InvestorQ : What is the long term plan that the US Federal Reserve has been talking about over the last few weeks?
Arusha Ray made post

What is the long term plan that the US Federal Reserve has been talking about over the last few weeks?

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diksha shah answered.
4 weeks ago


If you recollect, in the minutes of the last FOMC meet, the Fed had spoken elaborately about a long-term fed monetary policy stance that would provide a 1.5 years perspective to reduce the short term uncertainty over rates. That could soon become reality.

As per the first indications from the long term plan, the Federal Reserve is expected to keep interest rates close to zero for the next five years. This and a lot more are expected to be part of a long term strategy paper to be announced by the Fed in September.

One thing is likely to change in terms of Fed stance and that is, Fed may cease to be too finicky about inflation. Instead, the Fed is likely to outline a longer term policy wherein the rates would be kept low even if inflation touched 2% or even scaled higher.

When he speaks on Thursday, the Fed Chairperson, Jerome Powell, is expected to provide an outline of this long term Fed policy. The ultra low rates have helped equities give extraordinary returns and clearly the Fed wants to give more predictability to markets.