News

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

US Economy Has a Long Way to Go to Recover: Fed Chair
The US economy has picked up from its depressed second-quarter level and many economic indicators show marked improvement but it still has a long way to go before fully recovering from the coronavirus pandemic, Fed Chair Powell said in prepared remarks of his testimony before the House Financial Services Committee regarding the Coronavirus Aid, Relief, and Economic Security Act. Powell added that a full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities. The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government. About the Main Street Lending Program, Fed Chair added that it may not be the right solution for some businesses, in part because the CARES Act states clearly that these loans cannot be forgiven.
Published on 2020-09-22

Fed Keeps Rates on Hold
The Federal Reserve has left the target range for its federal funds rate unchanged at 0-0.25% today, in line with market expectations and signaled it would hold them there through at least 2023 to help the economy recover from the coronavirus pandemic. The Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%. The vote was 8-2 with Dallas Fed President Kaplan preferring to retain “greater policy rate flexibility,” and Minneapolis Fed President Kashkari in favor of waiting for a rate hike until “core inflation has reached 2% on a sustained basis.” Fed officials see the US economy shrinking 3.7% in 2020, compared to a 6.5% drop projected in June but see a slower 4% growth in 2021 (vs 5.0% earlier forecasted). The unemployment rate is expected to rise to 7.6% this year (vs 9.3%) and to fall to 5.5% in 2021 (vs 6.5%).
Published on 2020-09-16

Fed to Keep Dovish Tone
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 Wednesday while renewing its pledge to keep it low for as long as necessary. Still, investors will follow Chair Jerome Powell's press conference for further details about the new average inflation target, the possibility of additional stimulus, and clarification about the purchases of Treasury and mortgage-backed securities. The Fed will also release fresh economic and interest rate projections, including forecasts for 2023 for the first time. The funds rate is expected to stay near 0 percent through 2023 while unemployment is seen lower and economic growth faster.
Published on 2020-09-16

Powell Maintains Dovish Stance after Jobs Report
The Federal Reserve Chair Jerome Powell reiterated on Friday its pledge to maintain interest rates lower for years to support recovery from the coronavirus crisis and recession. Still, Powell told National Public Radio in an interview that today’s jobs report was a good one. Last week, the Fed unveiled a new monetary policy framework , under which it will seek an average 2% inflation rate over time and “broad-based and inclusive” gains in the jobs market.
Published on 2020-09-04

Powell Announces Inflation Targeting
Fed Chair Powell announced a robust updating of the Fed's monetary policy framework during his virtual speech at the Jackson Hole Symposium on August 27th 2020. The Fed's new approach could be viewed as a flexible form of average inflation targeting, allowing inflation to run moderately above or below the Fed’s 2% target for some time. This means that interest rates could be left lower for a longer period despite a rise in inflation. Regarding employment, the revised statement reflects the Fed's view that a robust job market can be sustained without causing an outbreak of inflation and the maximum level of employment is a broad-based and inclusive goal.
Published on 2020-08-27

Fed Set to Change to Average Inflation Target
Fed Chair Powell is expected to provide some clarity about Fed's monetary policy in virtual remarks to the Jackson Hole annual economic symposium including keeping short-term interest rates near zero for five years or possibly more. Powell will also likely set a new course on inflation, reinforce its commitment to full employment and provide some notes on the US economic outlook. The Federal Reserve, which has pegged 2% as a healthy level for inflation, is now expected to shift that level to an average inflation and allow subsequent periods of moderately higher inflation.
Published on 2020-08-27

Fed Set to Change Inflation Target
Fed Chairman Powell is likely to set a new course on inflation and reinforce its commitment to full employment in virtual remarks to the Jackson Hole annual economic symposium on Thursday morning. The Federal Reserve, which has pegged 2% as a healthy level for inflation, is now expected to aim to achieve that level as an average over a longer-term by allowing subsequent periods of moderately higher inflation. On this new monetary policy framework, the Fed is likely to keep short-term interest rates near zero for five years or possibly more. The Federal Reserve has left the target range for its federal funds rate unchanged at 0-0.25 percent on July 29th, 2020 but opened the door for further monetary easing to support the world’s largest economy through the pandemic.
Published on 2020-08-26

Fed Maintains Dovish Stance
Federal Reserve officials reiterated their pledge to maintain aggressive measures to support the economy, minutes from the July 28-29 meeting showed. The Fed policy is going to remain extremely accommodative given great uncertainty and some stalling in large parts of the recovery. Regarding the yield curve control, officials continued to voice scepticism about its usefulness. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25 percent on July 29th 2020 to bolster business through the pandemic.
Published on 2020-08-19

Fed Keeps Rates on Hold
The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25 percent on July 29th 2020 as expected. Policymakers reiterated the Fed is committed to using its full range of tools to support the US economy and repeated the coronavirus pandemic poses considerable risks to the economic outlook over the medium term. The federal funds rate will remain near zero until the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. Policymakers also pledged to maintain the bond purchases and the array of lending and liquidity programs at least at the current pace. Meanwhile, the central bank announced the extension of its dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities through March 31st, 2021.
Published on 2020-07-29

