Thursday’s meeting of the Federal Open Market Committee will almost surely signal that all is quiet on the monetary front given the major changes by the central bank this year. We expect no change in the policy rate, forward guidance or the pace of asset purchases.
We expect no change in the policy rate, forward guidance or the pace of asset purchases at Thursday’s meeting.
Since the introduction of the outcome-based guidance – an inflation average of 2% over a period of time — the path of interest rates is set at least through the end of 2023, according to the Fed’s Summary of Economic Projections, and possibly as far as 2025 if market pricing is prescient.
Second, given the intensification of the pandemic, all eyes will be on any mention of asset purchases as a method to bolster economic activity during the next few months should the overall economy slow.
We do not anticipate any change to the language in the monetary policy statement pertaining to the quantity or pace of asset purchases. Any substantive discussion will most likely be in the upcoming November FOMC minutes
Finally, given the proximity of this meeting to the elections on Tuesday, the Fed will make no changes to its monetary policy statement, and the news conference following the publication of the rate decision will feature Fed Chairman Jerome Powell attempting to finesse questions on the direction of fiscal policy, whoever wins the election.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
