FOMC meeting: Committee ready to do more, if needed

No Changes in Policy, At Least for Now

The Federal Open Market Committee (FOMC) held its first formal meeting in three months today—the meeting originally scheduled for March 18 was cancelled due to a number of policy steps that the Fed took on March 15–and, as widely expected, did not make any policy changes. That said, the committee left little doubt that it will do whatever is needed to help the economy weather the economic disruption that the coronavirus pandemic has caused.

The FOMC stated the obvious in its post-meeting statement when it said the measures taken to combat the outbreak “are inducing sharp declines in 2.0% economic activity and a surge in job losses.” But the committee stressed throughout its statement that it “will use its tools and act as appropriate to support the economy.” For starters, the FOMC has already slashed its target range for the fed funds range to 0.00% to and it noted in today’s statement that it “expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its $7T maximum employment and price stability goals.” Because we forecast that the unemployment rate, which is set to surge from the rate that was registered in March, will remain higher than at the end of 2021, we think that the FOMC will keep the fed funds rate pressed to 0.00% through at least the end of next year (top chart).

Download the full report.