Fed Indicates Bond Traders Are Behaving for Now
The central bank chooses to go on cruise control with interest rates and bond purchases.
Staying the course.
Photographer: Andrew Harrer/Bloomberg
Federal Reserve Chair Jerome Powell gave traders in the world’s biggest bond market the equivalent of a pat on the head after the central bank’s latest meeting.
The Federal Open Market Committee voted unanimously to leave the fed funds rate in a range of 0% to 0.25%, as expected, with all but two officials forecasting it will remain near zero until at least 2023. Notably, the Fed’s statement made no formal mention of yield-curve control, the policy tool seemingly on the tip of all analysts’ tongues. More than half of economists surveyed by Bloomberg said they anticipate the FOMC will eventually set target yields for certain Treasuries, likely two- or five-year maturities. Of those expecting that to happen, most said the announcement would most likely come in September.