Fed's Evans: Outcome-based forward guidance for rates, bond-buying could be beneficial

Eren Sengezer FXStreet

The Federal Reserve's highly accommodative policy will be appropriate for some time to come, Chicago Federal Reserve Bank President Charles Evans said on Thursday. "Outcome-based forward guidance for interest rates, bond-buying could be beneficial," Evans further added, as reported by Reuters.

Additional takeaways

"It's important that future policy actions are true to the principles in the new Fed framework."

"More fiscal relief is needed."

"Long way to go before the US economy is back to normal."

"Economic activity is being suppressed until coronavirus is controlled."

"Reintroducing restrictions on big gatherings, taking steps to protect the elderly would help substantially."

"Partisan politics threatens fiscal action, posing a significant downside risk to the economy."

"Expecting a late-2022 return to the pre-crisis level of economic activity if the virus is better controlled and fiscal support is provided."

"Seeing US unemployment at 9% at the end of 2020, between 5% and 5.5% at the end of 2022."

"It will be some time before inflation reaches the Fed's 2% goal."

"One year of lost schooling would have a lasting economic toll."

Market reaction

The US Dollar Index largely ignored these remarks and was last seen gaining 0.25% on a daily basis at 92.87.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD breaks below 1.1800, two-week lows

EUR/USD’s selling pressure is gathering pace now, breaching below the key 1.1800 yardstick to hit new two-week troughs on Wednesday. The pair’s pullback comes on the back of marked gains in the US Dollar following US data releases and ahead of the publication of the FOMC Minutes.

GBP/USD reaches multi-day lows near 1.3500

GBP/USD reverses its initial upside momentum and is now adding to previous declines, approaching the 1.3500 region on Wednesday. Cable’s downtick comes on the back of decent gains in the Greenback and easing UK inflation figures, which seem to have reinforced the case for a BoE rate cut in March.

Gold battle to regain $5,000 continues

Gold is back on the front foot on Wednesday, shaking off part of the early week softness and challenging two-day highs near the $5,000 mark per troy ounce. The move comes ahead of the FOMC Minutes and is unfolding despite an intense rebound in the US Dollar.

Fed Minutes to shed light on January hold decision amid hawkish rate outlook

The Minutes of the Fed’s January 27-28 monetary policy meeting will be published today. Details of discussions on the decision to leave the policy rate unchanged will be scrutinized by investors.

Mixed UK inflation data no gamechanger for the Bank of England

Food inflation plunged in January, but service sector price pressure is proving stickier. We continue to expect Bank of England rate cuts in March and June. The latest UK inflation read is a mixed bag for the Bank of England, but we doubt it drastically changes the odds of a March rate cut.

Sui extends sideways action ahead of Grayscale’s GSUI ETF launch

Sui is extending its downtrend for the second consecutive day, trading at 0.95 at the time of writing on Wednesday. The Layer-1 token is down over 16% in February and approximately 34% from the start of the year, aligning with the overall bearish sentiment across the crypto market.