While testifying testimony before the House Financial Services Committee on Tuesday, Jerome Powell, Chairman of the Federal Reserve System, said there was very little demand for loans below $1 million in the Main Street Lending Program.
Powell urges more spending amid coronavirus' impact on the economy
US stocks rejoiced and snapped a four-day losing streak after the Fed Chair affirmed the ‘Powell Put’, noting that further fiscal and monetary stimulus will be needed for the economy. Treasury Secretary Mnuchin said the next stimulus needed should help travel and restaurants, also offering that the unused Fed facility money could be used for smaller businesses.
FED'S LAST EMERGENCY MEASURES REVIEW
The Federal Reserve adopted a new inflation policy that that will permit price increases above the 2% target for extended periods if necessary to balance periods of weak performance. A product of the much discussed Monetary Policy Review, which has been more than a year in the making, the change reflects the bank’s experience with inflation and unemployment since the financial crisis.
The FOMC Minutes of July meeting showed on Wednesday that members continued the review of the monetary policy strategy, discussing potential changes to the statement of longer-run goals. The FOMC further noted that participants agreed that refining the statement was warranted in light of "fundamental changes" in the economy over the past decade.
The FOMC on Wednesday announced that it left the benchmark interest rate, the target range for federal funds, unchanged at 0%-0.25% as widely expected. In its policy statement, the Fed reiterated that it is committed to using its full range of tools to support the US economy and noted that the path of the economy will depend on the course of the coronavirus outbreak.
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August Fed Decision Review
Read my dot-plot, no new rate hikes – that is the message from the Federal Reserve. The new projections are pointing to low chances of higher borrowing costs in 2023, certainly not beforehand. That is merely a repeat of the previous messages by the Fed, as published in June. The accompanying statement has undergone a change, committing to an average inflation target – yet that is also unsurprising given the dovish policy shift that Federal Reserve Chairman Jerome Powell delivered in late August.
July Fed Decision Review
Reality bites – and the Federal Reserve has been unable to ignore it. The resurgence of coronavirus is already evident in jobless claims and consumer confidence figures – and the Fed probably has the Gross Domestic Product figures for the second quarter, reflecting the first wave's damage.
June Fed Decision Review
The bank has your back – that is the message from the Fed to investors. There are no signs of Fed fatigue – the commitment to support the economy remains strong and should boost stocks while dollar printing will likely keep the dollar down.
The Federal Reserve finally put numbers to the events and policies of the past three months issuing its delayed projection materials, forecasting that the US economy will contract 6.5% this year and unemployment will be 9.3% in December.
May Fed Decision Review
At yesterday's FOMC meeting minutes we saw that the Fed had been concerned about the unemployment picture. Jerome Powell has previously stated that unemployment in the US could hit 25%. The minutes from April's rate setting meeting also showed there is deep concern not just about the current state of the economy, but also what lies ahead.
The dollar has been gaining since Fed minutes dismissed the idea of negative US interest rates. Demand for the dollar has been bolstered by cooling market sentiment. The minutes are little stale since we've just heard fresher comments from Fed Chair Jerome Powell in his testimony to Congress this week.