Brian Chappatta, Columnist

Jerome Powell Sees Fed’s Limits and Punts to Congress

The central bank opts against extending the maturities of its bond purchases and instead leaves the heavy lifting to Washington lawmakers.

December 16, 2020 at 9:15 PM UTC

By Brian Chappatta

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Carried the ball as far as he can.
Photographer: Daniel Acker/Bloomberg

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Perhaps it’s because my alma mater, Northwestern, is competing in the Big Ten Championship Game this weekend against Ohio State, but I can’t help but use a football analogy to explain Wednesday’s prudent decision by the Federal Open Market Committee.

The Federal Reserve has clearly done an admirable job of defending the world’s largest economy from a steep and prolonged fallout from the Covid-19 pandemic in 2020. Since March, the central bank has lowered short-term interest rates to near-zero, bought wide swaths of U.S. Treasuries and mortgage-backed securities and even provided a backstop for corporate debt and municipal bonds.