In April, Federal Reserve officials discussed the next phase of interest rate policy – convincing the markets that rates will stay low for a long time – but they made no sense because any change was imminent.
Minutes of the meeting for this session published on Wednesday He said that “at the next meetings”, the Fed may want to clarify its intentions regarding interest rates.
Some officials wanted the factory to explain its forward orientation. For example, the Federal Reserve could specify a certain level of unemployment or inflation that must be reached before considering raising rates from zero.
Another option was a date-based approach, which indicated that rates would only increase after a specified amount of time.
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Several officials have said the Fed may need to clarify the central bank’s ongoing unlimited purchase of treasury bills and mortgage-backed securities.
The Fed said these purchases were necessary to keep the financial markets functioning.
Without further communication, some officials said the uncertainty may arise. “Several” officials have suggested that the purchases could be used to maintain long-term Treasury yields.
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Some “officials” have said that purchases of treasury bonds could be used to keep short and medium term maturities limited to specific levels over a given period. This is called “performance curve control”.
Overall, Fed officials said they would use “the full range” of their tools to support the economy during the difficult pandemic.
They noted that the virus was causing “enormous human and economic hardship” across the country.
When preparing for the meeting, the Fed’s forecast for the economy “fell sharply” compared to previous March forecasts.
Fed Chairman Jerome Powell mirrored this feeling from worse to worse, saying that the way forward for the economy is very uncertain and subject to downside risks.
Lily:Powell says there is a growing feeling that the economic recovery will be slow
Fed staff presented two scenarios for the economy. Baseline forecasts need to be improved in the second half and beyond.
But under a more pessimistic opinion, a second wave of viruses is damaging the economy by the end of the year.
Staff stated that this darker forecast was “no less plausible” than the baseline projection.
Benchmarks for US stocks. United States They were significantly higher on Wednesday The Dow Jones Industrial Average
DJIA
323 points.