Federal Reserve statement 07-29. All Quiet on the Coronavirus Front
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 0.25%.
source: tradingeconomics.com
The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and to achieve its maximum employment and price stability goals.
Future Monitoring
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.
The Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2% 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, 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.
Market’s Reaction
The euro continues its upward trend. All we need is to rise our stop order at @1.16414.
S&P 500 index boosts 1.24% yesterday. But there are signs showing the weekeness of stock market in US.
The gold futures price reaches all time high yesterday.
Source: Federal Reserve