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With virus war still raging, Fed peers out of the foxhole

by Rebecca Lindt (2020-09-07)


By Howard Schneider WASHINGTON, April 28 (Reuters) - The Federal Reserve has two core jobs assigned by Congress: Foster maximum employment and stable prices. The U.S. central bank begins a two-day policy meeting on Tuesday with no control over either, and little ability even to judge where an economy battered by the coronavirus epidemic is headed. Central banks, after all, don't lift lockdowns. And in the upside-down world of pandemic economics, firms may help the economy most by staying closed and daftar judi slot terbaik workers may be better off not working, casting the world's most powerful central bank in a supporting role, for who knows how long.

aa3788745c9fd5dbab89ff81143b9f00.jpg"I am actually not looking at the economy for ... answers," about the conditions the Fed might face later this year, Atlanta Fed President Raphael Bostic said in a webcast earlier this month. "I am looking at the public health response and how we manage that ... As long as the virus continues to spread we will need to continue to separate" and keep the economy in some state of lockdown. The Fed, which has responded to the current crisis by slashing interest rates, resuming bond-buying and backstopping credit markets, is scheduled to issue a policy statement at 2 p.m.

EDT (1800 GMT) on Wednesday. Fed Chair Jerome Powell is due to hold a videoconference with journalists half an hour later. The statement could begin to clarify how long the Fed intends to leave rates near zero - the sort of goal-driven "forward guidance" that research suggests is an effective policy tool. It also could offer a glimpse of how the policy-setting Federal Open Market Committee feels the economy will evolve. After cutting rates to zero in December 2008 in response to the global financial crisis, the Fed by its next meeting said it anticipated that a gradual recovery would begin later that year.

While a slow recovery did start in late 2009, it was not until the fall of 2010 before persistent improvement in the job market took hold. Offering any outlook now may be an even dicier prospect. Most U.S. states still have stay-at-home measures to curb the spread of the virus, while others are reopening. The number of cases of COVID-19, the respiratory illness that has killed more than 55,000 people in the United States, is still growing.

Against that backdrop, situs slot terbaik Fed policymakers will be hard-pressed to say much of anything new that doesn't risk getting overrun by developments on the public health front. LIMITED VISIBILITY Several other major central banks are meeting this week under similar circumstances, their options and information reliant on the spread of the pandemic and the world's response to it. Global central bankers have raced with fire-brigade speed to reopen some of the same emergency credit programs used during the last crisis more than a decade ago, when their role was more crucial in responding to problems that had started in financial markets.

They have tacked on more expansive tools given the breadth of the coronavirus pandemic. Interest rates have already been slashed to near zero or below, bond-buying has resumed, and slot indonesia financial markets, for now, seem to be working more normally.