Central Banks

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The Federal Reserve kept rates unchanged at their July meeting, kept QE infinity open with TALF for open-ended Treasuries, MBS and corporate bonds in amounts needed. Fed will continue to buy paper at current pace of $120B/month of Treasuries and MBS combined. Compare that to $40B/month in QE3.

 Fed Boardroom

Federal Reserve Emergency FOMC Statement

Federal Reserve Announcement Wed 29 July 2020 14:00:00 ET

FOMC Benchmark Interest Rate Target Range UNCH .00-0.25%

Interest Rate On Excess Reserves UNCH .10%

Conference To Follow At 2.30 ET PM With Chairman Powell

Highlights

  • Fed funds rate left at 0 to 0.25%, as expected
  • IOER left at 0.10%, as expected
  • Says will keep USD swap lines and repo facility for foreign central banks open through March 31, 2021
  • Vote was unanimous
  • Says path of economy will depend significantly on the course of the virus
  • Repeats that ongoing crisis will weigh heavily on economic activity, employment and inflation in the near term
  • Says economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the yea

 One Change From Last Month:

"The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses "

Became:

"Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year."

 

July 29 For release at 2:00 p.m.EDT

The full FOMC statement for July 29 2020

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The coronavirus outbreak is causing tremendous human and economic hardship across the United States and around the world. Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year. Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0 to 1/4 percent. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.

The Committee will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy. In determining the timing and size of future adjustments to the stance of monetary policy, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

To support the flow of credit to households and businesses, over coming months the Federal Reserve will increase its holdings of Treasury securities and agency residential and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning, thereby fostering effective transmission of monetary policy to broader financial conditions. In addition, the Open Market Desk will continue to offer large-scale overnight and term repurchase agreement operations. The Committee will closely monitor developments and is prepared to adjust its plans as appropriate.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.

June 29 FOMC STATEMENT CHANGES via RANsquawk @RANsquawk

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Source: Federal Reserve

From the TradersCommunity Research Des

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