December 16, 2020

A RELATIVELY BULLISH FED PREFERS FORWARD GUIDANCE TO CHANGES IN ASSET PURCHASES

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In Short

The Fed revised up its growth and labour market projections but stated again that the path to full employment and inflation at target is a long and uncertain one. However, and despite the concerns about the economy in the next months, it refrained from altering the size, pace and composition of asset purchases.
A RELATIVELY BULLISH FED PREFERS FORWARD GUIDANCE TO CHANGES IN ASSET PURCHASES
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Highlights:

  • The Fed revised up its growth and labour market projections but stated again that the path to full employment and inflation at target is a long and uncertain one.
  • However, and despite the concerns about the economy in the next months, it refrained from altering the size, pace and composition of asset purchases. Instead it strengthened guidance linking the developments of QE on the attainment of full employment and inflation averaging 2%.
  • Powell stressed again that it is up to fiscal policy to provide a bridge until the vaccine rollout will boost growth in the second half on next year. QE will be stepped up should risks to the medium term outlook materialise.

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A RELATIVELY BULLISH FED PREFERS FORWARD GUIDANCE TO CHANGES IN ASSET PURCHASES
December 16th, 2020

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