Bloomberg:
Here are five Key Takeaways from today’s Fed decision and press conference with Chair Jerome Powell:
• The Fed declined to adjust its forward guidance at this meeting, and Powell defended the current guidance in his press conference. Still, it may happen in June when Fed officials are forced to put some numbers to paper to explain where they think the economy is going, with their next scheduled release of quarterly economic projections.
• Likewise, there was no additional guidance on what the plan for bond-buying will be going forward. That could also come in June. Powell said the purchases are both restoring market function and providing accommodative financial conditions, which may hint at a coming shift in the rationale for ongoing purchases.
• Powell was fairly clear that probably more will need to be done to shield the economy from the fallout of the pandemic, especially on the fiscal side. That’s a bit of an about-face from his comments on fiscal policy two months ago, before the outbreak hit the U.S. At the time, he was arguing Congress needed to think about long-term solutions for reducing federal debt and deficits.
• Powell said medium-term risks to the economic outlook include the duration of the coronavirus lockdowns, inability of laid-off workers to regain employment, amount of unnecessary business insolvencies, and negative global economic activity. In other words, he did not sound particularly optimistic about where things are headed.
• We didn’t get a whole lot of new information on the emergency lending facilities, so stand by for more on that. Powell did say the corporate credit facilities would be launched “soon,” while he made it sound like there are still some details to be ironed out when it comes to the Main Street Lending Program.
Here are five Key Takeaways from today’s Fed decision and press conference with Chair Jerome Powell:
• The Fed declined to adjust its forward guidance at this meeting, and Powell defended the current guidance in his press conference. Still, it may happen in June when Fed officials are forced to put some numbers to paper to explain where they think the economy is going, with their next scheduled release of quarterly economic projections.
• Likewise, there was no additional guidance on what the plan for bond-buying will be going forward. That could also come in June. Powell said the purchases are both restoring market function and providing accommodative financial conditions, which may hint at a coming shift in the rationale for ongoing purchases.
• Powell was fairly clear that probably more will need to be done to shield the economy from the fallout of the pandemic, especially on the fiscal side. That’s a bit of an about-face from his comments on fiscal policy two months ago, before the outbreak hit the U.S. At the time, he was arguing Congress needed to think about long-term solutions for reducing federal debt and deficits.
• Powell said medium-term risks to the economic outlook include the duration of the coronavirus lockdowns, inability of laid-off workers to regain employment, amount of unnecessary business insolvencies, and negative global economic activity. In other words, he did not sound particularly optimistic about where things are headed.
• We didn’t get a whole lot of new information on the emergency lending facilities, so stand by for more on that. Powell did say the corporate credit facilities would be launched “soon,” while he made it sound like there are still some details to be ironed out when it comes to the Main Street Lending Program.