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FED WILL NOT CHANGE INTEREST AND ASSET PURCHASES
Economists predict that the Fed will not change interest and asset purchases, but can imply changes in verbal guidance and explain the inflation strategy.
Yazar: Tom Roberts
Yayınlanma: 26 Temmuz 2020 22:51
Güncellenme: 5 Kasım 2024 15:34
FED WILL NOT CHANGE INTEREST AND ASSET PURCHASES
Economists predict that the Fed will not change interest and asset purchases, but can imply changes in verbal guidance and explain the inflation strategy. Commerzbank US Fed Economist Bernd Weidensteiner said the Fed was intensely discussing updating the verbal guidance.Stating that low interest rates may be in question for a longer period, Weidensteiner said that Fed President Jerome Powell could give some information about the issue at the meeting.
Weidensteiner stated that the Fed was a little too early to make an official change in its statement, "The Fed now believes that monetary policy tightened early after the 2007-2009 crisis. The bank has relyed on a model in which inflationary pressures will be expected after strong labor market performance in this period ." he spoke.
"Now it seems that the Federal Open Market Committee (FOMC) wants to wait until the rising price pressures are reflected in the inflation figures," said Weidensteiner, who stated that this prediction was wrong. said.
Weidensteiner emphasized that this monetary policy approach, which will be changed, should be made compatible with verbal guidance and made clear for the markets.
Stating that it is not certain that the Fed will change this statement and change this new policy approach at this meeting, Weidensteiner noted that Powell may have some implications about this issue, so that the market participants will listen to Powell carefully.
Weidensteiner also said that the Fed will not change its interests and asset purchase program at this meeting.
Berenberg USA, America, Asia Chief Economist Mickey Levy also stated that the Fed will not change any policies including interest rates and asset purchase program.
Stating that the Fed will emphasize the uncertainties in the economic outlook, Levy said the bank will be prepared to support the economy with more aggressive monetary policies.
Stating that the Fed could explain the inflation strategy and highlight the long-term average inflation target by 2 percent, Levy argued that the Fed would allow inflation to exceed 2 percent.
Levy noted that the bank will use an ambiguous language on inflation so that the inflation target will not put any pressure on the Fed.
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