News

Fed Leaves Monetary Policy Unchanged
The Fed left the target range for its federal funds rate unchanged at 0-0.25% and said it will continue to purchase bonds at a rate of $120 billion a month despite acknowledging a rise in inflation and the improvement in the economy. Policymakers noted that indicators of economic activity and employment have strengthened amid progress on vaccinations and strong policy support but stressed the pandemic continues to weigh on the economy, and risks to the outlook remain.
Published on 2021-04-28

Fed Unlikely to Hint on Tapering
The Federal Reserve is expected to keep the fed funds rate at 0-0.25% and bond-buying at a $120 billion monthly pace during this week's meeting. The central bank already pledged to reduce bond purchases only when it sees "substantial further progress" in the economic recovery and inflation averaging above its target of 2 percent. And in fact, there is more evidence that the economy gained footing since March. Still, Fed Chair Powell is unlikely to provide any indication about future tapering as the jobless rate is elevated at 6% and the core PCE index which is the favored Fed measure stands at 1.4%. Investors will also keep an eye on any development in IOER rate on excess reserves and overnight reverse repurchase agreements as Repo and Treasury bill rates have been around zero.
Published on 2021-04-28

Fed Unlikely to Change Monetary Policy Anytime Soon
Fed officials commented on the notable rise in Treasury yields and generally viewed it as reflecting the improved economic outlook, some firming in inflation expectations, and expectations for increased Treasury debt issuance, minutes from the last FOMC meeting showed. Also, the outlook for inflation is seen broadly balanced while supply disruptions and strong demand could push it up more than anticipated. The Fed also noted that asset purchases would continue at least at the current pace until substantial further progress toward maximum-employment and price-stability goals would be realized and highlighted the importance of clearly communicating its assessment of progress toward its goals well in advance of a change in the pace of asset purchases. The Fed left the target range for its federal funds rate unchanged at 0-0.25% during its March meeting, and signalled a strong likelihood that there may be no rate hikes through 2023.
Published on 2021-04-07

Fed to Keep Supporting the US Economy
Fed Chair Powell reiterated the Fed is committed to using the full range of tools to support the economy and to help assure that the recovery will be as robust as possible, prepared remarks to his testimony on the CARES Act before Congress showed. The recovery has progressed more quickly than generally expected and looks to be strengthening in part due to the unprecedented fiscal and monetary policy actions. Meanwhile, Treasury Secretary Yellen who will also testify noted that while there are signs of recovery, the country is still down nearly 10 million jobs from its pre-pandemic peak.
Published on 2021-03-23

Fed Sees Interest Rates Unchanged Until 2023
The Fed left the target range for its federal funds rate unchanged at 0-0.25% during its March meeting, and signaled a strong likelihood that there may be no rate hikes through 2023. Policymakers noted that indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remained weak. The central bank revised up its GDP forecasts for 2021 and 2022 due to the approval of President Biden’s $1.9-trillion recovery package and the ongoing COVID-19 vaccination programme. The world's largest economy is seen growing by 6.5% this year (vs 4.2% projected in December) and by 3.3% in 2022 (vs 3.2%). The PCE price index is expected to rise by 2.4% in 2021 (vs 1.8%) and by 2.0% in 2022 (vs 1.9%). Regarding the labor market, unemployment rate is now seen at 4.5% this year (vs 5.0%) and at 3.9% in 2022 (vs 4.2%).
Published on 2021-03-17

Fed to Upgrade Economic Forecasts
As the Federal Reserve is expected to leave monetary policy unchanged when it concludes its two-day meeting today more attention will be given to a new set of quarterly economic projections. The macroeconomic scenario has improved compared to January as coronavirus infections slowed, vaccination rollout accelerated and the $1.9 trillion stimulus package has been signed into law, prompting a surge in inflation expectations and a bond sell-off. Investors will be looking for signs that inflation will overshoot the 2% target for a long period and will assess if the so-called 'dot plot' continues to point to record low rates until at least 2023, or in contrast, may point to an early tightening. The press conference will also be in the spotlight as Jerome Powell is expected to give more clarity on the bank's view and actions to tackle the recent surge in Treasury yields.
Published on 2021-03-17

US Economic Recovery Remains Uneven
The economy is a long way from Fed's employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved, Fed Chair Powell said in prepared remarks for his Semiannual Monetary Policy Report to the Congress. Although the number of new Covid-19 cases and hospitalizations has been falling, and ongoing vaccinations offer hope for a return to more normal conditions later this year, the economic recovery remains uneven and far from complete, and the path ahead is highly uncertain, he added. The Fed remains committed to using its full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible. Powell added that the inflation rate is on track to moderately exceed 2% for some time but nothing was said regarding the recent rise in Treasury yields.
Published on 2021-02-23

