inflation will not last, calling higher prices "transitory." The Fed’s unanimous decision reaffirmed its commitment to other easy monetary policies as the economy heals.
The Fed will also keep purchasing $120 billion in bonds each month, a policy known as "quantitative easing" that's designed to keep credit cheap.
FOX Business’ Megan Henney contributed to this report.