· The FED keeps interest rates and purchasing programs unchanged; rates will be close to zero until 2023 or until full employment and inflation above 2% have been reached.
· OECD forecasts a (-) 4.5% contraction in the global economy in 2020; (-) 10.2% for the Mexican economy.
· United States legislators present a $1.5 trillion dollar bipartisan fiscal proposal.
· The Bank of England discusses the implementation of negative interest rates amidst large risks for the economy.
Members of the Federal Open Market Committee of the US Federal Reserve concluded their monetary policy meeting yesterday, in which they decided to keep the federal funds rate unchanged at between 0-0.25%, as well as its asset purchasing program. The FED expects to maintain this stance until the jobs lost during the health emergency are recovered and inflation fluctuates above 2% for some time. The decision came with new macroeconomic forecasts, which expect a weaker contraction in 2020 (-3.7% vs -6.5% prev.) but a slower recovery in 2021 (4.5% vs 5% prev.). Regarding inflation, estimates were revised upwards in 2020 (1.2% vs 0.8% prev.) and slight changes were made for 2021 and 2022 (1.7% and 1.8%, respectively). Lastly, 13 out of 17 members estimate that interest rates will remain at zero until 2023. In a press conference, Chair Jerome Powell assured that the recovery has been faster than expected but warned that the rebound would become more moderate. He reiterated that the recovery`s future is still uncertain and depends on the virus`s evolution, and that there is still need for further fiscal stimulus that needs to be approved as soon as possible in Washington. The lack of concrete actions on behalf of the FED to keep interest rates anchored at low levels (through larger purchases or a yield curve control program) in an environment that will allow greater inflation left markets feeling nervous; in addition to the agency`s tone of uncertainty with which it talked about the recovery.