The Federal Chairman Jerome Powell sent markets lower overnight with a three-punch combination that would have done Batman proud. Chairman Powell firstly poured water on the prospect of negative interest rates from the Fed, saying that the evidence the policy is effective is marginal. Secondly, he stated that the post-virus growth and recovery would be lower for longer. Thirdly, and in my mind, much more importantly, he urged the Federal Government to enact more fiscal support and set aside partisanship to get the job done.
The last statement is significant, representing for the first time, a rather forceful statement that the Federal Reserve could not do the job alone, and cutting straight to the heart of much of the criticism of the Federal government’s coronavirus response to date. Indeed, the US President last night said that the latest Democratic crafted stimulus bill was “dead on arrival.” To be fair to President Trump, the proposed legislation had been crafted by…