Fed Unlikely to Change Monetary Policy Soon
In their first meeting in 2021, FOMC members expected that it would be appropriate to maintain the target range for the federal funds rate at 0 to 1/4 percent and asset purchases at current level until labor market conditions had reached levels consistent with the Committee's assessments of maximum employment and inflation had risen to 2 percent and was on track to moderately exceed 2 percent for some time, minutes from last FOMC meeting on January 26-27, 2021 showed. Fed officials observed that the economy was far from achieving the Committee's goal of maximum employment and that even with a brisk pace of improvement in the labor market, achieving this goal would take some time. Inflation is anticipated to move up, along a trajectory consistent with achieving the Fed's objectives, supported by stronger economic activity, widespread vaccinations and the associated reduction in social distancing, and accommodative fiscal and monetary policy.
Published on 2021-02-17

Fed Reaffirms Ultra-Easy Monetary Policy
Federal Reserve Chairman Jerome Powell highlighted the importance of keeping monetary policy extremely easy for the foreseeable future to support the fragile US labour market. In prepared remarks to the Economic Club of New York on Wednesday, Mr. Powell warned that bring the economy to full employment will not be an easy task and it will require more than dovish policy to achieve it. Meanwhile, the Fed Chair shrugged off concerns that Biden’s massive fiscal stimulus plan might trigger unwelcome inflation. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% and kept its bond-buying program intact during its first 2021 meeting.
Published on 2021-02-10

Fed Keeps Rates on Hold
The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% during its first 2021 meeting, in line with forecasts. The QE program was also maintained at $80 billion of Treasuries and $40 billion of Mortgage-Backed Securities. Policymakers noted the pace of the recovery in economic activity and employment has moderated in recent months and that the path of the economy will depend significantly on the course of the virus, including progress on vaccinations. The central bank reiterated it is committed to using its full range of tools to support the US economy in this challenging time.
Published on 2021-01-27

Fed Expected to Provide Clarity on Tapering
The Federal Reserve is expected to leave monetary policy unchanged when it concludes its two-day meeting Wednesday but investors will be looking for signals if the Fed may consider scaling back its support for financial markets. The QE program is widely expected to be maintained at $80 billion of Treasuries and $40 billion of Mortgage-Backed Securities and the central bank is seen reinforcing it will not pull it back anytime soon. However, more near-term inflation pressures arising from the economic recovery and substantial fiscal stimulus could lead policymakers to tighten their policy early than initially expected. The Fed is also seen renewing its pledge to keep borrowing costs low for as long as necessary and do whatever it can to help the economy recover from the coronavirus-hit. The central bank left the target range for its federal funds rate unchanged at 0-0.25% and its QE programme on hold during its December 2020 meeting, in line with forecasts.
Published on 2021-01-27

Fed Officials Pledge to Act to Support US Economy
The Federal Reserve reiterated it was committed to using its full range of tools to support the US economy, as the uncertainty surrounding the economic outlook remained elevated, minutes of the December 15-16 policy meeting showed. Also, policymakers sought to reassure market participants they would get plenty of notice before the asset purchases were curtailed. Fed members agreed that the path of the economy would depend significantly on the course of the virus and that the ongoing public health crisis would continue to weigh on economic activity, employment, and inflation in the near term. In addition, the central bank noted that, with the pandemic worsening across the country, the economic recovery would likely slow in coming months.
Published on 2021-01-06

Fed Leaves Rates and Asset Purchases Unchanged
The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% during its December meeting, in line with forecasts. The Fed will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward employment and inflation. Regarding new economic projections, the Fed sees the US economy shrinking less in 2020 (-2.4% vs -3.7% seen in September) and expand at a faster pace in both 2021 (4.2% vs 4%) and 2022 (3.2% vs 3%). PCE inflation is seen unchanged at 1.2% in 2020 and slightly higher next year (1.8% vs 1.7%) and in 2022 (1.9% vs 1.8%). Unemployment is also seen lower at 6.7% in 2020 (vs 7.6%), 5% in 2021 (vs 5.5%) and 4.2% in 2022 (vs 4.6%). The fed funds rate is likely to stay at current record low levels at least through 2023.
Published on 2020-12-16

