The Fed leaves its monetary policy unchanged. Fed chief Jerome Powell presented a type of risk report. The course of the virus was the focus of the press conference. A further increase in new infections harbors high economic risks. The press release has been supplemented accordingly. The economic trend depends largely on the course of the virus. The Fed will complete its monetary policy review in the near future. The so-called “forward guidance” should be sharpened. Jerome Powell did not provide any further information.
We can already prepare for major communications changes in September. If the US economy remains weak, the Fed will have to fix its credit programs. The volume of each loan vehicle may need to be increased. But it is becoming increasingly obvious that central banks are putting their arms out. In the current situation, cheap money cannot make up for everything. We are subject to the laws of the pandemic, which means that many areas of the economy are suffering. The public sector bears the main burden. The government’s emergency and economic stimulus programs will probably have to continue in the coming year to prevent entire industries from collapsing. Monetary policy is currently reaching its limits.
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