Fed

Fed Will Be Tested in 2021 as Vaccines Boost U.S. Economic Outlook | Investing News

(Reuters) – If 2020 was the year the Federal Reserve overhauled its game plan for supporting the U.S. economy, 2021 will be the year its new approach gets tested should a coronavirus vaccine deliver the lift that many analysts expect.

In its final policy meeting of the year this week, the U.S. central bank is expected to keep its key overnight interest rate pinned near zero and to signal it will stay there for years to come; many analysts also expect new guidance on how long the Fed will keep up its massive bond-buying program.

The super-easy monetary policy is part of a long-term strategy the Fed adopted in August to help it navigate a world of persistently low interest rates that limits the central bank’s options for fighting downturns and makes it difficult to hit its 2% inflation goal.

The idea is to counteract any unhealthy downward drag on

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What to watch for when the Fed meets Wednesday

Federal Reserve Chairman Jerome Powell must thread the needle in the coming days.

On the one hand, the economy seems to be stumbling as the year draws to a close given the alarming spread of the coronavirus across the entire country.

On the other, economic activity is expected to recover sometime next spring or summer as COVID-19 vaccines become widely available.

Should the Fed take any more action to help the economy bridge the pandemic? Or is the best bet waiting for more economic relief from Congress? Washington lawmakers seem tantalizingly close to a deal by the end of the week, yet it could be another false dawn for a fifth round of COVID-19 fiscal relief.

Despite the twists and turns of the soap opera centered on COVID spending, financial market conditions have remained healthy all summer and fall, helped in large measure by the Fed’s purchases of $80 billion

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Fed to weigh further options for aiding US economy in peril

WASHINGTON (AP) — The Federal Reserve’s policymakers face an unusual conundrum as they meet this week: A short-term economic outlook that is worsening even while the longer-term picture is brightening thanks to the emergence of coronavirus vaccines.

When its meeting concludes Wednesday, the Fed could announce steps to try to offset the pandemic’s increasing drag on growth. Or it could choose to mostly watch and wait, for now.

The central bank’s policy meeting coincides with a record-shattering resurgence of the coronavirus, which has caused an increase in business restrictions and made more Americans reluctant to shop, travel and dine out. Some analysts say the economy could shrink in early 2021 before recovering as vaccines combat the virus.

Economists are divided on whether the Fed will announce any new actions this week. One option the policymakers could take would be to announce a shift in the Fed’s bond purchases. The Fed

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Sterling rises on hope for Brexit deal, dollar swoons before Fed

By Stanley White



a group of people posing for a photo: Pound and U.S. dollar bills are seen in this illustration


© Reuters/Dado Ruvic
Pound and U.S. dollar bills are seen in this illustration

TOKYO (Reuters) – The British pound rose against the dollar and the euro on hopes that Britain and the European Union will secure a free trade agreement after their decision to extend negotiations beyond the Sunday deadline.

The dollar eased slightly ahead of a U.S. Federal Reserve meeting ending Wednesday where policymakers are expected to increase purchases of longer-dated Treasuries to contain a rise in yields.

The rally in sterling may not last, some analysts warn, because Britain and the EU have repeatedly struggled to narrow their differences and there is still a risk that trade and business will be thrown into chaos without an agreement.

“This is a temporary move higher in the pound, but it is still not clear that a no-deal scenario can be avoided,” said Junichi Ishikawa, senior foreign exchange

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