FOMC Minutes: Officials raised the bar for interest-rate increases at that meeting and signaled they expected it would be at least three years before they would near the new threshold.
Asset Purchases
- Participants judged that it would be appropriate over coming months for the Federal Reserve to increase its holdings of Treasury securities and agency MBS at least at the current pace - in fitting with current language
- Some participants also noted that in future meetings it would be appropriate to further assess and communicate how the Committee’s asset purchase program could best support the achievement of the Committee’s maximum employment and price-stability goals.
- Expectations for asset purchases this year remained tightly centered around the current pace; however, many survey respondents revised up the amount of asset purchases expected in 2021 and 2022.
Fiscal Support
- Several Fed officials have expressed concern at the prospect of delayed or reduced fiscal support from Congress and the White House after expanded unemployment benefits and support for small businesses expired this summer.
- Some officials have said their more optimistic forecast was premised on at least USD 1 trillion in additional spending.
- Many participants noted that their economic outlook assumed additional fiscal support and that if future fiscal support was significantly smaller or arrived significantly later than they expected, the pace of the recovery could be slower than anticipated.
Inflation
- While the outlook for inflation was viewed as highly uncertain, a number of participants projected that inflation would run below the Committee’s 2 percent longer-run objective for a significant period before moving moderately above 2 percent for some time—consistent with the Committee’s revised consensus statement.
- Participants still generally judged that the overall effect of the pandemic on prices was disinflationary
Forward Guidance
- Most participants supported providing more explicit outcome-based forward guidance for the federal funds rate that included establishing criteria for lifting the federal funds rate above the ELB in terms of the paths for employment or inflation or both.
- A couple of participants preferred even stronger, and less qualified, outcome-based forward guidance that they judged would more clearly convey the Committee's commitment to its objectives and to the strategic approach that was articulated in the revised consensus statement.
07 Oct 2020 - 19:01- Important- Source: Fed
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