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Federal Reserve says rates to stay at bottom until economy on track

Federal Reserve rate decision highlights April 29, 2020

Federal Reserve rate decision highlights April 29, 2020
  • Rates unchanged in a range of 0.00%-0.25%, as expected
  • Fed says rates to stay at lower bound until economy has weathered recent events and on track to achieve unemployment and inflation goals
  • Fed funds rate 2-year projection vs 1.6% prior
  • Fed funds rate 3-year projection vs 1.9% prior
  • Fed funds rate long-term projection vs 2.50% prior
Powell will host a virtual press conference at 1830 GMT. The next scheduled meeting is June 9-10

Fed’s Beige Book: Economy expanded at slight-to-modest pace

Highlights of the Fed’s anecdotal economic summary:

That’s a downgrade from modest previously.
Highlights:
  • Businesses see expansion continuing, many have cut outlook
  • Business activity varied across the country
  • Districts in south and west were more upbeat that midwest and great plains
  • Spending was solid on balance, housing market conditions changed little
  • Some districts suggested persistent trade tensions and slower global growth weighed on activity; early impact of GM strike was limited
  • Most expect economic expansion to continue; however many lowered their outlooks for growth in coming 6-12 months
  • A number of manufacturers reduced headcount because orders were soft, some cut hours rather than reduce staff
  • Wages rose moderately in most districts, with upwards pressure noted for lower-skill workers
  • Employers continued to use bonuses and benefits to attract and retain talent
  • Most districts characterized the recent pace of prices increases as modest
  • Retailers and manufacturers noted rising input costs
  • Shipping rates remained lower than they were earlier in the year because of excess capacity

Fed Bullard says a 50bp cut would align the Federal Reserve with market expectations

Bullard is president of the Federal Reserve Bank of St. Louis

  • Bullard says current Fed policy rate “too high,” would be better to get to “the right point” now rather than in smaller steps
  •  “aggressive” action needed given dive in US bond yields, impact of trade war
  • calls trade debate a “reckoning” for the current world trading system that could take a long time to sort out
B speaking in an interview, headlines via Reuters
Bullard is president of the Federal Reserve Bank of St. LouisYeah, hi