U.S. | FOMC loads and aims but refrains from pulling the trigger

Summary

As we expected, the FOMC left interest rates unchanged and enhanced their forward guidance on asset purchases. Today’s move represents only a modest shift in guidance and will not significantly alter the level and depth of financial accommodation being provided by the Fed.

Key points

• Key points:
• Fed commits to at least $80Bn in Treasury purchases and $40Bn in mortgage-backed security purchases.
• Explicit commitment to make balance sheet strategy part of the reaction function.
• Little change to committee forecasts, but perceptions of uncertainty and risks elevated.
• Additional fiscal and monetary needed to get the economy back to pre-pandemic levels.

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