This piece is approved to use with clients.
With More Stimulus on the Horizon, Fed Expects a Strong Recovery in 2021
- The Federal Reserve in March raised its forecasts for GDP growth, inflation and employment, based on the $1.9 trillion in new stimulus signed into law and an accelerated vaccine rollout.
- A proposal for roughly $2.3 trillion more in stimulus for infrastructure, jobs, and family programs could result in further upgrades to Fed economic estimates.
- The Fed allowed a temporary exemption enacted during the COVID-19 crisis to ease capital requirements for banks to expire; the change could impact money market pricing.
- Money market assets under management climbed higher during the quarter, spurred on by a variety of factors: higher volatility in longer-dated Treasuries, an influx from bank balance sheets, corporate issuance, and additional quantitative easing and stimulus.
- Regulatory reform remains on the horizon as regulators spoke in stark terms about preventing the stress in liquidity markets that was seen during the pandemic.
- Plans for the sunsetting of LIBOR, the short-term benchmark, will proceed with a new timetable for the cessation of U.S. dollar issuance; LIBOR’s obituary has been written.
This report is available as a PDF. To read the full report click the button above to open the report.