The US economy, battered by a resurgence in the spread of COVID-19, needs increased government spending to tide over households and businesses and broader use of masks to better control the virus, US central bankers said.
Two Federal Reserve officials sounded increasing pessimism on the swiftness of any economic recovery from the COVID-19 pandemic and warned the unemployment rate could rise again if the disease is not brought under control.
Gold rose to the highest in more than seven years after the US Federal Reserve said stocks and asset prices could suffer a significant hit from coronavirus, and warned the process of economic recovery may stretch through until the end of next year. Palladium surged more than $100 in 20 minutes.
Federal Reserve Board Chairman Jerome Powell said Tuesday the outlook for the US economy has become cloudier since early May, with rising uncertainties over trade and global growth causing the central bank to reassess its next move on interest rates.
A dovish Federal Reserve can use tools such as rate cuts to lessen the damage of America’s tariff skirmishes with China and Mexico, but it is either limited in its effectiveness or in its motivations, two economists told CNBC on Thursday.
Worried by prospects of a pause in the US interest rate hike cycle, the Bank of Japan is shifting focus towards a risk that it may be forced to deploy more stimulus this year to stop sharp yen rises from derailing an economic recovery, sources say.
Higher US rates are rattling many emerging markets in much the same way past tightening cycles did, but the Federal Reserve's hawkishness could also bring cheer for a small group of Asian economies that wouldn't mind seeing their currencies weaken.
Central banks need to consider aiming for a higher inflation target as they boost their room for maneuver in the context of a sluggish economic environment, a senior Federal Reserve policymaker has said.
Malaysia's ringgit and Indonesia's rupiah led an emerging market rally against the dollar on Friday while Asian equities also pushed higher after minutes from the Federal Reserve's latest policy meeting suggested it could keep borrowing costs at record lows into next year.
The US Federal Reserve kept interest rates unchanged in a bow to worries about the global economy, financial market volatility and sluggish inflation at home, but left open the possibility of a modest policy tightening later this year.