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WATCH: U.S. Federal Reserve adjusts inflation target to keep interest rates low

The Federal Reserve adjusted its inflation target to seek price increases above 2 percent annually, a move that will likely keep interest rates low for years to come.

Watch the press conference in the video player above.

The Fed on Wednesday also left its benchmark short-term rate unchanged at nearly zero, where it has been since the pandemic intensified in March.

Fed officials also indicated in a set of economic projections that they expect the rate to stay there at least through 2023.

“We believe that achieving inflation that averages 2 percent over time helps ensure that longer term inflation expectations remain well anchored at our longer run two percent objective,” Fed Chair Jerome Powell said.

The Fed’s benchmark interest rate influences borrowing costs for homebuyers, credit card users, and businesses.

The Fed’s statement says that because inflation has mostly fallen below its target of 2 percent in recent years, Fed policymakers now “will aim to achieve inflation moderately above 2 percent for some time.”

It also says it will keep rates low until inflation averages 2% over an unspecified period.

The change is significant for the central bank, because it means that Fed officials will accept higher inflation to make up for its previous shortfalls below 2%.

Previously, the Fed has ignored such shortfalls.