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Essentials of Monetary Policy

Federal Reserve (Fed). Key Rates to Remain at Their Floor for Some Time

June 10, 2020
François Dupuis • Mathieu D’Anjou • Francis Généreux • Hendrix Vachon

Fed leaders did not deviate from their recent position. Rates will remain at their floor, and asset purchases will continue. They also held back from providing new information in their statement, particularly regarding future developments to the various measures in place. They still seem hesitant to provide more specific forward guidance. That said, they pointed out that the Fed’s balance sheet will continue to grow at the current pace. Therefore, they do not foresee a tapering of asset purchases anytime soon. According to Fed Chair Jerome Powell, discussions are ongoing regarding the type of indication to give the markets about their future policy.