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29.04.2020, 06:19

USD: Fed likely to remain in risk management mode on Wednesday - Barclays

eFXdata reports that Barclays Research discusses its expectations for FOMC policy meeting.

"We expect the Fed to maintain the federal funds target range at the zero lower bound. We do not believe it is ready to shift to stronger forward guidance, which could include YCC, at the April meeting. We believe it would prefer to remain in risk management mode and focus on its LSAPs and credit and liquidity facilities to improve market functioning and ensure the flow of credit to households, business, and municipalities.

A shift to stronger forward guidance, in our view, is not likely to come about until the June FOMC meeting or later, when the Fed has a better idea of how economic activity is responding to the phased re-opening of the economy," Barclays notes.

"Our baseline economic outlook includes an elevated unemployment rate and belowtarget inflation throughout the forecast horizon, which could justify a strengthening of forward guidance sometime in Q3, should the Fed hold a similar view," Barclays adds.

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