Yesterday, as expected, the Fed held benchmark interest rates near zero following the conclusion of its two-day FOMC meeting. It also is committed to continue to buy at least USD120bn a month of debt until the economic recovery makes ‘substantial further progress’. ‘My expectation -- and many people have the expectation that the second half of next year the economy should perform strongly. We should be getting people back to work. Businesses should be re-opening’ Fed Chair Jay Powell told reporters after the meeting. He added ‘The issue is in the next four or five months, getting through the next four or five or six months’ which he said are sure to be ‘very challenging’.
The post meeting statement confirmed that ‘The Federal Reserve will continue to increase its holdings of Treasury securities by at least USD80bn per month and of agency mortgage-backed securities by at least USD40bn per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals’. Powell declined to outline what ‘substantial further progress’ would mean, saying only that the FOMC would signal well in advance of winding down stimulus that the economy appeared to be on that path.
Even as the FOMC revised higher its economic projections over the next few years, Powell warned that ‘it isn't going to be easy’ to get inflation higher. ‘There are significant disinflationary pressures around the world, and there have been for a while’ he said ‘It's not going to be easy to have inflation move up. It's going to take some time’.
Plus, for those of you who would like a better work/life balance, maybe think about sending your CV to Citi. The investment bank will offer its employees the ability to take a 12-week sabbatical as part of a raft of new company perks. Employees will also be able to buy up to five extra holiday days annually starting next year. Lastly the bank is also introducing a program that will allow employees to work pro bono with a charity for up to four weeks while still getting full pay.