Bolstered by the impact of fiscal and Covid-19 stimulus packages, the US Federal Reserve is expected to forecast an improving economic outlook with the labour market and inflation to rebound faster than anticipated in December.
However, traders will likely be disappointed if they are expecting sunnier projections to translate to changes in monetary policy when the US central bank's Federal Open Market Committee (FOMC) ends its two-day meeting on Wednesday.
Reaffirming its extremely dovish stance, the FOMC will hold its funds target range steady at 0%-0.25%, analysts forecast, while the QE monthly purchasing target should remain at “at least” USD 80bln in treasuries and USD 40bn in agency mortgage-backed securities.
Fed Chairman Jerome Powell is set to stress a change in plans for interest rates and bond purchases is premature while he wrestles with questions on tapering given the choppiness in bond yields.
While analysts expect the central bank keep rates at current levels through 2023, the recent wave of volatility in money markets has stoked speculation of a break from its holding pattern. The Fed may be forced into a technical adjustment, but virtually no one expects action at this week’s meeting.
Submitted March 17, 2021 at 08:03AM by DareDevlin https://ift.tt/3tvkJ0Y
