Today, on the macroeconomic calendar, minutes of the Federal Open Market Committee (FOMC) meeting held by the Federal Reserve on January 29 – 30 are the most important data stream for the markets to follow.
To remember the first FOMC meeting of 2020, after two-days meeting, the Fed did not change its policy interest rate in line with the market expectations, leaving the federal funding rate within the range of 1.50 – 1.75 percent. The meeting report stated that the policy stance was appropriate, the labor market was strong, and the economy was growing at a moderate pace. It further suggested that the household spending increased moderately and that the investments and exports were weak. At a press conference following the Fed’s decision to raise the overnight reverse repurchase rate by 5 basis points to 1.5 percent, Fed Chair Jerome Powell said, “The Federal Reserve’s repurchase operations will continue through at least April. What I can tell you is that you know what our intention is: It is to return reserve to an ample level. We expect that to happen during the second quarter and our plan. we believe we can gradually reduce them and we believe we can also gradually reduce repo as we reach an ample level.”
In the minutes to be published today at 20:00 (GMT+1), the Fed’s plans and justifications for changing the size of these operations will be questioned after the Fed decided to change the amount of its repo operations in the first quarter, which will possibly continue until April. In addition, in the context of Powell’s statement that the macroeconomic effects of coronavirus are uncertain, the Bank’s stance on potential risks, as well as the approach of the committee members to the risks of COVID-19 and the current monetary policy stance, will be the most important signs that markets will look for in the minutes.
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