FOMC Meeting Update

Gary Pzegeo, CFA
July 29, 2020

Head of Fixed Income Gary Pzegeo breaks down the latest FOMC announcement.

The Fed restated a message of accommodation with very few changes from the one delivered on June 10.

Policy

Very little was expected from the Fed and not much was delivered.  The target range for federal funds was maintained at 0 to 0.25% and balance sheet expansion will continue at least at the current pace over the coming months.  There was an outside chance that the Fed would share its findings regarding changes to its policy framework or that it would communicate a more specific forward guidance for policy, but it appears those topics will be pushed to the September meeting agenda.  Chairman Powell used today’s press conference to reiterate the Fed’s commitment to using all of its available tools to restore full market functioning and to improve the flow of credit to businesses and individuals.  All attempts to get the Chairman to discuss the risk of inflation or what may prompt the Fed to tighten policy were swatted away. 

Growth

The Fed noted an increase in economic activity and employment in the press release.  Powell, in his press conference, cautioned that the high frequency data has slowed since an increase in cases beginning in June and it is too soon to assess the full scope of a slowdown.  Powell stated on a number of occasions that the path of the economy, and therefore policy, is dependent on the virus and the measures we take to keep it under control.

The FOMC unanimously approved today’s policy and markets improved marginally following the release.

View the full FOMC announcement. 

Gary Pzegeo joined the firm in 2007 as head of fixed income, focusing on portfolio management, trading, policy formulation and client service.