The FED Doesn’t Sound Too Optimistic About the Economic Recovery
The USD has turned weaker now, after not very optimistic comments from the FED
Skerdian Meta•Wednesday, October 14, 2020•1 min read
The US economy rebounded nicely after the lock-down months, when it crashed lower like everyone else. But while the rebound has slowed considerably in other places and services are back into contraction in Europe, the US economy is doing fairly well, as it is keeping up the pace.
But the FED doesn’t think so, or at least they are not trying to sound too optimistic, judging by comments made by FED members a while ago today. The USD is a little weaker after those comments, as EUR/USD climbs around 40 pips.
Comments from the Fed vice chair
- Perhaps another year before US GDP reaches pre-pandemic peak
- Will take longer for full employment to return
- Economic data since May ‘surprisingly strong’ though the outlook remains uncertain and dependent on the virus and successful mitigation efforts
- Canada service sector lags but rebound otherwise ‘broad’
- New framework elevates the importance of keeping inflation expectations well-anchored at 2%
- Maximum employment may well be lower than we thought
- Believes there is pent-up demand for services with the arrival of a vaccine or at-home testing
- Those changes would release available savings
“While economic recovery since the spring collapse has been robust, let us not forget that full economic recovery from the COVID-19 recession has a long way to go,” he said in a dazzling bit of stating-the-obvious.
Comments from the Richmond Fed President
- Unemployment adjusted for the drop in participation is around 11%
- Downtrend in participation by prime-age women may limit the rebound
- Fed will aim to keep rates low until we see moderate overshoots of inflation
How low on rates and how much of an overshoot will be a big question for 2021 and beyond. The Fed has tried to define those parameters loosely but but I expect the goalposts will be moved repeatedly.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
ABOUT THE AUTHOR
See More
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
Related Articles
Comments
Subscribe
Login
Please login to comment
0 Comments
Oldest
Sidebar rates
Related Posts
Save
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals