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Weekly Economic And Financial Commentary – September 21, 2020

Last week, both the U.S federal Reserve and Bank of England held monetary policy meetings. While both left key benchmark rates unchanged, the feedback from the meetings suggest more accommodative measures ahead to support the recovery phase and also to...

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  • Weekly Economic And Financial Commentary – September 21, 2020

Last week, both the U.S federal Reserve and Bank of England held monetary policy meetings. While both left key benchmark rates unchanged, the feedback from the meetings suggest more accommodative measures ahead to support the recovery phase and also to strengthen growth post the recovery phase. The Federal Reserve confirmed the federal funds rate could remain lower for longer following its new approach to inflation targeting, suggesting interest rates would remain near zero until the labour market was at “maximum employment” and inflation has risen to 2% and is on track to moderately exceed 2% for some time.  With the Feds projection showing core PCE would be under 2% through 2022, interest rates might remain near zero until 2023. Elsewhere, the Bank of England is also considering negative interest rates as a potential next step to offset the economic impact of Covid-19, similar to current practice in the Eurozone and Japan.

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