WASHINGTON: The Federal Reserve is scheduled to release its latest policy statement on Thursday after two days of debate in which policymakers lacked a critical piece of information: who will run the United States for the next four years. With the final result of Tuesday’s presidential election still uncertain, the U.S. central bank’s policy-setting Federal Open Market Committee is expected to stick closely to its last statement and repeat its pledge to do whatever it can to help the economy through the coronavirus-triggered recession.
Until it’s clear who the next U.S. president will be, “it is the wrong time to be in the public eye,” said William English, a former head of the Fed’s monetary affairs division and now a professor at the Yale School of Management.
“They mostly don’t want to be a source of any additional uncertainty at this point. So they’d aim for a pretty quiet meeting,” he said in a recent interview with Reuters.
The Fed’s latest policy statement, due to be released at 2 p.m. EST (1900 GMT), will update the central bank’s view of the economy and likely repeat its prior promise to keep its key overnight interest rate near zero until the U.S. labor market returns to “maximum” employment and inflation is on track to exceed the 2% target “for some time.” Fed Chair Jerome Powell is scheduled to hold a news conference at 2:30 p.m. EST. Financial markets, at least, reacted calmly on Wednesday to the unresolved presidential election – relieving the Fed of a possible additional problem. Major U.S. stock indexes rose for a third straight day while U.S. Treasury yields fell. Cornerstone Macro analyst Roberto Perli said the decline in yields provided “no fundamental story to tell” about investor perceptions of election-related risk or the path of the economic recovery. The policies expected to be embraced by Democratic presidential nominee Joe Biden if he is ultimately declared the winner of Tuesday’s election may be starkly different from those that would be pursued by Republican President Donald Trump in a second term and could reshape the outlook among investors for U.S. fiscal and health policy, and expectations about growth and inflation. – Agencies
