30/01/2020
To update you all on what happened with the FOMC last night, the Fed Leaves Rates Unch, Extends Repo Bailout Facility and Downgrades Consumer Health.
Here are Bloomberg's key takeaways from today's FOMC decision:
• For the second straight meeting, the Fed left the federal funds target range unchanged at 1.5%-1.75%, as expected, following last year’s three quarter-point cuts; the FOMC repeated language that rates are currently “appropriate” to support growth, jobs and inflation.
• The Fed raised a secondary interest rate, covering banks’ excess reserves, by 5 basis points to 1.6% in what officials will likely characterize as a technical adjustment to maintain control of the benchmark federal funds rate. A related tool, the rate on overnight reverse repos, also rose by 5 basis points, to 1.5%. The central bank had previously telegraphed in meeting minutes that it might make such moves.
• In another move telegraphed earlier this month, the central bank extended its plan to address strains in money markets, saying it will inject funds through repo operations at least through April, compared with January previously. That will help cover any additional volatility during the U.S. tax-filing season, when payments would reduce reserve levels.
• The Fed reiterated its plan to buy Treasury bills at least into the second quarter.
• While most language on the economy was unchanged, the Fed downgraded household spending, saying it has been rising at a “moderate pace,” ahead of GDP data expected to show consumption cooled in the fourth quarter. The December statement had referred to a “strong pace” of spending gains.
• The unanimous decision reflected support from the four regional Fed presidents who rotated into voting slots this month, including Minneapolis’s Neel Kashkari, Dallas’s Robert Kaplan, Patrick Harker of Philadelphia and Loretta Mester of Cleveland.
The full FOMC statement for January 2020 can be found here.
Following is the full text of the statement released by the Federal Reserve'...