US Commentary: Minutes of the FOMC last meeting and Chair Powell testimony before the US Senate.

The FOMC April 28 meeting minutes provide some glimpse into the Federal Reserve’s early assessment of the crisis triggered by the coronavirus pandemic, the outlook for the US economy over the coming months and quarters. Fed Chair Powell testimony on May 19 before the US Senate Committee on Banking, Housing and Urban affairs offers additional insights into the Fed’s current thinking and options to contain the economic impact of the coronavirus crisis and to speed-up the recovery of the US economy.

Key takeaways:

  • The prospect of a V-shaped recovery is quietly moving from being the Fed’s baseline scenario to the least probable outcome as the risk of secondary pandemic outbreaks is increasingly considered as possibility
  • The exceptional fiscal support enacted in the CARES Act and other legislation might help contain the short term economic damage stemming from the sanitary crisis and the related containment measures but this might not be enough and further fiscal support might be needed
  • This will be the case if some of the measures and programmes contained in the CARES Act do not provide sufficient, appropriate and timely support for the most vulnerable households and businesses

Detailed commentary

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