INSTANT ANALYSIS: FOMC pivots to limitless asset purchases

Analysis details (19:16)

The Fed's rate decision came in broadly as expected; the federal funds rate target and the interest on excess reserves were left unchanged at 0.00-0.25% and 0.10% respectively. The Fed reiterated its commitment to keep rates at current low levels until the economy has weathered recent events and is on track to achieve its inflation and labour market goals. One key omission was the removal of references to specific amounts of asset purchases (previously it indicated that it would buy "at least" USD 500bln of Treasuries and at least USD 200bln of MBS); instead, it said it would purchase in amounts needed to support smooth market functioning, which an be taken as a pledge for limitless QE until the economy is back in line with its mandate. Some traders were disappointed by the lack of explicit forward guidance within the statement, which chair Powell will no doubt be asked about in his press conference at 1430 ET. Also in that press conference, the desk will be watching out for any references to yield curve control, which the Fed may use in combination with its pledge to keep rates at low levels, keeping shorter-dated Treasury yields anchored, although most analysts expect updates on this at the June FOMC. 

29 Apr 2020 - 19:14- Research Sheet- Source: Newsquawk

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