“Members agreed that the ongoing public health crisis would weigh heavily on economic activity, employment and inflation in the near term and was posing considerable risks to the economic outlook over the medium term.” – FOMC
Federal Reserve officials left interest rates unchanged near zero at their July session and continued to buy Treasury and mortgage-backed bonds at a pace of about $120Bn a month. At a press conference following the meeting, Fed Chair Jerome Powell said the path forward for the economy was “extraordinarily uncertain” and would depend on containing the virus. Results on that front have been mixed, with infections rising in several U.S. states, potentially weakening the recovery.
Officials had a long list of worries about the outlook, ranging from new waves of virus outbreak disrupting growth and crimping credit conditions, to waning fiscal support, as well as disruptions to foreign growth from the pandemic. Importantly, “several” said the long-run impact of the pandemic could result in business restructurings that may “slow the growth of the economy’s productive capacity for some time. Uncertainty is quite high. And I think uncertainty matters a lot for players in the economy and consequently for the economy itself,” said Thomas Barkin, president of the Federal Reserve Bank of Richmond.
IN PROGRESS
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