Lower for Longer
September 21, 2020
By Mike Moreland
VP - Investments
The Federal Reserve’s Open Market Committee met for its annual retreat in Jackson Hole, Wyoming, two weeks ago (nice work if you can get it!). It’s usually a study session, filled with presentations, discussions, and opportunities to discuss the bigger picture away from the chaos of Wall Street and Washington. Significant announcements from Jackson Hole are rare.
This year, like most of 2020, the unexpected occurred. The Fed announced a policy change to target its actions to average inflation over time. The Fed will allow economic activity and inflation to ‘run hot’ -- rather than raising interest rates when inflation reaches its 2.0% -2.5% target, it will allow inflation to exceed that level for an extended period before it acts.
The net effect is that interest rates will likely remain near zero for much longer than previously thought -- the Open Market Committee’s own projections show rates unchanged until at least 2023. The implications for investors are far-reaching. At minimum, investors in search of yield will be pushed further out the risk spectrum.
We explored some of these considerations in our Fall 2020 Economic & Market Commentary. Please take a few minutes to read it, and let us know what you think.
Making sure goals are met in a changing environment is part of your charge to us. Let’s work together to ensure your success. Please contact your Advisor for an appointment today.