Fed Seen Leaving Monetary Policy on Hold
The Federal Reserve is seen leaving the target range for its federal funds rate unchanged at 0-0.25% during its July 28-29 meeting. The central bank is not expected to make big changes to its asset purchase policies although investors will be looking for a discussion on additional stimulus and a change in forward guidance for the coming months. Policymakers are seen keeping their pledge that the Fed will do whatever it can to support the economy and that interest rates will remain at the current level for some time while reinforcing the need of fiscal stimulus. On July 28th, the Fed announced an extension of its lending programs to businesses, governments and individuals to the end of 2020, saying that the three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic.
Published on 2020-07-29

Fed Extends Lending Programs to End of 2020
The US Federal Reserve on Tuesday announced an extension of its lending programs to businesses, governments and individuals to the end of 2020, saying that the three-month extension will facilitate planning by potential facility participants and provide certainty that the facilities will continue to be available to help the economy recover from the COVID-19 pandemic. US Fed officials are expected to maintain their accommodative stance after a two-day monetary policy meeting starting today, with investor focus turning to the central bank's economic outlook for further details about future policy steps.
Published on 2020-07-28

Fed Expands Main Street Program to Non-Profit
The Federal Reserve expanded its Main Street Lending Program to provide greater access to credit for nonprofit organizations such as educational institutions, hospitals, and social service organizations that were in sound financial condition prior to the pandemic. "Nonprofits provide vital services across the country and employ millions of Americans," Fed Chair Powell said. The minimum employment threshold for nonprofits was lowered from 50 employees to 10, the limit on donation-based funding was eased, and several financial eligibility criteria were adjusted to accommodate a wider range of nonprofit operating models. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25% on June 10th 2020 as expected.
Published on 2020-07-17

Fed Bostic Says US Recovery May Be Levelling off
The Federal Reserve Bank of Atlanta President Raphael Bostic said in an interview with the Financial Times on July 6th 2020 that high-frequency data had shown a “levelling off” of economic activity in some districts of the country. Bostic also added that the US economic recovery is in danger due to a recent spike in coronavirus infections and that the Fed is trying to figure out whether this levelling off is something that is a more sustained pattern, or just a pause.
Published on 2020-07-07

FOMC Minutes Show Fed Stronger Guidance
Federal Reserve officials were committed to using a full range of tools to support the US economy endure the coronavirus-driven slump, while the Fed should strengthen the guidance it provides to markets, minutes from the June 9-10 meeting showed. Regarding the yield curve control, policymakers noted that it would be useful for the staff to conduct further analysis of the design and implementation of YCT policies as well as of their likely economic and financial effects. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25 percent on June 10th 2020 as expected, saying the US economic recovery from the coronavirus pandemic is set to be challenging and there will take time and work.
Published on 2020-07-01

Powell Warns of Economic Uncertainty
Federal Reserve Chairman Jerome Powell said in remarks prepared for a Congressional hearing on June 30th that the US economy faces “extraordinary uncertainty”, particularly in light of ongoing attempts to contain the spread of Covid-19. Powell also noted that the central bank's Main Street lending facility may prove helpful for firms hit by the coronavirus crisis. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25 percent on June 10th 2020 as expected, saying the US economic recovery from the coronavirus pandemic is set to be challenging and there will take time and work.
Published on 2020-06-29

Fed Limits Big Banks Dividend
The Federal Reserve set new limitations on big bank dividend payments and bar share repurchases until at least the fourth quarter of 2020 following its annual stress test. Many banks could get painfully close to minimum capital levels due to severe economic slowdown from the coronavirus pandemic. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25 percent on June 10th 2020 as expected, saying the US economic recovery from the coronavirus pandemic is set to be challenging and there will take time and work.
Published on 2020-06-25

Powell Sees Challenging Path Ahead for US Economy
The US economic recovery from the coronavirus pandemic is set to be challenging and there will take time and work, Fed Chairman Jerome Powell said during a video conference hosted by the Federal Reserve Bank of Cleveland on June 19th. Powell added that the cruelty of pandemic has been outsized effects of many areas that were already suffering and it has exposed a range of inequalities. The Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25 percent on June 10th 2020 as expected.
Published on 2020-06-19

Powell Warns the Economy May Need More Support
Federal Reserve Chairman Jerome Powell, during his second day of testimony, urged Congress not to drawback on its unemployment insurance payments amid growing talks over whether to renew the fiscal-aid measures they’ve approved for the millions of Americans who lost their jobs. Powell also noted the central bank’s corporate bond purchases eventually will move away from ETFs and into individual bonds. The US continues to face difficult and challenging times, as the pandemic is causing tremendous hardship, and the GDP is likely to contract at a record pace this quarter.
Published on 2020-06-17