Welcome back to Economic Track with Zac. This segment focuses on updates by the Federal Reserve. During the pandemic, a main goal of the Federal Reserve was to stimulate demand for products and services through their monetary policy. The Fed has done this in two main ways: cutting interest rates and quantitative easing (or the Fed’s “large-scale asset purchases”). Some members of the Fed have hinted towards talks of tapering off this economic interference. Robert Kaplan, President of the Dallas Fed, said with respect to their quantitative easing actions "these purchases are very adept at stimulating demand, but we've got plenty of demand.” (citation) Kaplan believes that the Fed has done its part in jump-starting the economy and that supply side constraints are the real issue. The Federal Reserve’s abstract target for weaning its monetary policy is “substantial further progress”. Powell noted more economic data is needed before the substantial further progress goalpost can be declared. For now, the Central Bank is continuing to jump-start the economy, but the market may be in a precarious position if the Fed begins tapering.
For more information and updates, please see our weekly blog posts every Wednesday afternoon. Thanks for tuning in.
McCormick Emily. “Fed meeting minutes: What to know this week”. Yahoo! Finance, 5 July 2021. https://finance.yahoo.com/news/holiday-shortened-week-fed-meeting-minutes-what-to-know-this-week-102647733.html.