The Federal Reserve kept the target range for the federal funds rate at 0-0.25 until economic conditions stabilize, according to Bloomberg. Fed will also continue bond buys until ‘substantial‘ progress on goals is made.
- Fed to continue increasing holdings of Treasury securities by at least $80 billion per month and agency mortgage-backed securities by at least $40 billion per month.
- Fed will make no change to asset purchases’ composition and pace and will extend temporary dollar swap lines and repurchase facilities.
- Consumer prices have leveled out more recently but remain below the 2% target on a 12-month basis.
- The unemployment rate was 6.7% in November and will continue to decline to median projections of 5% by the end of 2021
- Fourth-quarter unemployment rate to hit 5.0% in 2021, down from the prior estimate of 5.5%, and decline further to 4.2% in 2022
- Fed projects the gross domestic product to fall by 2.4% in 2020, better than feared 3.7% contraction, but growth will hit 4.2% in 2021
- Personal consumption expenditures inflation to be 1.8% in 2021, up from the prior estimate of 1.7% and increase further to 1.9% in 2022
- Spending on durable goods has been strong, while the pace of improvements in the economy has moderated in recent months.
- Weaker demand and oil prices are holding down consumer inflation while virus poses considerable risks to outlook over the medium term.
- Economy will perform better in the second half of 2021 on vaccines.
U.S stocks are gaining as the dollar loses. SPY is up 0.28%, EURUSD is up 0.19%
