FOMC: Loose stance remains well in place – UOB
|Senior Economist at UOB Group Alvin Liew reviews the latest FOMC event (Wednesday).
Key Quotes
“The Fed Reserve, as widely expected, kept its policy rates and asset purchase program unchanged in its April FOMC. Even as Fed’s growth outlook continued to turn more bullish, Powell highlighted that the recovery remains uneven and incomplete, the economy is ‘long way’ from employment and inflation goals and likely to take ‘some time’ for substantial further progress to be achieved. As such, Powell continued to sweep aside the notion of Fed policy shift discussion, saying “it is not time yet” to begin talking about tapering its asset purchase program.”
“Going forward, our base case remains for the Fed to stay on hold for most of 2021, at least, and the taper discussion will only start in late 2021/early 2022. This is premised on the continued successful rollout of vaccinations across the US, additional fiscal stimulus, and the subsequent reduction in COVID-19 infections and deaths with the return to economic/social normalcy in the foreseeable future. We continue to hold the view that the Fed will keep policy rates at the current 0.0-0.25% region at least until 2023.”
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