Fed to Keep Rates on Hold, Bond Buying in Focus
The Federal Reserve is expected to keep its fed funds rate steady at 0-0.25 percent at the end of its last two-day policy meeting of 2020, and to adopt a more dovish tone. Investors will keep a close eye on any changes in the Fed's bond-buying program, either in the pace or composition, such as buying more longer-term bonds and fewer shorter-term securities, in an attempt to hold interest rates low. The Fed has been buying $80 billion in Treasury bonds and $40 billion in mortgage bonds each month. Traders will also monitor if the Fed links asset purchases to measures of employment and inflation. Also, the central bank is expected to release a new outlook for the economy, with improved forecasts for the long term due to the coronavirus vaccine rollout.
Published on 2020-12-16

Powell Stresses Importance of Emergency Programs
Federal Reserve Chairman Jerome Powell highlighted the importance of the lending programs aimed at battling the economic fallout from the coronavirus pandemic. In prepared remarks for the Senate Finance Committee, he noted that even as recent positive vaccine news raised the prospect of a swifter economic recovery next year, it is not time to shut down emergency programs yet. In addition to the lending and liquidity programs, the Federal Reserve is expected to pump more money into the economy, expanding both its bond-buying programme and ultra-cheap loans to banks to support economic recovery. The Central Bank left the target range for its federal fund's rate unchanged at 0-0.25% during its November 2020 meeting.
Published on 2020-11-30

Fed Could Provide More Accommodation if Necessary
The Federal Reserve is committed to using its full range of tools to support the US economy, minutes from the last FOMC 4-5 November meeting showed. Policymakers noted that economic activity and employment had continued to recover but remained well below their levels at the beginning of the year and that the path of the economy would depend significantly on the course of the virus. Regarding the asset purchase program, Fed officials noted that the central bank could provide more accommodation, if appropriate, by increasing the pace of purchases; or by shifting its Treasury purchases to those with a longer maturity without increasing the size of its purchases; or by conducting purchases of the same pace and composition over a longer horizon. The Fed is currently buying $120 billion of Treasuries and mortgage-backed securities a month. The Fed left the target range for its federal funds rate unchanged at 0-0.25% during its November 2020 meeting.
Published on 2020-11-25

Fed Holds Rates as Officials Wait for US Election Results
The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% during its November meeting, as policymakers took a wait-and-see approach amid US presidential election uncertainty. The central bank also said it will increase its holdings of Treasury securities and agency mortgage-backed securities over coming months, to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses. Officials warned that the ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. Looking ahead, the Fed reiterated its commitment to keep rates at record low levels until labor market conditions reach levels consistent with maximum employment and inflation rises to 2 percent and is on track to moderately exceed 2 percent for some time.
Published on 2020-11-05

Fed Likely to Take Wait-and-See Approach
The Federal Reserve is seen holding the target range for the federal funds rate steady at 0-0.25 percent at the end of its two-day meeting on Thursday while renewing its pledge to keep it low for as long as necessary and do whatever it can to help the economy recover from the coronavirus-hit. Policymakers are seen discussing their future bond buying plans and stress the need of further fiscal stimulus although the central bank will likely take a wait-and-see approach as the final outcome of the US presidential election is not known yet. Still, investors will follow Chair Powell's press conference for any hints on new monetary stimulus amid the likely scenario of a divided Congress. The Fed left the target range for its federal funds rate unchanged at 0-0.25% on September 16th and signalled it would hold them there through at least 2023.
Published on 2020-11-05

Fiscal Support Needed to Help the Economy: Brainard
The economic recovery in the US remains highly uncertain and highly uneven, with certain sectors and groups experiencing substantial hardship, Fed Governor Lael Brainard said in prepared remarks to the Society of Professional Economists Annual Online Conference. She also added that the Fed is committed to providing sustained accommodation to achieve a broad-based recovery but warned further fiscal support will be needed alongside accommodative monetary policy to turn this K-shaped recovery into a broad-based and inclusive recovery. The Fed left the target range for its federal funds rate unchanged at 0-0.25% on September 16th and signalled it would hold them there through at least 2023.
Published on 2020-10-21

Fed Sees Uncertain Economic Outlook
Fed officials continued to see the uncertainty surrounding the economic outlook as very elevated, with the path of the economy highly dependent on the course of the virus, minutes from the last September 15–16, 2020 meeting showed. Also, with inflation running persistently below its longer-run goal, the Fed judged that it would be appropriate to aim to achieve inflation moderately above 2 percent for some time. The federal funds rate will likely remain unchanged until labor market conditions had reached levels consistent with maximum employment and inflation had risen to 2 percent although it was on track to run moderately in excess of 2 percent for some time. Regarding fiscal stimulus, the Fed added that absent a new package, growth could decelerate at a faster-than-expected pace in the fourth quarter.
Published on 2020-10-07