The Federal Open Market Committee (FOMC) convenes today for the first time since Federal Reserve Chair Jerome Powell announced the central bank would tolerate a little bit more inflation.
The Federal Reserve pioneered a ground-breaking change to the way officials steer the world’s largest economy, setting the stage for a longer stretch of rock-bottom interest rates.
The U.S. economy remains in a difficult condition as the COVID-19 crisis rages on. Millions are out of work, enhanced unemployment checks ran dry at the end of July, and too many Americans are struggling to put food on the table and stay in their homes. At the same time, people have begun returning to work following government lockdowns and the stock market is hovering just below all-time highs.
By keeping short-term interest rates near zero and buying up trillions of dollars of bonds, in addition to the new inflation strategy, the Fed is doing whatever it takes to buttress the nation’s economy.
Chair Powell is waiting on Washington to hammer out a second stimulus package. As it currently stands, the chances of a relief bill being agreed before the election (3rd November) appear touch-and-go.
Powell’s press conference, scheduled to take place Wednesday afternoon following the conclusion of the monetary policy meeting, is expected to include remarks that strike a cautious tone on the pace of the economic recovery amid the ongoing pandemic, even as newly released economic data moves in a marginally more positive direction.
The markets will be watching Powell’s remarks closely and to the Fed statement on how the central bankers are measuring the oil price spike amid all the other economic trends.
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