The Fed had its final meeting in the most active year for Central Banking since the Global Financial Crisis. The headline is that Fed members continue to project no upward change in rates for at least 3 years and will continue asset purchases at the same levels for the foreseeable future. In other words, no fireworks. The tone and outcome were nonetheless positive for markets in our view.

Some had speculated that the Fed might engage in further accommodative action like buying longer-dated debt as it did about a decade ago. Chairman Powell responded to questions about why they decided not to do this by explaining that long-term interest rates are already low. He said monetary policy, particularly since we can see through to mass vaccinations, is not the most appropriate or effective tool to respond to short-term economic challenges. He again resolutely implored fiscal authorities to act quickly as, in his view, assistance from them will be the most effective in getting assistance to struggling businesses and families. It is ironic and unfortunate that disputes over the future of lending programs have been thrust directly into that debate. He noted that monetary policy is not a good tool to aid industries that are struggling due to lockdowns and changed consumer behavior from ...

Unlock this article with a FREE 30-Day Trial!

An FSI Pro, or FSI Macro subscription is required in order to access this content.

*Free trial available only on a monthly plan

Disclosures (show)

Get invaluable analysis of the market and stocks. Cancel at any time. Start Free Trial

Articles Read 2/2

🎁 Unlock 1 extra article by joining our Community!

You’ve reached your limit of 2 free monthly articles. Please enter your email to unlock 1 more articles.

Already have an account? Sign In

Want to receive Regular Market Updates to your Inbox?

I am your default error :)