THE FED REMAINS SILENT ON CHANGES TO QE AND CALLS FOR FURTHER FISCAL STIMULUS

Highlights:

  • Chair Powell underlined the progress the economy has made so far but stressed the downside risks related to Covid.
  • The Fed is not out of ammunition, but lost income due to the crisis can only be restored by fiscal policy, he reiterated.
  • FOMC members have discussed on how to improve QE should the economy require additional momentary stimulus. Details may be disclosed at the December meeting.
  • Starting from December, the information on the FOMC economic thinking will be enhanced, with more details on the balance of risks around the outlook.

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THE FED REMAINS SILENT ON CHANGES TO QE AND CALLS FOR FURTHER FISCAL STIMULUS

LATEST INSIGHTS

COVID-19 FACTS & FIGURES
Pfizer and BioNTech candidate Covid-19 vaccine showed to be 95% effective in early analysis, an even better result compared to data released last week. Moderna candidate Covid-19 vaccine showed to be 94.5% effective in early trials involving 30,000 people. Switzerland announced ICU beds reached full capacity and no extra units are available. Oxford and AstraZeneca Covid-19 vaccine test results are expected by late December.
THE FED REMAINS SILENT ON CHANGES TO QE AND CALLS FOR FURTHER FISCAL STIMULUS
As widely expected, the November meeting was rather uneventful: chair Powell seized the opportunity to reiterate the strong forward guidance on rates illustrated in September and to reassure on the capability of unorthodox measures to cushion a possible downturn of the economy.
CHINA’S NEW “DUAL CIRCULATION STRATEGY”
At the end of October, China approved its “Dual Circulation Strategy” which is the new five-year economic plan (2021 – 2025). The concept has been under discussion for quite some time and President Xi highlighted it already in May. In a nutshell, the concept promotes domestic demand as the central growth engine. It foresees more independent and resilient supply chains while at the same time it intends to further opening-up the corporate sector and financial markets.