Wells Fargo Investment Institute – The Fed’s Decision and What It May Mean for Investors

Navegó a una página que no está disponible en español en este momento. Seleccione el enlace si desea ver otro contenido en español.

Página principal

The Fed’s Decision and What It May Mean for Investors

Wells Fargo Investment Institute – November 5, 2020

Policy Announcement

The Federal Open Market Committee (FOMC) decided to leave the federal funds rate unchanged at 0.00%–0.25%. The Federal Reserve (Fed) also announced that it will continue to purchase Treasury, agency mortgage-backed, and commercial mortgage-backed securities at least at the current pace to sustain smooth market functioning.

Download the Key Takeaways (PDF)

Stated Reasons

  • COVID-19 is causing tremendous human and economic hardship across the United States and around the world. Economic activity and employment have continued to recover, but they remain well below levels at the beginning of this year.
  • Overall financial conditions remain accommodative.
  • The path of the economy will depend significantly on the course of the virus.

Looking Forward

  • The FOMC expects to maintain this target range (0.00%-0.25%) until labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time. 
  • The FOMC will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge to the Committee’s goals.

What Else?

  • The Fed changed very little in their release today. This was expected, as the Fed prefers to stay in the background during an election period, if possible.
  • The new summary of economic projections shows that FOMC members do not expect inflation will exceed the 2% target through 2023 or over the longer run. The new Fed inflation framework would suggest that under such a scenario, the federal funds rate would remain at the lower zero bound (0.00%-0.25%) throughout the forecast period.
  • The vote for the policy statement was unanimous.