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Investing.com – Federal Reserve
The Federal Reserve has pledged to continue the government bond purchase program until “tangible progress is made.”
The guidelines issued by the Federal Open Market Committee came after the two-day meeting.
Fed officials have updated their economic forecast, affirming their commitment to keep interest rates close to zero until at least the end of 2023.
Despite the strong pace of government bond purchases, at least $ 120 billion per month.
However, the Federal Reserve has not provided more robust monetary stimulus to deal with the weak pace of the economic recovery by lengthening bond maturities or increasing the overall value of the program.
The Fed’s tone of buying government bonds reflected its willingness to keep interest rates close to zero until the economy hit peaks in employment.
Inflation is back on track, exceeding the 2% target for some time.
Facilitation
Fed management has set a longer time horizon for the bond buying program, after an earlier statement said it would only continue the program in the “coming months.”
Finally, Fed Chairman Jerome Powell reiterated the need for fiscal stimulus.
Given that the tools available to the Central Bank are not necessarily up to the most urgent needs facing families and businesses today.
obstacle
Top leaders in the US Congress met on Tuesday to finalize a $ 908 billion fiscal stimulus package.
As part of their efforts to end the fallout from the pandemic, the value of the fiscal stimulus package has been reduced to $ 748 billion.
Backed by a bipartisan group of senators who hoped to pass the package by Friday.
The proposal includes support for small businesses and the financing of unemployment benefits.
It represents a last chance before the holidays to reach an agreement on government support at a time when the United States faces a surge in HIV cases.
And a number of moderate lawmakers have removed the two main sticking points – protecting businesses from certain lawsuits and helping states and local governments – seeking to make the deal more bipartisan in Congress.
conflict
Last Thursday, a political dispute erupted over the Fed’s lending programs to counter the fallout from the pandemic.
It threatens to derail the fiscal stimulus package that U.S. Congressional leaders hoped would be completed on Friday.
Republican Senator Pat Tommy has sought to include a provision in the legislation that would prevent the Federal Reserve from renewing several emergency credit facilities, which are due to expire at the end of this year.
“I think there is a very broad agreement among Republican senators that this is the right approach, and Treasury Secretary Stephen Mnuchin shares this view,” Tommy told reporters.
The Republican move saw opposition from Mark Warner, a Democratic senator and a key member of the fiscal stimulus negotiating team.
This, according to him, would limit the ability of American decision-makers to react to the economic fallout from the pandemic.
Suggestion
Jerome Powell, Federal Reserve Chairman, Janet Yellen, candidate for Treasury Secretary in Biden’s government, was expected to be able to extend credit facilities without needing Congress approval if needed.
However, Senator Tommy’s proposal would require getting the green light from lawmakers.
Which can be difficult to secure.
In addition to the controversies over the federal loan program.
Disputes also persisted over the final terms of unemployment benefits and direct checks to be cashed for Americans.
This is in addition to the inclusion of disaster relief assistance for different cities and states.
The unforeseen hurdle has forced congressional leaders to say they may have to extend the deadline for expiring on Friday by a few more days by a few more days to allow more time for negotiations and work on it over the weekend.
On the other hand, Republican Senate Majority Leader Mitch McConnell said, “We cannot overwhelm our citizens with these changes.
Let us end our framework with a bipartisan consensus. Let us pass the legislation as soon as possible. ”
Dollar
The US decline continued throughout the week due to investor appetite for risk with the launch of vaccines.
While the FOMC has kept its course unchanged, hopes for a revival have remained.
The index ended the week’s trading, down 1.27%, to close at 90.02.
On the one hand, he took advantage of the change in sentiment, as well as hopes of ending negotiations on the UK Brexit deal.
At the end of the week, trade rose 1.04% and closed at 1.2255.
Biden wins
In the presidential election, many Republican leaders acknowledged that Joe Biden would be the next president of the United States.
This stands in stark contrast to Donald Trump’s trending stance, after the president-elect secured the majority of the electoral college votes needed to win the White House presidency.
Republicans who recognized Biden’s eligibility for president told reporters on Monday it was time for them to accept Biden’s swearing-in on Jan.20 as the 46th President of the United States.
The announcement came after most Republicans have refused in recent weeks to voice any differences of opinion with Trump’s claims that he would have won the Nov. 3 election if the voter cards had not not been tampered with on a large scale.
Unemployment
Data released Thursday revealed first-time requests for help increased by 885,000 requests last week, the highest level in three months.
The figure comes as new restrictions to tackle the resurgence of coronavirus cases continue to negatively impact the job market. The reading exceeded economists’ expectations, with the number of complaints reaching 800,000.
It also coincides with the increase in federal unemployment programs to 40,000 claims.
Before the outbreak of the pandemic, the highest number of new jobless claims recorded in a week was 695,000, recorded in 1982.
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