Fed: No changes in policy, at least for now – Wells Fargo

After its two-day meeting, the Federal Reserve kept as expected its interest rate unchanged. Analysts at Wells Fargo, think that the FOMC will keep the fed funds rate pressed to 0.00% through at least the end of 2021.

Key Quotes: 

“Because it has implemented a number of unprecedented policy steps in recent weeks, the FOMC took no further action at today’s meeting. But it is prepared to do more, if needed.”

“The Federal Open Market Committee (FOMC) held its first formal meeting in three months today—the meeting originally scheduled for March 18 was cancelled due to a number of policy steps that the Fed took on March 15– and, as widely expected, did not make any policy changes.”

“The committee left little doubt that it will do whatever is needed to help the economy weather the economic disruption that the coronavirus pandemic has caused.”

“Because we forecast that the unemployment rate, which is set to surge from the 4.4% rate that was registered in March, will remain higher than 6% at the end of 2021, we think that the FOMC will keep the fed funds rate pressed to 0.00% through at least the end of next year.”

“We look for real GDP to contract at an annualized pace in excess of 20% in Q2-2020, but expect that a gradual recovery will begin in Q3 as the economy emerges from lockdown. But we also acknowledge that there is tremendous uncertainty surrounding this outlook depending on how the pandemic evolves. Although it appears that the FOMC shares this uncertainty, it is also apparent that it is committed to do even more to support the economy, if necessary.”