Federal Reserve Chair Jerome Powell, in a sober review of where the U.S. economy stands on the cusp of its reopening, said on Wednesday the country could face an « extended period » of weak growth and stagnant incomes, pledged to use more Fed power as needed, and issued a call for more fiscal spending.
Federal Reserve Chair Jerome Powell, in a sober review of where the U. S. economy stands on the cusp of its reopening, said on Wednesday the country could face an “extended period” of weak growth and stagnant incomes, pledged to use more Fed power as needed, and issued a call for more fiscal spending.
In a Webcast Question & Answer hosted by the Peterson Institute for International Economics, Powell said the Fed’s view on negative interest rates has not changed and it is not something the policy-setting committee is looking at.
Story: MARKET REACTION:
STOCKS: S&P 500. SPX opened lower after futures erased losses, last off 0.68%
BONDS: U. S. Treasury yields see sawed in a narrow range, briefling firming after Powell threw cold water on negative rates; 2s US2YT=RR last at 0.1569%; 10s US10YT=RR at 0.6573%
FOREX: The U. S. dollar index. DXY little changed about 0.15% lower COMMENTS:
KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CAMBRIDGE GLOBAL PAYMENTS, TORONTO
“In saying that the FOMC’s position ‘has not changed, this is not something we’re looking at,’ Mr. Powell clearly shelved the prospect of negative rates for now. Market participants will look for enhanced forward guidance and more explicit forms of yield curve control at the June meeting.”
JUSTIN HOOGENDOORN, HEAD OF THE FIXED INCOME STRATEGIC ANALYTICS GROUP, PIPER SANDLER, CHICAGO
“I’m very happy (Powell’s) holding to his guns (on negative rates) there and I hope he does.”
“If I’m the Fed, I’d do things to try and stimulate growth like quantitative easing like they’re doing but I don’t buy as much securities as they might do out long.
