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[The Fed is expected to maintain a near zero interest rate until the end of 2022 and promises to continue to purchase bonds]

The Fed maintains the benchmark interest rate unchanged at 0%-0.25%, in line with market expectations. The Fed's FOMC statement: Keep the excess reserve ratio (IOER) at 0.1%. "At least at the current pace" to purchase treasury bonds and housing mortgage-backed securities, continue to carry out large-scale overnight and regular repurchase operations. The Fed bitmap shows that the Fed is expected to maintain interest rates at current levels until the end of 2022. The GDP growth rate is expected to shrink by 6.5% by the end of 2020, and growth will resume in 2021 and 2022.


[Key points of press conference after Fed Chairman Powell after FOMC meeting]
1. Maintain zero interest rate until 2022;
2. The US economy is expected to contract by 5.6% this year;
3. Continue to increase liquidity injection in financial markets;
4. Now that inflation is zero, rest assured to continue to rescue;
The financial stimulus of US$5.3 trillion is powerful, but the fiscal stimulus is not expected to be so great in the next step;
6. Do not comment on the US stock market, do not predict and operate the stock market valuation, as long as there are unemployed people, resolutely release liquidity.

[EIA report: US crude oil inventories rose to a record high of 538.1 million barrels]

 EIA crude oil inventories increased by 5.72 million barrels, gasoline inventories increased by 866,000 barrels, and refined oil inventories increased by 1.568 million barrels in the week to June 5. Last week, US domestic crude oil production fell by 100,000 barrels to 11.1 million barrels per day. The US Strategic Petroleum Reserve (SPR) increased by 2.2 million barrels to 650 million barrels last week.


GMT(time)

Currency

News and Data

00:30

USD

 

Crude Oil Inventories

 

04:00

USD

 

Fed Interest Rate Decision

 

22:30

USD

 


Initial Jobless Claims

 

22:30

USD

 

PPI (MoM) (May)

 


Summary of Institutional Perspectives
US economic macrostrategist MICHAEL SKORDELES: Although the market interpretation of the bitmap is that the Fed will maintain interest rate stability until the end of 2022, but look carefully at the bitmap, only two members believe that there is an interest rate increase action, so it is expected that zero interest rates will continue for more than three years ; The US economy is not fully recovered so quickly, and the Fed still has work to do, so from the perspective of the stock market, the Fed will not remove support for the market.

Bank of Canada interest rate strategist JON HILL: The Fed's actions were in line with expectations. They admitted that the unemployment rate will be high, inflation will be low, and interest rates will be kept at a very low level for at least the next two years, which should benefit the stock market.

 

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PRIYA MISRA, head of global interest rate strategy at TD Securities: The Fed’s interest rate resolution is generally in line with expectations. We believe that it is too early for the Fed to give specific forward guidance. In terms of quantitative easing, they have maintained the same pace of debt purchases. There is a lot of flexibility in terms of purchase volume, and it is too early to control the yield curve. There are a lot of uncertainties, but we think they will complete it before the end of this year.

 

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Alan Ruskin, a strategist at Deutsche Bank, said: The Fed’s plan to keep interest rates unchanged at least until 2022 “is conducive to risk appetite”, which will lead to a weaker dollar; he pointed out that the flexibility of asset purchases and the “lower” forecast of unemployment rates also benefit Risky assets.

 

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Marc Chandler, chief market strategist at Bannockburn Forex: This interest rate decision is basically in line with market expectations that the Fed will not take any action. People like me who originally thought the Fed will introduce a yield curve control, now expect the Fed not to do so soon, perhaps using this tool in the late summer. In addition, the Fed's expectations of economic growth are very close to a V-shaped recovery.


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