Fed Chairman Powell, “Near-Zero Rates Through 2022, GDP to Hit 5% Next Year”

Fed Chairman Powell, “Near-Zero Rates Through 2022, GDP to Hit 5% Next Year”

$DIA $SPY $QQQ $RUTX $VXX

Wednesday, the Trump Fed signaled it will provide years of extraordinary support for an economy clawing back from the C-19 coronavirus chaos. Th FOMC projects a 6.5% decline in GDP this yr and a 9.3% unemployment rate at yr’s end.

In the 1st economic projections of the virus quarter, US central bank policymakers put into numbers what has been an emerging narrative: that the measures put in place to battle a health crisis will echo through the economy for years to come rather than be quickly reversed as commerce reopens.

The projections show the unemployment rate falling to 6.5% at the end of Y 2021 and 5.5% at the end of Y 2022 – a full 2 percentage pts above where it was at the end of last year, representing millions of lost years of work.

The ongoing public health crisis will weigh heavily on economic activity, employment and inflation in the near term and poses considerable risks to the economic outlook over the medium term,” the Fed said in a policy statement after it 2-day meeting.

The response: officials see the Key overnight federal funds rate, remaining near Zero through at least Y 2022. The decision to leave that rate unchanged Wednesday was unanimous.

Officials promised to maintain the Fed’s bond purchases at least at the current pace of around $80-B/month in Treasuries and $40-B/month in agency and mortgage-backed securities – a sign the Fed is beginning to shape its long-run strategy for the economic recovery.

The work of the Fed touches communities and families and businesses across the country … We are committed to using our full range of tools … to ensure the recovery will be as robust as possible,”  Chairman Powell said in a news briefing via a video link. “It is a long road. It is going to take some time.”

Wednesday, the major US stock market indexes finished at: DJIA -282.31 at 26989.99, NAS Comp +66.59 at 10020.37, S&P 500 -17.04 at 3190.01

Volume: Trade on the NYSE came in at 1.2-B/shares exchanged

  • NAS Comp +11.7% YTD
  • S&P 500 -1.3% YTD
  • DJIA -5.4% YTD
  • Russell 2000 -12.1% YTD

HeffX-LTN’s overall technical outlook for the US major stock market indexes is still Very Bullish in here.

Looking Ahead: Investors will receive the weekly Initial and Continuing Claims report and the Producer Price Index for May Thursday

Have a healthy day, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.