Jerome Offers Solace and Lower for Longer

As expected, the FOMC had no rate changes for investors. Also as expected, Chairman Powell pledged to continue asset purchases at levels at least as large as is currently underway. And after suspending its Summary of Economic Projections at its meeting in March, the Committee resumed the publication of that compilation today. Keeping in mind that this is not intended as a consensus-driven forecast, but rather a compilation of individual members’ outlooks, it is noteworthy that no change to the policy-rate appears until after 2022. Some observes might be disappointed that the Committee is still only discussing the possibility of yield curve control, but, according to the Chairman, no decision to pursue such a policy was reached at this meeting. As far as forward guidance goes, Chairman Powell stated that current monetary policy is appropriate for the time being, but will remain flexible. Mr. Powell also reminded everyone that there are several possible paths to recovery and it’s not clear to him, nor to the rest of the Committee, what the eventual outcome might look like. Really?

Treasury bonds continue the nice rally going on today and the Ten Year’s yield is down to around 75 basis points. Equities must not have gotten what they wanted and have sold off a bit since the issuance of the Fed’s statement.