J.P. Morgan: Federal Reserve set to anchor rates at low levels
At its June meeting, the Federal Reserve made it clear that interest rates are going to stay low for a long time.
All voting members of the Federal Open Market Committee expected that interest rates would stay on hold through 2021, with only two members foreseeing rate hikes in 2022. Following the Fed's commitment in March to buy corporate bonds and unlimited amounts of Treasuries, we expect more details later in the year on how they plan to achieve their goals of 2% inflation and full employment. The traditional tools in the toolbox include strengthening forward guidance (perhaps linking future rate increases to economic conditions) or being more explicit about the planned amount of asset purchases. An alternative would be to move to yield curve control, which remains an "open question" according to Jerome Powell's press conference.