Volatility under check for now, but further tests ahead – Fidelity reacts to FOMC meeting

by | Apr 29, 2021

the fed

As the latest FOMC two day meeting ended on April 28, the Fed kept policy and forward guidance unchanged. Salman Ahmed, Global Head of Macro and Strategic Allocation at Fidelity International comments:

“The statement’s characterisation of the current state of the economy and inflation was notably better than the last meeting, and Chair Powell highlighted both ‘unprecedented’ fiscal policy and ramp-up in vaccination programmes as key factors. That said, the current communication remains consistent with forward guidance that substantial progress will need to be seen before the central bank reassesses the highly accommodative policy stance, with the current rise in inflation seen as transitory – a view Chair Powell was keen to reinforce in the press conference.

“We think that heavy debt burdens, which continue to rise on the back of ongoing massive fiscal easing, will need the Fed to keep real rates negative and thus help keep debt service ratios in check. While the Fed has indicated that it will now consider composition of employment along social dimensions as well as in setting policy, the end result remains a central bank committed to running the economy hot while facilitating the heavy fiscal easing which continues to build.

“Medium term risks to US yields are to the upside driven by higher inflation expectations, but in the short-term the ongoing forward guidance will likely help keep volatility in rate markets under check for now. But further tests of the Fed’s credibility lie ahead.”


Related articles

Argentina devalues peso, slashes public spending

Argentina devalues peso, slashes public spending

(Sharecast News) - Argentina's new hard-right government has devalued its currency by more than half in its first package of economic measures that include slashing public spending. The plans, unveiled by economy minister Luis Caputo in a televised address, also...

OPEC+ agrees to cut output by a further 1m barrels a day

OPEC+ agrees to cut output by a further 1m barrels a day

(Sharecast News) - OPEC+ members have reportedly agreed to cut oil production by a further one million barrels a day. In an online meeting, the cartel of oil producing nations- led by Saudi Arabic - said the production cuts would begin early next year. According to...

Gold and oil prices jump on geopolitical unrest

Gold and oil prices jump on geopolitical unrest

(Sharecast News) - Commodity prices continued to rise on Friday, as tensions escalated across the Middle East. Gold, traditionally seen as a safe haven asset, pushed past $1,980 an ounce, with Comex gold futures adding nearly 1% at $1,980.60, the highest since May....

Trending stories

Join our mailing list

Subscribe to our mailing list to receive regular updates!