Fed Review - July 2020: Still Waiting For Guidance

Fed Review - July 2020: Still Waiting For Guidance

• Going into the meeting, the July FOMC was widely seen as a stage-setter for policy shifts in future meetings – and the broad consensus among sell-side analysts is that this is basically what we got.
• However, some of Powell's comments in the press conference suggested that the Fed may take a little bit more time than most anticipated before committing to major changes.
• While most analysts stuck to their pre-FOMC views in their post-FOMC notes, there was a change in tone for some of those who anticipated a conclusion of the framework review to coincide with adoption of explicit forward guidance / other policies at the September FOMC meeting.
• This is because Powell remained vague and noncommittal on details of the FOMC's leanings on the above topics, which suggests that internal discussions are still very much live.
• Now, it seems risks are increasing that the FOMC will either take incremental steps at successive meetings, rather than all at once in September, or push back changes toward end-2020 as Committee members have more time to consider the options, and await further macroeconomic developments.

Click here for the full Fed Review or see attachment below:

FedRevJul2020.pdf

Sell-Side Fed Policy Expectations