FOMC meeting preview: what to watch out for

Forex

The FOMC meeting concludes today and markets are waiting for tonight’s announcement of the decisions taken. BlondeMoney CEO Helen Thomas talks us through what to expect later.

BlondeMoney FOMC meeting preview

 

The FOMC aren’t expected to make significant changes to monetary policy, having already acted swiftly to dramatically ease policy to combat the economic fallout of the Covid-19 pandemic.

Instead of looking for changes to interest rates or quantitative easing, markets will instead be focussing on key issues like yield curve control and negative rates, to see whether these got a mention during the FOMC meeting.

FOMC to consider yield curve control?

Yield curve control involves a central bank buying bonds of a set maturity in order to keep the yield at below its target level. This is done to keep borrowing costs under control, and is already being used by the Bank of Japan and the Reserve Bank of Australia.

What will the FOMC say about negative rates?

The FOMC has so far resisted calls for interest rates to go negative. However, it wants to make sure the market is confident that it will do whatever it takes to support the economy should things worsen. We can expect Federal Reserve chair Jay Powell to be asked about negative rates during the press conference held after the FOMC meeting.