We believe there may be more uncertainty around the Federal Reserve's upcoming mid-September Open Market Committee meeting than is typical. It will be the first committee meeting since last month’s virtual Jackson Hole meeting, at which the Federal Reserve announced revisions to its statement on longer-run goals and monetary policy strategy, and it is the last scheduled meeting before the U.S. election in November. We see four main possibilities as to what actions the Federal Reserve may take at this meeting: (a) provide forward guidance on the Federal Reserve Funds rate; (b) provide forward guidance on its asset purchase program; (c) provide both; or, (d) do nothing. We believe any forward guidance provided would be outcomes-based, meaning it would commit the Federal Reserve to an action until an economic target is achieved, rather than until a specified time has elapsed. The purpose of any Federal Reserve action would likely be to pivot from crisis management to a policy that may support and sustain the nascent economic recovery.
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