WASHINGTON—The Fed’s decision to leave rates unchanged at its meeting this week is an indication the real drivers of the economy’s future are politicians and health officials, according to one analyst.
As expected, the Federal Open Market Committee (FOMC) this week maintained the federal funds target rate near its current range of 0 to 0.25%, saying it "expects to maintain this target range until it is confident that the economy has weathered recent events" related to the coronavirus pandemic.
“The early days of the pandemic saw the Fed act and speak forcefully to calm financial markets and restore confidence to investors, to great effect. But lately it is all too clear that while the Fed may have more ammunition to support markets, the problems in the real economy are mostly a matter for elected and health officials," observed NAFCU Chief Economist and Vice President of Research Curt Long. “NAFCU continues to believe that a sustained recovery will prove elusive until a vaccine is available.”
One Comment of Note
Of note, the committee's policy statement changes little from the previous meeting. However, the committee did add a comment on the path of the economy depending heavily on the course of the virus, Long added.
The committee also stated it intends to maintain or increase its current pace of Treasury and agency securities purchases, with a goal of “fostering effective transmission of monetary policy to broader financial conditions.”
The FOMC is expected to meet next on Sept. 15-16.