Fed Officials Discuss How to Convince Markets That Interest Rates Will Stay Low For a Long Time

Thursday, 21 May 2020 02:33 WIB

The FedEkonomi AS


Federal Reserve officials in April discussed the next phase of interest rate policy —convincing markets that rates will stay low for a long time — but gave no sense than any changes were imminent.

Meeting minutes from that session released Wednesday said that “at upcoming meetings” the Fed might want to clarify its intentions regarding interest rates.

Some officials wanted the central to make its forward guidance more explicit. For example, the Fed could specify a certain level of unemployment or inflation must be achieved before the Fed would consider raising rates from zero.

Another option was a date-based approach, indicating rates would be raised only after a specified amount of time had elapsed.

Several officials said the Fed might need to provide clarity over the central bank’s ongoing unlimited purchase of Treasurys and mortgage-backed securities.

The Fed has said these purchases are needed to keep financial markets functioning.

Source : Marketwatch




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