Markets have been choppy this week buffeted by the ongoing Covid pandemic and slow vaccination rates in Europe with the realisation that a return to “normal” is further off than first anticipated. The new Biden administration continues to settle in with little sign of any bipartisan Democratic/Republican cooperation apparent- looks like “normal” transmission has resumed!
The US Federal Reserve kept their funds range unchanged at 0.0% – 0.25% on Thursday morning in a unanimous 11-0 vote. They have maintained their 120 Billion per month Asset buying program saying the economic path and future QE lies largely with the country making progress on coronavirus. The Fed acknowledged that the economy has softened in recent weeks while they watch the ongoing effects to business and employment are being affected. December figures showed increases to Unemployment and a decrease to Retail Sales but the Fed highlighted they believe perhaps naively they expect economic setbacks are temporary. Later this year as vaccines are distributed the Fed say the economy will bounce back as vaccines become more readily available. In December congress approved 900 Billion in new stimulus measures including $600.00 checks to Americans. The new Biden administration has proposed 1.9Trillion in additional spending including $1,400 checks. The Fed estimates unemployment will drop to 5.0% towards the end of 2021 from the current 6.7% and 4.2% by the end of 2022.