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Fed holds rates; NAFCU expects recovery to slow in coming months
The Federal Open Market Committee (FOMC) Thursday maintained the federal funds target rate at its current range of 0 to 0.25 percent. The committee indicated it plans to maintain this range until it achieves maximum employment and "inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time."
“The FOMC’s latest statement contained no significant changes from its last meeting," said NAFCU Chief Economist and Vice President of Research Curt Long in a new Macro Data Flash report. "Some observers anticipated that the committee would signal its intent to increase asset purchases, but no such language materialized. In Chair Powell’s press conference, he emphasized the need for more fiscal stimulus and the risk posed by rising COVID cases.”
The committee noted the Fed will continue to purchase Treasury securities and agency mortgage-backed securities in the coming months “to sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses.”
“The economic outlook is clearly more positive than it was in April, and Chair Powell noted that tail risks have abated since then,” added Long. “Nevertheless, the inability to get another spending bill is concerning, and NAFCU expects that the economic data will begin to show slower progress, starting with the October jobs report release.”
More insights from the meeting can be found in the new Macro Data Flash report. The FOMC is expected to next meet Dec. 15-16; its tentative meeting schedule for the remainder of 2020 can be viewed here.