Fed Chair Jay Powell was not shy about sharing his opinions on the economic and policy outlook just two weeks ago in his microwave-side chat.

  • The Federal Reserve held steady its target for overnight rates to a range of 0 – 0.25%, unchanged now six meetings and more to come
  • There were no material policy changes, and we continue to anticipate zero interest rates through 2022, possibly longer
  • Language in the FOMC statement was almost entirely unchanged, but retains the very cautious tone set back in July’s FOMC meeting
  • In our view, if vaccination progress continues or accelerates, the Fed could eliminate its “downside risks” language in March

It should come as no surprise, therefore, that the January FOMC meeting echoed those opinions: no change in policy rates, no change in bond buying, and no change in the risk assessment. Although the llama drama in some single-name equities over the last week has certainly pulled focus away from the Fed (and seemingly everything else), it is worth pointing out we are roughly balanced between the fiscal adventurism that dominated interest rate markets since November and the monetary dovishness that dominated those same markets in the six months prior.

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About the author

Guy LeBas

Director, Custom Fixed Income Solutions

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