The necessity of “cautious” dovish stance in monetary policies

Powell did not make any changes to his picture of the economy in his semi annual presentation before the Senate, and he continued his rhetoric at the last Fed meeting.

Powell did not make any changes to his picture of the economy in his semi annual presentation before the Senate, and he continued his rhetoric at the last Fed meeting. In this context, discourses that come to the forefront; the economy had to go a long way to reach its pre-pandemic situation, the inflation would remain below the target for a considerable time and the Fed would continue to make all the moves needed in monetary policy. Even though the last FOMC did not provide much detail, it was seen that the Fed's stimulus drive continued to expand with new moves focusing on company financing in monetary expansion. Powell will repeat the same presentation today at the House of Representatives.

 

Economies cannot be left to their own state in the following conjuncture. There is a lot to achieve organic growth. Even if a few incoming data is good, they cannot be associated with a V-shaped recovery. Because comparative data is currently based on a bad period. Therefore, it is more accurate at this point to address the state of the economy through the indices calculated rather than the deviations in the increase rates. As a result, the rate of change will not give you a linear trend chart. The important thing is our position relative to the normal period.

 

In terms of the number of cases, things are not getting better in some states of the USA and Beijing. In fact, it is not entirely clear whether the event is wave 2, it seems more like an extension of the first wave. They had already opened their economies not to end the outbreak, but to ease the financial burden. The recovery scenarios are either based on the assumption that there will be no wave 2 or will still be managed. As such, large economies cannot afford a total reclosure.

Source: Tera Menkul
Hibya News Agency

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