Big Day for the FOMC

Big Day for the FOMC 

Investors will be waiting eagerly on Wednesday for the US Federal Reserve’s interest rate decision, and any signal on when the central bank will begin pulling back on its stimulus policies. 

The Federal Open Market Committee will conclude its two-day policy meeting on Wednesday and announce its decision at 21.00 GMT+3. This will be followed by a press conference with Fed Chair Jerome Powell at 21.30 GMT+3. 

The Fed has said its benchmark borrowing rate will remain at record lows for some time, so the first step for the central bank will be to start to slow its massive monthly bond-buying programme, which is expected before the end of the year. 

Investors will be watching to see if Powell provides details on the taper plan. Monthly asset purchases currently total at least USD80 billion in Treasury securities and USD40 billion in agency mortgage‑backed securities. 

Meanwhile, the Bank of Japan on Wednesday decided by an 8-1 majority vote to keep a negative interest rate of 0.1%. 

BoJ also kept its loose monetary policy unchanged. The bank said it will continue expanding the monetary base until the year-on-year rate of increase in the consumer price index exceeds 2% and stays above the target in a “stable manner”. 

Japan’s central bank noted that the local economy has picked up as a trend, although it has remained in a “severe situation” due to coronavirus, both at home and abroad. Exports and industrial production have continued to increase despite supply-side constraints. 

However, the bank noted that the level of Japan’s economic activity in the face-to-face services sector is expected to be lower than that prior to the pandemic for the time being. 

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