- Background and views of June 10 Projection Materials and economy of most interest.
- Powell testimony in Congress on Tuesday was optimistic though cautions on pandemic.
- GDP is projected to contract 6.5% this year, expand 5% in 2021, 3.5% in 2022.
- Minutes unlikely to supplant Powell’s recent Congressional information.
In the fast moving world of the coronavirus the minutes of the last FOMC meeting have already been supplanted by Federal Reserve Chairman Jerome Powell’s Congressional testimony.
Treasury Secretary Steven Mnuchin and Mr. Powell spoke and answered questions at the House Financial Services Committee on Tuesday in their quarterly appearance as required by the CARES Act, the Coronavirus Aid, Relief and Economic Security Act.
Mr. Powell stressed that control of the pandemic was of the greatest importance if the US was to recover from its steepest economic contraction in history.
“We have entered an important new phase and have done so sooner than expected,” he told the committee. “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” he noted. “A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities.”
Projection Materials
The Fed formulates and releases its Projection Materials four times a year, March, June, September and December. The scheduled March 18 issue and the meeting itself was cancelled as the FOMC met twice earlier that month on March 3 and 15 to institute its emergency pandemic response. The minutes of those two meeting were released on April 8.
The materials from the June 9-10 meeting were the first to include the economic damage from the coronavirus shutdown. The Fed forecast that the US economy will contract 6.5% this year and expand 5% in 2021. Unemployment is expected to be 9.3% in December. It was 13.3% in May and is predicted to drop to 12.3% in June. Core PCE inflation will be 1% this year 1.5% in 2021 and 1.7% in 2022.
In perhaps the most surprising assessment the fed funds rate is expected to remain unchanged until through the end of 2022.
With the fed funds rate expected to be static for more than two-and-a-half years the discussions and views around the economic projections will be the main market interest but with little new information expected.
After Mr. Powell’s multiple recent appearance in Congress, all more up to date and pertinent than the materials, it would be a surprise if the minutes are anything more than historical value.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
USD/JPY flat-lines below 151.50 after soft Japanese CPI data
USD/JPY stays defensive below 151.50 after the release of a soft Japan's CPI report and mixed Industrial Production and Retail Sales data on Friday. Japanese verbal intervention also weighs on the pair amid the holiday-thinned conditions on Good Friday. US PCE inflation awaited.
AUD/USD buyers lack vigor above 0.6500 amid Good Friday trading lull
AUD/USD is trading listlessly above 0.6500 in the Asian session amid light trading on Good Friday. The Aussie pair shrugs off encouraging comments from China's FX regulator, as price action remains subdued ahead of the US PCE inflation data.
Gold flirts with record highs above $2,230, all eyes on US PCE data
Gold price flirts with record highs around $2,230 during the Asian session on Friday. The uptick of yellow metal is bolstered by the safe-haven flows amidst growing economic concerns and the prospect of interest rate cuts from the US Federal Reserve.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days. As this coiling up comes undone, investors can expect XRP to kickstart a massive rally.
Will they won’t they cut rates is the question of Q2?
There has been some significant push back from Fed and Bank of England members around the timing of rate cuts, and the Bank of Japan still haven’t physically intervened in the FX market to stem yen weakness although they are threatening to do so.