Below we present some key takeaways from the Fed Chairman’s press conference:
- Goods spending has moderated following large gains
- Consumer spending on services remains low
- Inflation remains below 2% target
- Optimistic about the vaccine
- Progress on vaccine and mask wearing as positives
- Economy has proved more resilient than expected
- Monetary policy is playing a key role in supporting the recovery
- It's appropriate to leave rates at current levels until inflation on track to moderately exceed 2% for some time
- QE will continue until 'substantial further progress' made but it's likely to this will take 'some time'
- There are as many people unemployed now as at the peak of the financial crisis
- "The connection between low interest rates and asset values is probably something that's not as tight as people think"
- Fed won't react to small, transient inflation increases and its unlikely that anything will result in sustained problematic inflation
- Fed is equipped with appropriate tools to deal with high inflation
The market reaction is moderate, the EURUSD currency pair fell slightly and US indices are also continuing to decline.
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US500 continues to trade under pressure. Index is testing the major support at 3746 pts which is additionally strengthened by 200 SMA (red line). Source: xStation5
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