FOMC latest publications
For the third time this year, the Fed lowered the target range of federal funds rate 25bp to 1.5-1.75% without significant changes to their outlook on the labor market or inflation.
Repo Rates: Rates stabilize as average daily intervention inches up to $84bn during the week. Fed recalibrates intervention: daily up to $120bn from $75bn and term up to $45bn from $35bn.
Repo Rates: Rates trended higher but pressures receded after increased intervention. Fed Open Market Operations: Average daily intervention jumped to $81bn during the week; Repo operations will continue at least through January.
Repo Market: No major spikes in rates. Average daily intervention since 9/17 jumps to $65bn; Fed commits to overnight repo operations at least through January 2020; Several FOMC members suggest introducing standing repo facility.
Repo Rates: Rates continue to stabilize. Fed Open Market Operations: Average daily intervention softened to $47bn this week from $86bn prior. Fed Balance Sheet: Total assets up $185bn since 8/28; Reserves up $101bn since start of turmoil.
After weeks of disappointing data, rising trade tensions and renewed fears of slower global growth, the Fed set the stage for a monetary easing cycle, in line with our view.
As expected, at their March 19th-20th meeting, the Fed left rates unchanged and maintained their patient bias. This is not surprising considering the weak incoming data, the downward bias to the committee’s outlook and increasing downside risks abroad.