• In the Federal Open Market Committee’s (FOMC) minutes for the meeting that took place over April 28-29, participants agreed to maintain the target range for the federal funds rate at 0 to ¼ percent, given the impact the COVID-19 crisis was having on economic activity. They also noted that this target range will be maintained “until they were confident that the economy had weathered recent events”, and that the economy was on track to achieve the Fed’s maximum employment and price stability goals.
  • FOMC members were concerned about the state of the labor market and the extreme decline that was underway in April. In particular, they were worried that “temporary layoffs could become permanent, and that workers who lose employment could face a loss of job-specific skills or may become discouraged and exit the labor force”. Participants judged that lower-income workers would be most severely impacted.
  • In terms of inflation, FOMC members noted that the health crisis had brought both supply and demand shocks. But the overall effect was disinflationary, and it would take time for inflation to return to the 2 percent target.
  • Participants assessed that it was appropriate for the Fed to continue the quantitative easing and special lending programs, and that they were helping support financial market functioning and the flow of credit to the economy. They also noted that fiscal support was crucial during this period, and that “even greater fiscal support may be necessary if the economic downturn persists”.
  • FOMC members also discussed whether the Fed should adopt forward guidance in its communication strategy. Some stated that “explicit forms of forward guidance could help ensure that the public’s expectations regarding the future conduct of monetary policy continued to reflect the Committee’s intentions.”

Key Implications

  • While April’s meeting minutes didn’t provide anything surprising, it did show that FOMC members were keeping a very close eye on the COVID-19 shock. They noted the disproportionate impact of COVID-19 on lower income households, and that we could see lasting damage to the labor market as a result of the health crisis.
  • Participants were also clear that fiscal policy has a crucial role to play during this crisis. While the Fed stands ready to expand and introduce new measures, fiscal policy will play the biggest role in supporting the economy through these trying times.


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