US central bankers convene for monetary policy review but no announcement expected
The Federal Open Market Committee of the Federal Reserve is set to meet in Washington today to commence a two-day policy meeting.
In mid-March, the Fed lowered interest rates to 0-0.25% to restore confidence in the US economy, which is suffering from state lockdowns, mass layoffs and mounting fears of a recession. Unemployment claims have climbed by 26.5 million in five weeks and a precipitous drop in consumer spending has prompted economists to predict a 30-40% contraction in the economy by the end of the second quarter.
It is highly unlikely that the Fed will readjust its near-zero rates today. Indeed, according to a recent poll of 31 leading economists, the Fed is not even expected to offer any hint about how long it intends on keeping rates at near-zero levels.
Instead, expect the Fed to attempt to project confidence today, asserting that existing aid programs for struggling large firms and loan money provided to small businesses will keep the economy afloat until the COVID-19 pandemic subsides. Whether this settles uncertainty among investors and anxious business owners remains to be seen, especially as earnings reports from major tech, healthcare, energy and defence firms roll in this week.
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