Surging Covid-19 case counts, renewed strain in the labor market and floundering fiscal negotiations – all amid a backdrop of Treasury yields grinding toward the highest levels of the pandemic – are compelling reasons for Fed officials to stand ready to do more, so the big question for today is, will they hedge and enable some easing (extending WAM on purchases) as StanChart suspects, and/or will The Fed hike its IOER, or will The Fed leave well alone at these stratospherically rich levels – merely promising to do something at some point in the unknown future?
The headline is simple – NOTHING CHANGES, EVERYTHING CONTINUES
Central bank officials left rates near-zero at their December meeting, and tied bond buying to their employment and price goals.
“The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time,” Fed officials reiterated in their December policy statement, released Wednesday afternoon.
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