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Fed holds rates, notes slowing economic activity
The Federal Open Market Committee (FOMC) Wednesday maintained the federal funds target rate near its current range of 0 to 0.25 percent. The committee noted it "expects to maintain this target range until it is confident that the economy has weathered recent events" related to the coronavirus pandemic.
During his post-meeting press conference, Fed Chairman Jerome Powell stated that the latest high-frequency data indicate slowing economic activity and softening consumer sentiment.
“The early days of the pandemic saw the Fed act and speak forcefully to calm financial markets and restore confidence to investors, to great effect. But lately it is all too clear that while the Fed may have more ammunition to support markets, the problems in the real economy are mostly a matter for elected and health officials," said NAFCU Chief Economist and Vice President of Research Curt Long in a new Macro Data Flash report. “NAFCU continues to believe that a sustained recovery will prove elusive until a vaccine is available.”
Of note, the committee's policy statement change little from the previous meeting; however, the committee did add a comment on the path of the economy depending heavily on the course of the virus.
The committee also noted that it intends to maintain or increase its current pace of Treasury and agency securities purchases, with a goal of “fostering effective transmission of monetary policy to broader financial conditions.”
More insights from the meeting can be found in the new Macro Data Flash report. The FOMC is expected to meet next Sept. 15-16; its tentative meeting schedule for 2020 can be viewed here.